Report of the Audit Committee to the Auditor General of Canada for the 2015–16 fiscal year


The Audit Committee serves in an oversight capacity with respect to significant operational areas within the Office of the Auditor General of Canada. These include the oversight of financial statements, accountability reporting, internal control, practice review and internal audit, external audit, compliance with legislative and professional requirements, and reporting responsibilities. As necessary, the Committee provides advice and recommendations to the Auditor General of Canada, and reviews reporting documents and processes. Through this advisory role, the Committee forms an essential component of the Office’s governance framework.

In keeping with provision 17 of the Audit Committee Charter, the Committee has prepared this report summarizing Committee activities, issues, and related recommendations for the fiscal year ended 31 March 2016.

Membership and meetings

The Audit Committee Charter, which was revised and approved by the Audit Committee during the year, requires that the Committee be composed of three voting members, all of whom must be external members who are financially literate and independent of the Office of the Auditor General of Canada. Bruce Joyce, Chair, and Brian Aiken were continuing members from the previous year, while Suzanne Morris joined the Committee in October 2015. Michael Ferguson, the Auditor General of Canada, who was a voting member of the Committee in the previous year, became an ex officio, non-voting member. He requested this change in membership to ensure the full independence of the Committee. In addition, Sylvain Ricard, Assistant Auditor General—Corporate Services and Chief Financial Officer (CFO), and Anne Marie Smith, Senior General Counsel, continued as ex officio, non-voting members.

Louise Bertrand, Chief Audit Executive (CAE), and Lucie Cardinal, Comptroller, attended the Committee’s meetings as observers and to respond to questions from members.

The Committee held four regular meetings during the fiscal year (16 April, 9 July, 29 October, and 21 January) as well as two special meetings (14 August and 3 September). At each regular meeting, the Committee allocated time for the voting members to have individual in camera sessions with both the CAE and CFO. The Committee also had in camera sessions with the external auditor (Collins Barrow Ottawa LLP) during the meetings, which the external auditor attended. In addition, the Chair had regular email exchanges, meetings, and phone conversations with the CAE, Comptroller, and external auditor. The Chair also encouraged external members to work with Office staff to support them in meeting their objectives.

Committee charter

On a regular basis, the Audit Committee reviews its terms of reference as it continues to develop operating routines to serve the Auditor General of Canada effectively. During the year, the Audit Committee Charter was updated to ensure that it was aligned with the Treasury Board’s 2012 directive and policy on internal auditing, the Treasury Board of Canada Secretariat’s 2012 standards on internal auditing, the Auditor General Act, and the Financial Administration Act. The charter was recommended for approval to the Auditor General at the October meeting. An annual work plan, which was developed to cover each area of the Committee’s responsibilities as set out in the charter, was presented and discussed at each meeting to ensure that the Committee would meet its objectives.

The Committee considers that its charter and work plan are suitably aligned with the Treasury Board’s guidance, and it has structured this report to demonstrate how it has addressed the Treasury Board’s eight key areas of oversight responsibility.

Eight areas of oversight responsibility

1. Values and ethics

During its October 2015 meeting, the Committee was briefed on how the Office of the Auditor General of Canada applies its Code of Values, Ethics and Professional Conduct. The Committee also received information on the Office’s handling of issues concerning respect in the workplace, conflicts of interest, harassment, and discrimination.

2. Risk management

The Committee received and reviewed the Corporate Risk Profile that resulted from the Office’s annual risk review as well as the Internal Control Report and 2016 Work Plan.

As part of its assessment of the risk-based Practice Review and Internal Audit (PRIA) plan, the Committee also considers and reviews how the Office addresses risk management issues from an audit perspective.

3. Management control framework

The Committee is updated annually on what the key management issues are and on how procedures have been adopted to mitigate concerns and produce desired results. The Office addresses issues concerning the delivery of professional services and products separately from issues concerning administrative and finance activities.

By receiving briefings on the results of the annual practice reviews, the Committee continues to be informed of progress and challenges in the area of management control.

The Committee stays informed of ongoing activities by reviewing copies of the most recent summary management reports and selected other reports at each meeting. In particular, the Committee examines quarterly reports that summarize the Auditor General’s spending on travel, leave, and hospitality. The Committee also reviews quarterly reports outlining major contracts and contracting exceptions.

In October 2015, the Committee received an update on the plan for the Monitoring Report on the System of Quality Control—2014, in accordance with the requirements of Canadian Standards on Quality Control, and reviewed the final report in January 2016.

4. Practice Review and Internal Audit function

The hallmark of the Office is the reliability and integrity of the reports produced by its various audits and other examinations. Accordingly, emphasis and attention are directed to ensuring that the System of Quality Control for all product lines is operative and effective. This is done by periodically assessing the design of the quality management systems and by annually conducting systematic and rigorous practice reviews on a basis that covers all senior practitioners over a multi-year cycle.

The Committee provided advice that internal audit activities should be evaluated for conformance with the International Standards for the Professional Practice of Internal Auditing. As part of this process, the PRIA Charter was updated and aligned with the Office’s Protocol for Practice Reviews and Internal Audits (2013), which has been integrated with the PRIA Charter, the Treasury Board’s 2012 directive and policy on internal auditing, and the Treasury Board of Canada Secretariat’s 2012 standards on internal auditing. The revised PRIA Charter was recommended for approval to the Auditor General at the October 2015 meeting and subsequently approved by him.

In July 2015, the Committee received both the Report on a Review of the Annual Audit Practice and the Report on a Review of the Direct Report Audit Practice. The Committee recommended these reports for approval to the Auditor General, who subsequently approved both of them.

The Committee received the report on findings and recommendations arising from the internal audit of integrated human resource planning. The Committee was satisfied with the report and with management’s response to recommendations, and the report was recommended for approval to the Auditor General.

At each meeting, the Committee is updated by the Chief Audit Executive on audits in progress, staffing issues, and other matters affecting PRIA.

The Committee considers that the internal audit function

The Committee is satisfied that the PRIA team continues to operate in line with relevant guidance and is performing its role in a satisfactory manner.

5. External assurance providers

The Committee is briefed on the findings of any examination by external oversight bodies and of any annual report on the status of management action plans.

In addition, the Committee met in April 2015 and July 2015 with the external auditor (Collins Barrow Ottawa LLP) to be briefed on the respective plans for, and results of, the audit of the Office’s 31 March 2015 financial statements. The Committee also met with the external auditor in January 2016 for a preliminary discussion on the audit of the 31 March 2016 financial statements. During the year, the Committee performed for the first time an annual assessment of the external auditor and discussed the results with the external auditor in January 2016.

6. Follow-up on management action plans

The Committee attaches a high priority to assessing the responsiveness and timeliness of management action plans and to monitoring their implementation. Accordingly, a revised systematic and thorough approach has been adopted to ensure the receipt of progress reports until each action point is resolved.

As a matter of practice, the Committee receives periodic updates on plans to address findings from internal audits until all points are cleared.

7. Financial statements and Public Accounts of Canada reporting

Management briefed the Committee on the preparation of the financial statements, including the preparation of estimates and the choices of accounting policies. The Committee recommended the approval of the audited financial statements for the year ended 31 March 2015 to the Auditor General, who subsequently approved them.

8. Accountability reporting

In July 2015, the Committee was briefed on the Performance Report of the Office of the Auditor General of Canada for the 2014–15 fiscal year, including the related audited financial statements. The Committee reviewed the draft document, provided comments, and recommended the amended report for approval to the Auditor General.

At the April 2015, October 2015, and January 2016 meetings, the Committee received the most recent versions of the quarterly financial statements. As noted last year, these reports must be prepared on an expenditure basis of accounting, rather than on the accrual basis of accounting that is used for year-end reporting.

In addition, prior to the January 2016 Committee meeting, Committee members reviewed the draft Report on Plans and Priorities for the 2016–17 fiscal year and provided comments. The Committee recommended the approval of the final report to the Auditor General at the January 2016 meeting.

The Committee was also briefed on a project being undertaken by the Office to review compliance with all applicable legislation, regulations, Treasury Board policies and directives, and Treasury Board of Canada Secretariat standards. They were also briefed on the Policy on Access to Information as it applies to the Office and on how requests are handled.


The briefings and reports presented to the Audit Committee during the 2015–16 fiscal year, together with the experience of prior years, have provided the Committee with a sound understanding of the key issues facing the Office of the Auditor General of Canada. The Committee found management and staff to be candid and clear on the challenges they face and to be receptive to the Committee members’ comments and suggestions.

The Committee notes that the Office sets very high standards for the quality of its audit products and that it has a satisfactory methodology to conduct reliable audits and studies. In addition, the Committee believes that the system of management control is satisfactory for the Office’s needs.

Overall, the Committee concludes that the Office has a rational and systematic approach to addressing its mandate, to monitoring results, and to reporting to Parliament and the public.

April 2016