Annual Audit Manual
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11022 Our legislative responsibility to report “other matters”
Apr-2018
In This Section
Overview
This topic explains:
- The legislative responsibility of the Auditor General to report “other matters” in relation to Public Accounts of Canada, Crown corporations, and other entities
OAG Guidance
Sections 63 and 64 of the FAA, together Sections 5 and 6 of the Auditor General (AG) Act, contain the mandate for our examination of the Public Accounts. Section 5 of the AG Act constitutes the Auditor General as the auditor of the accounts of Canada and requires him to make such inquiries as he considers necessary to report as required by the AG Act. Section 6 of the AG Act specifically refers to the Public Accounts. The Auditor General is required to express his opinion as to whether the Public Accounts present fairly information in accordance with stated accounting policies of the government and on a basis consistent with that of the preceding year together with any reservations he may have. Although there is no particular direction to report any “other matter” in connection with the Public Accounts as is found in the FAA, Section 7 of the Auditor General Act does give the Auditor General the discretion to determine the content of his periodic reports to Parliament. Comments on the Public Accounts of an “other matters” nature could therefore be included in a periodic report.
See OAG Audit 11024.1 for examples of reporting “other matters” in Public Accounts.
CAS Requirement
If the auditor considers it necessary to communicate a matter other than those that are presented or disclosed in the financial statements that, in the auditor’s judgment, is relevant to users’ understanding of the audit, the auditor’s responsibilities or the auditor’s report, the auditor shall include an Other Matter paragraph in the auditor’s report, provided (CAS 706.10):
(a) This is not prohibited by law or regulation; and
(b) When CAS 701 applies, the matter has not been determined to be a key audit matter to be communicated in the auditor’s report.
When the auditor includes an Other Matter paragraph in the auditor’s report, the auditor shall include the paragraph within a separate section with the heading “Other Matter,” or other appropriate heading (CAS 706.11).
CAS Guidance
The placement of an Emphasis of Matter paragraph or Other Matter paragraph in the auditor’s report depends on the nature of the information to be communicated, and the auditor’s judgment as to the relative significance of such information to intended users compared to other elements required to be reported in accordance with CAS 700. For example (CAS 706.A16):
[…]
Other Matter Paragraphs
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When a Key Audit Matters section is presented in the auditor’s report and an Other Matter paragraph is also considered necessary, the auditor may add further context to the heading “Other Matter”, such as “Other Matter – Scope of the Audit”, to differentiate the Other Matter paragraph from the individual matters described in the Key Audit Matters section.
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When an Other Matter paragraph is included to draw users’ attention to a matter relating to Other Reporting Responsibilities addressed in the auditor’s report, the paragraph may be included in the Report on Other Legal and Regulatory Requirements section.
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When relevant to all the auditor’s responsibilities or users’ understanding of the auditor’s report, the Other Matter paragraph may be included as a separate section following the Report on the Audit of the Financial Statements and the Report on Other Legal and Regulatory Requirements.
OAG Guidance
Crown corporations
The legislative mandate for reporting “other matters” in relation to federal Crown corporations is most clearly articulated in Part X of the Financial Administration Act (FAA). Part X of the FAA describes, among other things, the framework of financial and management controls over Crown corporations.
Paragraph 132(2)(b) of the FAA requires the auditor to call attention in the annual auditor’s report to any other matter falling within the scope of the auditor’s examination for the report that, in his opinion, should be brought to the attention of Parliament. The FAA is silent on the types of issues that might constitute “other matters”. However, legislative language provides a clear direction for the auditor to exercise his or her judgment in determining whether, and on what, to report. What is noteworthy is the obligation to report, once the auditor has determined that an “other matter” exists. This obligation implies that if a potential “other matter” is identified during the course of an audit, the auditor’s report would not normally be finalized until the auditor reaches a decision as to whether or not an “other matter” exists.
The legislation requires that the “other matter” fall within the scope of the auditor’s examination for the report. In other words, there should be some relationship between the “other matter” and the annual financial statements and/or the significant legislative authorities being examined. This requirement is not usually onerous to satisfy. For example, most activities undertaken by a Crown corporation will have a financial impact, which automatically makes the “other matter” reportable.
Similar and specific requirements also exist for the auditor to report on “other matters” to the Legislative Assemblies of the territorial governments under their enabling legislation and under the individual territorial Financial Administration Acts for Territorial corporations.
See OAG Audit 11024.2 for examples of reporting “other matters” in Crown corporations
Other entities
We perform additional annual audits of the financial statements of other federal entities. There is a wide variety of legislation governing our annual audit mandate in these entities. In order to provide consistency and predictability for Parliamentarians regarding the nature and extent of information included in our annual auditor’s reports, we utilize the flexibility provided in Canadian Auditing Standards to report “other matters” in these entities.
See OAG Audit 11024.3 for examples of reporting “other matters” in other entities.
OAG Guidance
Similar and specific requirements also exist for the auditor to report on “other matters” to the Legislative Assemblies of the territorial governments under their enabling legislation and under the individual territorial Financial Administration Acts for Territorial corporations. See OAG Audit 11011, for further guidance.