Leading the way: The appointment of Canada's first woman auditor general is a positive sign for women who aspire to get the top jobs in accounting and finance. (Government Issues).

The appointment of Sheila Fraser earlier this year as the first woman Auditor General of Canada reflects the increasing prominence of women in financial mangement.

Fraser -- a protege of former Auditor General Denis Desautels, whose ten-year term expired in March -- joined the office in January 1999 after a long career with Ernst & Young, one of the country's "big- five" auditing firms.

"I was looking for a new challenge," says Fraser about her move into the civil service. "I had been practising public accounting for 27 years, and I really enjoyed working in the Quebec City office. But it was time for a change."

And what a change she got. The Auditor General's office is the Canadian taxpayer's top watchdog. Its boss is a highly visible public figure. This is mostly because of the reports she presents -- usually four times a year -- detailing the results of audits of federal programs that are designed to ensure that government disbursements are accounted for and well spent.

Fraser supervises a staff of 500 and oversees a budget of $63 million, both of which dwarf the resources that a typical big-five public accounting firm audit partner is responsible for. And the stakes are high. Generally, countries that don't have strong independent reviews of their government finances can quickly slide into corruption.

Unlike the ethics counsellor, who reports to the Prime Minister, the Auditor General reports directly to Parliament. This, plus the fact that she is nominated for a ten-year term and cannot easily be replaced, helps ensure that the reports she presents will be independent and free of political bias.

This independence is critical because of the massive amount of money that the federal government controls. With disbursements exceeding $150 billion each year, there is an ever-present temptation for elected officials to strong-arm bureaucrats into favouring certain interests.

Although Fraser was able to ease into her new position by taking office just as the country's elected officials were planning summer vacations, she is going to be much more visible this fall. The Auditor General's December report is expected to include a follow-up summary on how Human Resources Development Canada implemented previous recommendations following the recent controversy surrounding HRDC payments and perceived deficiencies in internal controls.

Beyond dealing with her increased media profile, and the HRDC situation, Fraser will have to face a number of challenges in the coming months. For one, government accounting is different than private sector accounting. Until recently, capital items were expensed in the year they were paid for. In the past, when a bridge or road was built, for example, it was only recorded as an expense during the particular government's mandate in which the cheque was disbursed, even if the asset was going to last for 20 years.

However, that anomaly is due to change this year, and Fraser will be watching the government's conversion. The first new full-year statements reflecting accrual-based accounting are to be released in March 2002.

But one of Fraser's greatest impacts could be in her continuing role as ambassador for women in the financial management profession. Women make up more than half of the students in many university commerce programs, and are filling an ever-increasing number of financial management roles -- especially in small- and medium-sized businesses.

But women continue to have difficulty breaking through the glass ceiling that exists in many accounting and finance departments. Much of the reason for this is that although there are a lot of women currently working in the finance profession, many are fairly recent arrivals with only a decade or two in the field.

"When I started in the profession in 1973, there were almost no women," says Fraser. "And when I became a partner at Clarkson Gordon (as Ernst and Young's Canadian arm was previously known) in 1981, I was only the second women partner in Canada."

In practice, this means organizations have a much smaller talent pool of women candidates with the long track records and extensive experience that are required to qualify for top CFO jobs. A case in point is the Auditor General's office itself. Its organizational chart -- published earlier this year as part of the 2001-02 Report of Plans and Priorities -- shows that four of the 17 top executives named on the chart (including Ms. Fraser) are women, despite the fact that women contitute half the office's professional staff.

The situation is by no means restricted to government. Fraser estimates that only between 10 and 20% of the partners at Canada's big-five accounting firms are women. Furthermore, none of these firms has a female chief executive officer. And the picture is just as challenging at many of Canada's largest companies, where women are struggling to break into the top CFO jobs.

The still-too-small talent pool of women financial executives, with the decades of long track records required to obtain the top CFO positions, is a problem that is slowly working its way through the system. It will likely decrease in scope as those who graduated from universities in the 1980s and 1990s build up their resumes.

Fraser's visibility may give private sector companies another signal that women are ready to take on more of the country's top finance jobs in Canada's largest corporations.

Peter Diekmeyer is a Montreal-based business writer.