11024 Reporting “other matters” in accordance with our additional reporting responsibilities

Apr-2018

OAG Guidance

This section deals only with “other matters” reported in accordance with our legislative responsibilities to report any significant matter that, in our opinion, should be brought to the attention of Parliament. The expression “other matter” used in this section always refers to our other legislative audit reporting responsibilities. See OAG Audit 8014 for further guidance on Emphasis of Matter and Other Matter paragraphs reported in the context of our responsibilities as auditor of the financial statements.

“Other matters” are reported in accordance with the requirements set out in CAS 700.43. – Other reporting responsibilities. Accordingly, “other matters” identified during annual audits are reported in a separate paragraph of the Auditor’s Report under the section “Report on Other Legal and Regulatory Requirements”. If our auditor’s report includes an opinion on compliance with legislative authorities, then any “other matter” is presented after this opinion.

There should be consultation between the audit team and Audit Services as the “other matters” paragraph is being drafted. The main challenge in describing an “other matter” is to present a clear, concise and compelling message to Parliamentarians that facilitates their understanding of the nature and significance of the issue.

Reporting beyond the entity’s financial statements

Because “other matters” are of a nature and significance that should be brought to the attention of Parliament, reporting beyond the strict confines of the entity’s annual financial statements is often appropriate.

The nature of an auditor’s report dictates that only a concise description of the “other matter” can be provided. Accordingly, other reporting vehicles are often used to help ensure that Parliamentarians are provided with the background information and other relevant details that are often crucial to developing a full appreciation of the “other matter”. These vehicles include: our Reports to Parliament, (the Auditor General’s Matters of Special Importance and performance audit chapters), the Auditor General’s Observations on the Financial Statements of the Government of Canada and our Auditor General’s Report to the Yukon/NWT/Nunavut Legislative Assemblies (also more commonly known as the Report on Other Matters or ROM). The nature of the vehicle chosen for additional reporting depends, primarily, on the nature of the entity.

OAG Guidance

The Report Clearance Summary or Issue documented in the audit working paper software should include a comprehensive discussion of any proposed “other matter” including a full description of:

• the nature of the “other matter”;
• management’s perspective;
• the perspective of Internal Specialists and other specialists consulted; and
• any potential sensitivities.

OAG Guidance

Reporting to the Audit Committee

When we expect to include in the Auditor’s Report an other matter paragraph, we shall communicate with the Audit Committee on a timely basis. We communicate in a manner that explains the nature of any specific matters and provide the Audit Committee with the opportunity to obtain further clarification where necessary. We provide also proposed wording to be included in the Auditor’s report. The significance of the matter and the Audit Committee’s ability to help resolve or clarify the matter if necessary will impact the timing of this communication. If significant and the Audit Committee may help resolve a matter, communication should occur as early as practicable.

Audit committee members should never be surprised that we might report an “other matter.” Our Report to the Audit Committee describing our plan for the audit should always include a clear description of our annual audit mandate, including our responsibilities relating to “other matters.” In addition, communication with the Audit Committee on a timely basis will prevent any surprise.

Because both management and the audit committee may have serious concerns about an “other matter” being reported, it is important the Office position be clearly explained and any potential next steps identified (such as extended reporting in one of our other reporting vehicles).

Management letter

Not all potential “other matters” will be of significance and/or of a nature that we should bring them to the attention of Parliament. There may be value, however, in bringing these matters of lesser significance to the attention of senior management through our management letter. This would be the case where there are specific activities that management, and not the Audit Committee or Parliament, should undertake.

OAG Guidance

Office practice is to obtain a management representation letter on each of our annual audit engagements. Where “other matters” embody critical facts or assertions made by management, these should be included in the entity’s management representation letter.

When the team believes that it is necessary to include specific management representations related to the “other matter,” the appropriate wording should be developed in consultation with Audit Services.

OAG Guidance

The circumstances that lead to us reporting an “other matter” may persist for several years. Accordingly, the audit team should normally continue to report the “other matter” until it is addressed. (for example, see OAG Audit 11024.1—Two other matters were reported in the Auditor’s Report on the Summary financial statement of the Government of Canada four consecutive years.)

Since “other matters” are issues that we believe need to be brought to the attention of Parliament, there are generally actions that we hope that Parliament will take in response to the “other matter(s)” we have raised. While we are able to bring them to Parliament’s attention through our annual auditor’s report, we do not control Parliament’s agenda. Consequently, it may be some time before Parliament responds to our reports. The engagement leader, in consultation with the Auditor General, should develop a strategy for engaging Parliament to examine any “other matter” we have reported.

In circumstances where an “other matter” persists for an extended period of time, we would continue to report the “other matter” in our annual auditor’s report until:

• Parliament deals with the matter; or
• Parliament indicates that it will take no further action; or
• Despite our best efforts over a reasonable period of time, we have been unable to engage Parliament’s interest and the Auditor General is satisfied that no further action is warranted.

We would always perform follow up procedures during the subsequent year’s audit. Those procedures would be sufficient to provide audit level assurance regarding the current status of the “other matter.”

Related Guidance

Communicating Deficiencies in internal control to those charged with Governance and Management—OAG Audit 2220

Audit Reporting—OAG Audit 8010

Management representations—OAG Audit 9050

Reporting “other matters” in the Public Accounts of Canada—OAG Audit 11024.1

Examples of “other matters” reported in Crown corporation auditor’s reports—OAG Audit 11024.2

Examples of “other matters” reported in other entities auditor’s report—OAG Audit 11024.3