What to Expect—An Auditee's Guide to the Performance Audit Process

2—Interaction with departmental audit committees

Background

In April 2006, a new Treasury Board Policy on Internal Audit and related instruments came into effect. The policy is being phased in over a three-year period and calls for a review of the implementation to be conducted six months prior to April 2009, to determine if changes to the policy are required. The policy applies to departments and agencies defined as departments within the meaning of section 2 of the Financial Administration Act.

Among other measures, the policy calls for the deputy head of each department, other than small departments and agencies, to establish a departmental audit committee that includes a majority of external members who are not current members of the federal public service. The Treasury Board has also approved a directive that provides direction to deputy heads on the responsibilities, membership, and operations of departmental audit committees. (It has also approved the Directive on Small Departments and Agencies Audit Committee, which includes similar provisions.) The Treasury Board of Canada Secretariat is drafting guidance to help committee members exercise their responsibilities.

Departmental audit committees are not charged with any departmental management or governance responsibility or authority but serve as advisors to the deputy head or equivalent. According to the Treasury Board of Canada Secretariat, the fundamental role of these audit committees is to support the deputy head or equivalent in fulfilling his or her oversight responsibilities as the departmental accounting officer by providing advice on the adequacy of the department's control and accountability processes.

The Office of the Auditor General (the Office or OAG) welcomes and supports initiatives to strengthen departmental oversight, including a requirement for external membership on departmental audit committees.

What departmental audit committees can expect from the Office of the Auditor General

The OAG wants to work with departmental audit committees while maintaining its objectivity and preserving its independence from government. When senior OAG staff are invited by the committee chair to appear at committee meetings as observers, they will make every effort to attend these meetings. To that end, it is important that the Office is notified of the committee's meeting schedule and, where applicable, that the committee's work respects the Office's timelines for finalizing its audit reports.

The Office welcomes the opportunity to inform departmental audit committees about its audit plans and encourages and appreciates receiving their input thereon. It also welcomes the opportunity to discuss its audit reports with the departmental audit committees to explain audit findings after entity management has had the opportunity to confirm and validate the facts.

The Office encourages departmental audit committees to play an active role in reviewing and assessing the adequacy of entity's responses and action plans, and in monitoring the implementation of audit recommendations.

The deputy head may share OAG audit information with members of the departmental audit committee and is accountable for ensuring that this is done in a manner that protects the confidentiality of the information. In the case of numbered/controlled documents, it is the deputy head's responsibility to ensure that information is shared in a manner that complies with the letter (Entity Notification and Custody of Drafts) that he/she signs at the beginning of the audit.

The Office welcomes the committee's views on the content of OAG audit documents. However, with respect to draft audit reports, the Office will not confirm and validate fact-based audit information with departmental audit committees as these documents are finalized through the normal OAG process with appropriate entity officials.

It is reasonable to anticipate that newly constituted departmental audit committees will need a certain period of time to achieve their full role and functions. The manner in which the OAG interacts with departmental audit committees may need to be updated once the Office starts expressing an opinion on departmental financial statements and/or as experience in the operation of the committees is gained.

Additional resources

Related information sheets

Interaction with departmental audit committees

OAG

Audited Entity

When senior OAG staff are invited by the committee chair to appear at departmental audit committee meetings as observers, they will make every effort to attend these meetings.

The secretary of the departmental audit committee is expected to notify OAG staff of the committee's meeting schedule and to inform the Office when it is invited by the committee chair to attend a committee meeting.

The OAG welcomes the opportunity to inform the departmental audit committee about its audit plans.

The work of the departmental audit committee concerning OAG matters is expected to respect the Office's timelines for finalizing its audit reports, where applicable.

The OAG welcomes the opportunity to discuss its audit reports with the departmental audit committee to explain audit findings after entity management has had the opportunity to confirm and validate the facts.

When the opportunity arises, the departmental audit committee is expected to provide input on OAG audit plans as it deems appropriate, and to discuss matters of mutual interest.

The OAG encourages the departmental audit committee to play an active role in reviewing and assessing the adequacy of entity responses and action plans, and in monitoring the implementation of audit recommendations.

The departmental audit committee is expected to actively review and assess the adequacy of entity responses and action plans, monitor the implementation of audit recommendations, and advise the deputy head accordingly.

The OAG provides its audit documents directly to appropriate entity officials who may, at their discretion, share them with the departmental audit committee.

The deputy head is expected to be accountable for ensuring that OAG audit information that the entity shares with the departmental audit committee is protected in a manner that ensures the confidentiality of the information.

In the case of OAG numbered/controlled documents, the deputy head is expected to be responsible for ensuring that information is shared in a manner that complies with the letter (Entity Notification and Custody of Drafts) that he or she signs at the beginning of the audit.