OAG Audit Committee Charter

Introduction

  1. The Treasury Board’s revised Policy on Internal Audit and its Directive on Internal Audit came into effect on 1 April 2017. The policy outlines the roles and responsibilities of departmental audit committees. The Treasury Board’s Directive on Internal Audit provides more details on the operation, composition, and overall function of these committees.

Purpose

  1. The Audit Committee, in exercising the powers and responsibilities set out in the Office of the Auditor General of Canada’s Audit Committee Charter, will provide oversight to the Office’s significant operational areas. These include the oversight of financial statements, accountability reporting, internal controls, practice reviews and internal audits, external audits, compliance with legislative and professional requirements, and reporting responsibilities. As necessary, the Committee will provide advice and recommendations to the Auditor General, and review reporting documents and processes.
  2. The Auditor General, as Accounting Officer pursuant to the Financial Administration Act, is ultimately responsible for receiving and considering the advice and recommendations of the Committee to inform decision-making.
  3. The Audit Committee will also oversee the functions of the Office’s Executive Committee and the leave usage and travel of the Auditor General.

Composition

  1. The Audit Committee is composed of three voting members, all of whom must be external members. The Auditor General will appoint Committee members and a Committee chair. The Committee has to include a majority of external members recruited from outside the federal public administration. The Auditor General may also appoint ex officio members, such as the Chief Financial Officer and General Counsel.
  2. All external Committee members will be both independent and financially literate. At least one member is to be a financial expert, who possesses a financial accounting designation.
  3. If any Committee member is (or if a member of the Committee believes a member could be) in a position of conflict that has not been disclosed formally, the member must consult with the Internal Specialist, Values and Ethics before meeting with the Audit Committee.
  4. All external Committee members are engaged by the Office for a term of four years, subject to annual approval by the Auditor General. Appointments should be staggered to ensure adequate continuity, with no member serving more than two terms, unless considered necessary by the Auditor General.

Powers of the Audit Committee

  1. The Audit Committee may request investigations or inquiries into any matters within its scope of responsibility. The Committee can request the Auditor General to provide independent counsel, accountants, or others to advise and assist the Committee.
  2. The Committee is empowered to inform the Minister of Finance of any concerns it has that it cannot resolve through the Office.
  3. The Chief Audit Executive (CAE) reports functionally to the Audit Committee and administratively to the Auditor General.

Responsibilities

  1. Oversight
  1. Provide objective advice and recommendations to the Auditor General on the sufficiency, quality, and results of internal audit engagements related to the adequacy and functioning of the Office’s frameworks and processes for risk management, controls, and governance.
  2. Provide advice and recommendations on matters for which the Auditor General, as Accounting Officer, is responsible and on other related matters as needed or requested by the Auditor General.
  1. Financial statements
  1. Understand the Office’s accounting policies and procedures for financial reporting.
  2. Review changes to accounting policies and to significant accounting and reporting issues, including complex or unusual transactions and highly judgmental areas, and to recent professional and regulatory pronouncements, as well as understand their impact on the financial statements.
  3. Review the annual financial statements and consider whether they are complete, consistent with information known to Committee members, and reflect appropriate accounting principles.
  4. Review with management and the external auditors all matters required to be communicated to the Committee under generally accepted auditing standards.
  5. Understand how management develops interim financial information and the nature and extent of internal and external auditor involvement.
  6. Review interim financial reports with management when they become available, and consider whether they are complete and consistent with the information known to Committee members.
  7. Review with management and the external auditors the results of the audit, including any difficulties encountered.
  1. Accountability reporting
  1. Review and recommend to the Auditor General the approval of the departmental plan, the departmental results report, and other significant accountability reports. These reports provide context for the deliberations of the committee and for its advice to the Auditor General.
  2. Review the Office’s performance measurement framework and performance indicators.
  1. Governance, risk management, and internal control
  1. Consider the effectiveness and adequacy of the Office’s management control framework.
  2. Consider the effectiveness and adequacy of the Office’s risk management framework.
  3. Review and discuss with the Auditor General and Chief Financial Officer the Office’s internal controls and procedures with respect to the information to be disclosed, any material control weaknesses, and fraud.
  4. Understand the scope of the Internal Audit function’s review of the governance, risk management, and internal control over financial and operational reporting, and obtain reports on significant findings and recommendations, together with management’s responses.
  5. Understand the scope of the external auditors’ review of the governance, risk management, and internal control over financial reporting, and obtain reports on significant findings and recommendations, together with management’s responses.
  6. Review and provide advice to the Auditor General on the risk-based assessment plans and results related to the effectiveness of the Office’s internal control over financial reporting.
  1. Practice reviews and internal audits
  1. Request each fall that the CAE confirm whether the Practice Review and Internal Audit (PRIA) team conforms to the PRIA Charter.
  2. Review periodically and recommend to the Auditor General the approval of the PRIA Charter, multi-year plans, reports, activities, staffing, and organizational structure.
  3. Review periodically and evaluate the reporting structure and responsibilities, to ensure that there are no impairments to the CAE’s and the PRIA team’s independence and objectivity, and develop, if needed, alternative processes to obtain assurance related to the areas of additional responsibility.
  4. Ensure that there are no unjustified restrictions or limitations to the PRIA team.
  5. Ensure that the CAE is reviewing and assessing the Office’s management of risk through active, continuous support and involvement in the risk management process, such as participation in oversight committees, monitoring activities, and status reporting.
  6. Monitor and assess the performance of the PRIA team in relation to its planned and emerging activities.
  7. Monitor the PRIA team’s internal audit plan, risk assessments, and engagement communications with respect to any potential impairments to independence and objectivity and more specifically as it relates to the CAE’s role in conducting practice reviews.
  8. Review and assess the status of actions taken by management in response to recommendations from the PRIA team and to recommendations from other external experts.
  9. Provide advice to the Auditor General on the performance, recruitment, appointment, and termination of appointment of the CAE, and on any disciplinary actions.
  10. Meet separately with the CAE on a regular basis to discuss any matters that the Committee or the PRIA team believes should be discussed privately.
  11. Provide oversight to ensure that the PRIA team is operating in compliance with the International Standards for the Professional Practice of Internal Auditing, the PRIA Charter, and the expectations of the Auditor General and the Audit Committee.
  12. Receive periodic updates from the CAE on the PRIA team’s quality assurance and improvement program.
  13. Discuss annually, or as required, the CAE’s independence, objectivity, and associated risks and safeguards in place for conducting practice reviews.
  1. External auditing
  1. Review the external auditors’ proposed audit scope and approach, including possible coordination of audit effort with the Internal Audit function.
  2. Review the performance of the external auditors and, if applicable, review the Canadian Public Accountability Board’s professional inspection of those external auditors (the Enhancing Audit Quality initiative).
  3. Review and assess the status of actions taken by management in response to recommendations from the external auditors.
  4. Review and confirm the independence of the external auditors by obtaining statements from the auditors on relationships between the auditors and the Office. This includes non-audit services and discussions on relationships with the auditors.
  5. Meet separately with the external auditors on a regular basis to discuss any matters that the Committee or auditors believe should be discussed privately.
  1. Compliance with legislative and professional requirements
  1. Review procedures for receipt and treatment of disclosures of wrongdoing received by the OAG under the Public Servants Disclosure Protection Act. In addition, in the event of a finding of wrongdoing, review and provide advice on information publicly accessible under section 11(1)(c) of the act.
  2. Review the findings of any examinations by regulatory agencies and any auditor observations.
  3. Review the findings of peer reviews by other supreme audit institutions and by the Canadian Council of Legislative Auditors; review the findings of provincial inspections by chartered professional accountants.
  4. Review the Office’s Code of Values, Ethics, and Professional Conduct and the process for communicating the Code to Office personnel and for monitoring compliance with the Code.
  5. Obtain regular updates from management on compliance matters.
  1. Reporting and other responsibilities
  1. Report annually to the Auditor General about the Committee’s activities, issues, and related recommendations.
  2. Review and assess annually the adequacy of the Audit Committee Charter and recommend the approval of appropriate changes to the Auditor General.
  3. Confirm annually that all responsibilities outlined in this Charter have been carried out.
  4. Evaluate the Committee’s performance. The Chair of the Audit Committee is to evaluate individual members’ performance on a regular basis.
  5. Provide during all Committee meetings an opportunity to facilitate communication among the PRIA team, the external auditors (when in attendance), and management.
  6. Provide direct access to the Chair of the Audit Committee, the CAE, and the external auditors.

Meetings

  1. The Audit Committee will meet at least four times per year and may convene additional meetings as circumstances require. All Committee members are expected to attend each meeting, in person or by teleconference or video conference. The Committee will invite members of management, internal and external auditors, or others to attend meetings and provide pertinent information as necessary. The Committee will hold private meetings with internal and external auditors and, if necessary, the Office’s senior management. Meeting agendas will be prepared and provided in advance to members, along with appropriate briefing materials. Minutes will be prepared.
  2. The quorum for an Audit Committee will be a simple majority of the voting members. No alternates shall be permitted.
Approved by:

Karen Hogan, CPA, CA
Auditor General of Canada
Office of the Auditor General of Canada

Bruce Joyce
FCPA, FCA (Ontario)
Chair of the Audit Committee
Office of the Auditor General of Canada

Louise Bertrand, CPA, CA, CIA
Chief Audit Executive
Office of the Auditor General of Canada

Date: 26 October 2021

Last modified:
2021-12-31