Report of the Audit Committee to the Auditor General of Canada for the 2016–17 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 it 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 18 of the Audit Committee Charter, the Committee has prepared this report summarizing the Committee’s activities, issues, and related recommendations for the fiscal year ended 31 March 2017.

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, Brian Aiken, and Suzanne Morris were continuing members from the previous year. Michael Ferguson, the Auditor General of Canada, Sylvain Ricard, Assistant Auditor General—Corporate Services and Chief Financial Officer, and Anne-Marie Smith, Senior General Counsel, continued as ex officio, non-voting members.

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

The Committee held four regular meetings during the fiscal year (14 April, 14 July, 14 October, and 9 January). At each meeting, the Committee allocated time for the voting members to have individual in camera sessions with the Chief Audit Executive, Chief Financial Officer, and the Auditor General. The Committee also had in camera sessions with the external auditor (Collins Barrow Ottawa Limited Liability PartnershipLLP) during the meetings that the external auditor attended. In addition, the Chair had regular email exchanges, meetings, and phone conversations with the Chief Audit Executive, Comptroller, and external auditor. The Chair also encouraged external members to work with Office staff to support them in meeting their objectives.

As a part of the Committee’s oversight and monitoring responsibilities, the Committee also invited an Assistant Auditor General or Principal to each meeting to gain further insight into senior managers’ responsibilities and into how they implement those responsibilities. This initiative is part of the Committee’s ongoing acquisition of knowledge of the Office’s business environment and management team. This initiative also facilitates management’s understanding of the Audit Committee’s role.

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. In the previous year, the Audit Committee updated its charter to ensure the charter 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. In the current year, the charter was further updated to align with the recommendations of the Institute of Internal Auditors’ International Standards for the Professional Practice of Internal Auditing. The Committee recommended the charter for approval to the Auditor General at the October meeting, who subsequently approved it. An annual work plan, which was developed to cover each area of the Committee’s responsibilities as set out in the charter, was presented at each meeting to ensure that the Committee would meet its objectives.

The Committee considers that its charter and work plan suitably align 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

At the April 2016 meeting, the Committee was provided with an annual update on any complaints the Office received regarding accounting, internal controls, and auditing matters, including employees’ confidential, anonymous submissions of concerns. The Committee was also informed of the Office’s procedures for dealing with these types of complaints.

During its October 2016 meeting, the Committee was briefed on the process the Office used to obtain an annual declaration on conflict of interest and independence from all active employees as well as the follow-up procedures the Office employs when a potential conflict is identified. The Committee was also briefed on the separate process the Office uses to confirm independence on each of its specific audit engagements.

In addition, the Senior General Counsel updated the Committee on compliance matters at each meeting.

2. Risk management

The Committee received and reviewed the 2016 Corporate Risk Profile that resulted from the Office’s annual risk review. The Committee was also provided with an update of the Office’s progress in terms of the five major initiatives identified in the 2016 work plan, which was included in the 2015 Internal Control Report.

As part of its assessment of the Practice Review and Internal Audit—Risk-Based Plan for the 2016–2017 to 2018–2019 Fiscal Years, the Committee also considered and reviewed how the Office addresses risk management issues from an audit perspective.

3. Management control framework

Each year, management updates the Committee on its key issues and on how it has adopted procedures 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 financial activities.

By providing briefings on the results of the annual practice reviews, Practice Review and Internal AuditPRIA continues to inform the Committee of its 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 July 2016, the Committee also received the summary findings of both the Office’s review of its executive travel and hospitality spending and its annual assessment of internal controls over financial reporting.

In October 2016, management provided the Committee with a briefing on the planned 2017 financial audit summary report, which was being prepared to highlight the value added from the Office’s financial audit practice. Management also provided the Committee with an internal Annual Audit Practice Retrospective Report designed to assist with managing the practice by providing information on the most recent annual audit cycle.

Also in October 2016, the Committee received an update on the plan for the Monitoring Report on the System of Quality Control—2015–16 Fiscal Year, which the Office prepares in accordance with the requirements of Canadian Standards on Quality Control.

4. Practice Review and Internal Audit function

The Office’s hallmark is the reliability and integrity of its reports for its various audits and other examinations. Accordingly, the Office focuses on ensuring that the System of Quality Control for all product lines is operating and is effective. Each year, the Office conducts systematic and rigorous practice reviews that cover all senior practitioners over a multi-year cycle to assess the design of the quality management systems.

During the year, the PRIA Charter and the Audit Committee Charter were updated and aligned with updated professional standards and guidance. The Committee recommended the revised charters for approval to the Auditor General at the October 2016 meeting, and he subsequently approved them.

In April 2016, the Committee received the Report on a Review of the Financial Audit Practice, and in July 2016, the Committee received the Report on a Review of the Direct Engagement Audit Practice. The Committee recommended these reports for approval to the Auditor General, who subsequently approved them.

The Committee received and reviewed PRIA’s report on the findings and recommendations arising from its self-assessment of its internal audit activities.

At each meeting, the Chief Audit Executive updates the Committee 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 performs 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, this year, the Committee received regular updates regarding the status of the Office’s readiness assessment project for an upcoming International Peer Review that is anticipated for the 2018–2019 fiscal year.

The external auditor (Collins Barrow Ottawa LLP) met with the Committee in April 2016 and July 2016 to brief the Committee on the respective plans for and results of the audit of the Office’s 31 March 2016 financial statements.

During the year, the Committee performed an assessment of the external auditor, and the Chair discussed the results with the external auditor in January 2017.

6. Follow-up on management action plans

The Committee prioritizes assessing the responsiveness and timeliness of management action plans and monitors their implementation. Accordingly, the Committee uses a systematic and thorough approach to ensure it receives progress reports until each action item is resolved. Management provides the Committee with regular updates on plans to address findings from internal audits until all items 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 fiscal year ended 31 March 2016 to the Auditor General, who subsequently approved them.

8. Accountability reporting

In July 2016, the Committee was briefed on the Office of the Auditor General of Canada—2015–2016 Performance Report, 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, who subsequently approved it.

At the April 2016, October 2016, and January 2017 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, at the January 2017 Committee meeting, Committee members reviewed the draft Office of the Auditor General of Canada 2017–18 Departmental Plan and provided comments. The Committee recommended approving the final report to the Auditor General at this meeting, who subsequently approved it.

Management also provided the Committee with quarterly briefings on the Office’s project to review compliance with all applicable legislation, regulations, Treasury Board policies and directives, and Treasury Board of Canada Secretariat standards. Management also briefed the Committee on the Policy on Access to Information as it applies to the Office and on how the Office handles requests.


The briefings and reports presented to the Audit Committee during the 2016–17 fiscal year, together with the experience of previous years, have provided the Committee with a sound understanding of the key issues the Office of the Auditor General of Canada faces. The Committee found management and staff were candid and clear on the challenges they face and were receptive to the Committee members’ comments and suggestions.

The Committee notes that the Office sets 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 internal controls 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 2017