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

In the reporting phase, the audit team formally presents, in writing, the observations, conclusions, and recommendations relative to the objectives of the performance audit.

The Office of the Auditor General (the Office or OAG) produces two key audit draft chapters:

• the audit principal's draft chapter (the first draft chapter for external comment, commonly referred to as the PX draft chapter); and
• the transmission draft chapter (the final draft issued before publication, commonly referred to as the DM draft chapter).

The OAG's auditing standards require that the Office provide audited entities with an opportunity to review and comment on draft audit chapters for confirmation and validation of facts before they are published. The two draft chapters are the key iteration points in the audited entity's review of the chapter.

After issuing the PX draft chapter, the OAG will seek entity management's views concerning the validity and completeness of audit observations, conclusions, and recommendations. The Main Points, set out at the beginning of the chapter, are selected highlights designed to provide parliamentarians with a useful summary of what the audit examined, why it's important, and what was found. Although audited entities may comment on Main Points in a chapter, the issues included in this section are determined by the OAG.

Audited entities will receive numbered/controlled copies of the PX draft chapter. Where more than one entity is included in the scope of an audit, an audited entity may receive only those portions of the chapter that are relevant to it, as noted in the information sheet on multi-entity audits. Audited entities normally have three weeks to provide their comments on this draft. This time frame is subject to such factors as the extent to which substantive discussions between the audit team and entity officials have already occurred, the nature of the audit subject itself, and the complexity of the entity's internal review procedures.

The OAG asks the audited entity to provide comments on its agreement or disagreement with the content of the draft, normally within three weeks of receipt of the PX draft. To this end, the OAG requests consolidated comments of the audited entity on the validity and completeness of audit observations, conclusions, and draft recommendations. These comments must be in writing and be signed. The audit team may need to meet with entity officials to discuss the entity's comments, to gain a full understanding of the comments and/or to obtain any additional significant information related to the comments. Such meetings are normally limited in number and should be scheduled within a period that meets the OAG's report production schedule as indicated in the entity plan summary.

As a matter of professional courtesy, extracts of the PX draft chapter will be sent for confirmation and validation of facts to other federal entities not included in the scope of the audit, including Crown corporations, and to other third parties who are named directly or indirectly in the chapter. Since these third parties will receive only limited extracts, they may wish to contact officials of the audited entity for additional contextual information. In the covering letter sent to a third party, the OAG will normally provide the name of the audited entity's OAG contact/liaison person (who will also receive a copy of the third party letter).

As noted in the information sheet on developing and responding to recommendations, within one week of receipt of the entity's response to the PX draft chapter, the audit team will send a letter including all of the draft recommendations (modified, as appropriate, to reflect the earlier discussions) to the deputy head or other senior entity management (usually at the ADM level). The letter will also request the entity's draft response to the recommendations, which should be provided within three to four weeks.

After receiving the comments from the audited entity and others, the audit team considers their substance and revises the PX draft chapter, as appropriate. The team will then submit to the deputy head a transmission draft chapter that includes the audited entity's draft responses to recommendations. The deputy head will sign off on the chapter, providing final comments and confirmation that the responses are final.

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.

Derivative communications. Occasionally, the OAG identifies issues that are less important than those included in the report to Parliament, or that fall outside the scope of the audit, but that it believes are of interest to the audited entity. These issues may require follow-up and corrective action by entity management. In such instances, the OAG will communicate these issues in a timely manner (usually within one month of tabling of the related report of the Auditor General or the Commissioner of the Environment and Sustainable Development) to the deputy head of the audited entity or the head of the entity's internal audit function, as appropriate, through a management letter, a slide presentation, or verbal communication. If a management letter is issued, the OAG may request a written response to the matters raised in it, including any proposed actions to be taken, together with a target completion date. The OAG may also choose to follow up on these issues at a later date.

Related information sheets

• Interaction with departmental audit committees
• Developing and responding to recommendations
• Multi-entity audits
• A road map for performance audits
• Glossary of terms

Steps and interaction between the OAG and the audited entity in the reporting phase