What to Expect—A Crown Corporation’s Guide to a Special Examination
What to Expect—A Crown Corporation’s Guide to a Special Examination
Table of Contents
- A message from the Auditor General of Canada
- 1. Introducing special examinations
- 2. Phases of a special examination
- 3. Recommendations and responses
- 4. Report distribution
- 5. Tabling
- 6. After a special examination
- 7. Information access and security
- 8. Handling and treating information
- 9. Interactions with internal audit offices
Questions often arise about how we conduct our special examinations—more specifically, what Crown corporations that we audit can expect from us and what we expect of them. The purpose of this document is to provide answers to these questions by outlining
- our objectives,
- the principles governing interactions between auditors and auditees, and
- information about our audit process.
The underlying principles that guide the work of the Office of the Auditor General of Canada are ensuring respectfulness, trust, and integrity while maintaining our independence, professionalism, and objectivity.
Ultimately, the aim is to better serve Parliament and Crown corporations’ boards of directors by ensuring that our special examination reports and recommendations are fair and objective, and are seen to be fair and objective by those responsible for making the changes we propose. Our recommendations are intended to improve the systems and practices in Crown corporations for the safeguarding of public assets, the economical and efficient use of resources, and the effectiveness of operations.
We hope that this information provides corporation officials with a valuable reference that will encourage productive and respectful relations between Crown corporations and my audit staff.
For some Crown corporations, the FAA has appointed the OAG and a co-examiner as joint auditors. In these instances, both examiners prepare a joint report on the results of the special examination and each examiner assumes an obligation for the entire audit.
A special examination is one of the types of audit carried out by the Office of the Auditor General of Canada (OAG). Special examination audits are mandated by the Financial Administration Act (FAA). The objective of a financial audit is to provide an opinion on the fair presentation of the corporation’s financial statements in accordance with generally accepted accounting principles. In a special examination, the OAG concludes on whether the corporation’s systems and practices selected for examination provide reasonable assurance that
- its assets are safeguarded and controlled;
- its financial, human and physical resources are managed economically and efficiently; and
- its operations are carried out effectively.
These are known as the statutory control objectives, and the FAA requires Crown corporations and each wholly-owned subsidiary to maintain systems and practices that provide reasonable assurance that they have been achieved.
Special examinations are planned, performed, and reported in accordance with professional auditing standards and with policies of the Office of the Auditor General of Canada (OAG). Audits are conducted by qualified auditors who
- establish the criteria for the assessment of performance,
- gather the evidence necessary to assess performance against the criteria,
- report both positive and negative findings,
- conclude against the established audit objective, and
- make recommendations when there are significant risks to the entity and findings demonstrate the potential for significant improvement in performance.
The main audience of a special examination report is Parliament, even though the report is addressed to the board of directors and made public by the Crown corporation. Therefore, special examinations contribute to a government that is accountable to Parliament and Canadians.
Special examinations do not question the merits of corporate or public policies. Rather, they examine whether the corporation’s systems and practices in place provide reasonable assurance that the statutory control objectives are achieved.
Under subsection 138(1) of the Financial Administration Act (FAA), “Each parent Crown corporation shall cause a special examination to be carried out in respect of itself and its wholly-owned subsidiaries, if any.” This usually translates in practice into the corporation indicating its acceptance and acknowledgement of the special examination by signing an engagement and solicitor-client privilege letter it receives from the Office of the Auditor General (OAG).
It is a Crown corporation’s responsibility to cause a special examination to be carried out at least once every 10 years. If required, additional special examinations may be carried out prior to the expiry of the 10-year statutory period. An additional special examination may be requested by the Governor in Council, the appropriate Minister, the board of directors, or the Auditor General of Canada. In cases where an additional special examination is required by the Auditor General, the examination team communicates the Office’s intention to carry out a special examination by sending the Crown corporation an engagement and solicitor-client privilege letter.
A special examination involves the following:
Audit team—A team of auditors responsible for conducting an audit. The team reports to an engagement leader and may include contract staff assigned to the team.
Auditor—A member of an audit team who may be either an OAG employee or contract staff assigned to the team.
Engagement leader—Usually an OAG Audit Principal with the overall responsibility for conducting special examinations. The engagement leader manages the entire audit cycle and ensures the quality of audit products produced by the team.
Entity principal—An OAG Audit Principal designated to serve as the senior liaison or point of contact between the OAG and the audited entity. The entity principal coordinates with other OAG teams on audits affecting the entities for which he or she is responsible.
Lead auditor—Usually an OAG Audit Director who manages on a day to day basis the audit project and a team of auditors.
A special examination may also involve the following:
Adviser—An individual recognized as a leader in a field of expertise and selected by the audit team to advise—but not decide—on the scope and significance of audit issues, lines of enquiry, identified risks, and audit scope. An adviser may be internal or external to the OAG and is selected on the basis of skills, expertise, relevant knowledge on a particular topic, and experience.
A special examination consists of three phases:
- examination, and
The audit team of the Office of the Auditor General of Canada (OAG) acquires appropriate knowledge of the corporation, the systems and practices to be audited, and the current issues facing the corporation.
The audit team makes various inquiries as part of the planning phase, to obtain a good understanding of the Crown corporation being audited. Some specific inquiries are in fact required by audit standards. The team uses this knowledge to develop its audit strategy, which includes a Special Examination Plan and audit programs. The team also identifies its initial information needs and specifies areas in the entity and locations or sites where the team expects to conduct preliminary fact finding. This information is used to inform the audit strategy.
The statutory control objectives are quite broad, and it is impractical and unnecessary to examine all systems and practices of a Crown corporation. One of the first things the OAG does when planning a special examination is to decide which systems and practices are essential to maintain in a manner to achieve the statutory control objectives. The selection of essential systems and practices follows a risk-based approach whereby the audit team
- reviews risks arising from the corporation’s mandate,
- considers current challenges and business risks in the corporation’s operating environment, and
- incorporates the systems and practices that represented a significant deficiency or warranted a recommendation for improvement in the previous special examination report.
Based on the audit team’s own knowledge and experience, and consultations with the corporation we are auditing, we then develop an audit strategy, which includes a Special Examination Plan and audit programs.
The audit team will meet with the audit committee to discuss the Special Examination Plan, including the audit objective, the criteria against which the corporation’s systems and practices will be measured, the expected timing of key communications and phases of the special examination, and any questions the audit committee may have concerning the examination phase. If there are any subsequent changes to the Special Examination Plan, the audit team will resubmit the plan or an addendum to the audit committee and meet again as appropriate. While no formal acceptance of the plan is required, the audit committee usually makes a resolution to accept the plan.
The team also identifies its initial information needs and specifies areas in the corporation and locations or sites, if applicable, where the team expects to conduct preliminary fact-finding.
Notification to the corporation. To initiate the special examination, the OAG sends an engagement and solicitor-client privilege letter to the Head of the Crown corporation (such as the CEO). This letter formally notifies the Head of the corporation of the OAG’s intention to conduct a special examination and requests timely access to information and personnel. According to the Financial Administration Act (FAA), the OAG may request access to, among other things, documents that may be subject to solicitor-client privilege or to other privileges. The Crown corporation’s disclosure of such documents to the OAG does not amount to a waiver of any privilege attached to the documents. The corporation will be asked to confirm, in writing, its understanding of the terms of the engagement outlined in this letter, within two to three weeks of its receipt of the letter.
A Special examination provides an independent conclusion on whether there is reasonable assurance that a Crown corporation has systems and practices in place to ensure that its statutory objectives are achieved. This means that the Office of the Auditor General of Canada (OAG) requires sufficient, appropriate evidence to give an opinion on the corporation’s systems and practices selected for examination. There is a need to ensure not only that the systems and practices are well designed, but also that they are functioning as intended to help meet the statutory control objectives. Therefore, during the examination, the corporation can expect the audit team to request documents and interviews to ensure there is sufficient and appropriate evidence to assess against the criteria. This includes requesting any documents or interviews needed from the corporation’s internal audit function, as outlined in the Special Examination Plan.
Early in this phase, the team indicates any plans to rely on work conducted by, or on behalf of, the corporation’s internal audit function.
The audit team formally presents, in writing, the findings against the criteria used, the conclusion against the audit objective and the recommendations relative to the audit objective through two key audit report drafts provided for external comment:
- the principal’s (PX) draft report sent to the management of the Crown corporation, and
- the transmission draft report for the audit committee, which is the near-final draft of the special examination report.
Consistent with sub-paragraph 139(2)(a) of the FAA, each special examination report must include a statement on whether in the examiner’s opinion and based on the established criteria, reasonable assurance exists that there are no significant deficiencies in the Crown corporation’s systems and practices examined. The special examination opinion statement serves as a basis for the conclusion against the audit objective and is included in the conclusion paragraph in the audit report.
Before finalizing a report, the OAG provides corporations with the opportunity to review and comment on draft audit reports to validate facts, and to provide responses to any recommendations for inclusion in the final audit report.
After the audit team receives management’s responses to recommendations contained in the PX draft report, it will provide the transmission draft report, including the responses, to the audit committee prior to submitting it to the board of directors. The purpose of this review is to allow members of the audit committee to ask questions to the OAG that will help them understand the report and subsequently provide advice to the board of directors. The OAG encourages the audit committee to play an active role in reviewing and assessing the adequacy of management’s responses and in providing comments.
After incorporating the feedback into the final special examination report, the audit team submits the final report to the corporation’s board of directors.
During this phase, the corporation
- arranges timely meetings between the corporation’s senior management and other staff and the OAG to discuss the audit;
- provides the audit team with the information needed to understand the areas subject to audit, as well as information on lines of responsibility, sources of criteria, risks, management concerns, and any related internal audits, evaluations, or studies that were published previously; and
- facilitates any field visits to corporate or project sites, if applicable.
After receiving the engagement and solicitor-client privilege letter, the Head of the corporation is expected to acknowledge in writing that the corporation will respect the confidentiality of the OAG-controlled documents to be provided during the course of the audit. This acknowledgement also confirms that the corporation will comply with any requests that the OAG makes for access to relevant documents under the control of the corporation, including those documents to which solicitor-client privileges are attached.
At the end of the planning phase, the corporation is required to review the Special Examination Plan and acknowledge the suitability of the criteria as a basis for assessing whether the audit objective has been met.
The corporation is expected to identify one of its officials as its OAG liaison for the audit. The liaison
- coordinates the flow of information between corporation officials and the audit team, to help advance the audit process and minimize miscommunication or misplacement of documents;
- informs the audit team by email of the entity’s language preference for the audit, in particular for the Special Examination Plan, PX draft, and audit committee transmission draft; and
- provides a list of recipients who need electronic access to OAG controlled documents.
The liaison is also expected to brief the corporation's staff on the audit’s purpose, nature, and timetable.
Corporation officials are expected to review and sign off on documented meeting and interview minutes prepared by the OAG if the OAG indicates its intention to rely on such records as audit evidence during the audit. Officials should normally sign off within five working days.
The corporation is expected to review the draft reports, validate facts, and provide responses to any recommendations. The corporation is also expected to confirm that it has provided the OAG with all information requested or that could significantly affect the findings or the conclusion of the audit report.
The audit team reviews the audit schedule and key milestones with the corporation officials to determine whether any changes are needed. If changes are needed, the parties are expected to discuss how best to adjust deadlines to ensure the quality of the report within the timelines of the FAA and within the OAG’s report production schedule.
The team also discusses how the OAG will brief the corporation’s senior management, the audit committee, and the Board of directors on the results of the audit.
Opening meeting. The team holds an opening meeting with corporation officials, including the Head of the corporation where appropriate, to
- launch the audit in the corporation, and
- discuss the planned audit to gain a better understanding of the areas being audited.
Before the meeting, the audit team notifies the corporation of the main topics to be discussed. The corporation is expected to make every effort to ensure that the appropriate corporation officials attend this meeting.
Audit meetings and briefings. The level of officials participating in audit meetings and briefing sessions depends on the subject matter discussed and on officials’ availability.
To reinforce ongoing communication, the liaison at the corporation should have the authority and responsibility to
- set up regular meetings throughout the audit,
- ensure that appropriate individuals attend, and
- help resolve any problems or barriers to completing the audit.
The OAG will provide the corporation with an opportunity to discuss the proposed Special Examination Plan.
The corporation is expected to discuss issues with the audit team and indicate any changes that are under way. The corporation should also be prepared to answer questions related to the main topics discussed at meetings with the team.
The team periodically briefs corporation officials and senior management on emerging findings throughout this phase and ensures that it gets the views of the Head of the corporation.
Officials are expected to participate in briefings to
- understand the nature and the implications of the findings,
- understand the proposed recommendations, and
- ask the OAG questions related to the audit.
The OAG’s engagement leader normally offers to consult with the corporation’s senior management at the key decision points during the audit.
How the OAG will brief the corporation should be agreed on before the examination phase ends. Appropriate senior corporation officials are expected to participate in these debriefings.
The audit team offers briefings to senior corporation officials to seek their views on the validity and completeness of audit evidence, audit findings, conclusions, and recommendations, including corrective actions to be taken. The OAG makes every effort to resolve disagreements quickly, professionally, and respectfully.
At the end of the planning phase, the OAG provides the corporation with a Special Examination Plan, a document that shows
- the mandate and context of the corporation,
- the responsibilities of the corporation and the OAG,
- the audit objective(s),
- risks related to the achievement of the corporation’s mandate and statutory control objectives,
- the audit scope and approach,
- the audit criteria, and their sources,
- the plans, if any, to rely on work of the corporation’s internal audit function, and
- the audit timetable and team.
Objective, scope, and criteria
The objective of the special examination is to determine whether the systems and practices the OAG selected for examination at the Crown corporation were providing it with reasonable assurance that its assets were safeguarded and controlled, its resources were managed economically and efficiently, and its operations were carried out effectively, as required by section 138 of the Financial Administration Act. The OAG team meets with the corporation’s officials to discuss the audit plan stated in the Special Examination Plan.
After the Special Examination Plan is prepared, the audit team communicates the plan to the Head of the Crown corporation and asks that it provides, within the established time frame, written acknowledgement of the suitability of the audit criteria against which the corporation will be assessed. After that, the team submits the plan to the audit committee.
The team informs the corporation, in writing, of any significant changes made to the Special Examination Plan and, if needed, issues a revised version to the corporation.
The corporation informs the OAG if these changes affect the corporation’s position on the suitability of the criteria.
If required, the OAG discloses, with an appropriate explanation in the audit report, any unresolved disagreements about criteria.
The audit team seeks written comments on the principal’s (PX) draft report. The team is also required to seek written confirmation that the audited corporation has provided all information of which it is aware that has been requested or that could significantly affect the findings or the conclusion of the audit report (excluding Cabinet confidences).
The team also asks for draft responses to the recommendations (modified, as appropriate, to reflect discussions).
The team provides electronic access to a protected copy of the draft report to
- identified recipients, and
- the corporation’s OAG liaison (who needs to coordinate comments by parties responsible for audited areas).
Discussions about the draft report
The audit team may need to meet with officials to discuss the corporation’s comments. Such meetings are scheduled with due consideration for the report production schedule.
If required, the OAG’s engagement leader meets with the Head of the corporation or other senior management to discuss the draft, including the suitability of the proposed audit recommendations and the potential responses to them.
Expectations for entities
The corporation is expected to
- review the draft report,
- provide its position on the accuracy of the text,
- flag any disputed facts (accompanied by all the supporting evidence it has),
- inform the team of any new developments,
- provide written confirmation that it has provided all information of which it is aware that has been requested or that could significantly affect the findings or the conclusion of the audit report (excluding Cabinet confidences), and
- provide written responses to the recommendations.
Updates to the report
After careful consideration, the team revises the PX draft if necessary to reflect the discussions and comments received from
- the corporation, and
- applicable third parties (that is, federal entities—departments, agencies, Crown corporations—not included in the audit scope but identified directly or indirectly in the report).
If required, the Head of the corporation or designate is expected to meet with the engagement leader to try to resolve any outstanding issues and reach either an agreement or a clear, shared understanding of points on which they “agree to disagree.”
While acquiring audit evidence, the OAG encourages officials to validate facts to help ensure the evidence’s accuracy, relevance, and completeness.
This process may require a series of meetings with corporation officials to ensure they agree on the facts gathered during the audit examination and field work.
While validating facts, the corporation’s management (including senior officials) is expected to examine all statements of fact and provide corrections with appropriate supporting evidence if it identifies
- factual errors,
- context changes, or
- new information.
The corporation is expected to review the PX draft and provide its position on any disputed facts, accompanied by all supporting evidence the audited corporation has.
The audit team prepares the transmission draft report for the audit committee. The draft report
- reflects the team’s disposition of discussions between the team and the corporation since the conclusion of the PX draft stage, and
- includes the final recommendations and draft corporation responses to recommendations.
Electronic access to a protected copy of the draft report is provided to identified recipients and to the corporation’s OAG liaison.
The transmission draft for the audit committee is submitted in one or both official languages (depending on the agreement established with the corporation during the planning phase).
Expectations for the audit committee
The audit committee is expected to
- confirm the report is factually accurate,
- confirm the final responses to the recommendations, and
- specify areas of and reasons for disagreement.
The final special examination report is provided to the board of directors in both official languages. If requested by the corporation’s management and the audit committee during the planning phase, the PX draft report and the transmission draft report for the audit committee will also be provided in both official languages.
No additional comments or sign-offs are required.
If required, the OAG discloses, with an appropriate explanation in the audit report, any unresolved disagreements around the validity of facts and/or its ability to obtain confirmation from the corporation that it has provided all information of which it is aware that has been requested or that could significantly affect the findings or the conclusion of the audit report (excluding Cabinet confidences).
Special examination reports usually include recommendations that direct corporations to positive changes they can make for the most serious deficiencies reported. Recommendations address areas where there are significant risks to the corporation if deficiencies remain uncorrected.
Recommendations should be
- fully supported by and flow from the associated findings and conclusions, and
- aimed at correcting the underlying causes of deficiencies.
During the examination phase of a special examination, the audit team periodically offers to brief entity officials (and senior management as required) on emerging findings.
The team also encourages discussion of proposed recommendations as they are developed and seeks views on actions needed to correct problems.
At the end of the examination phase, the audit team seeks the views of the corporation’s officials to enable the development of clearly stated and action-oriented recommendations.
This gives the corporation time to prepare responses and develop an action plan. The team asks the Head of the corporation or other senior management to provide input to ensure that recommendations are practical and feasible to implement.
The principal’s (PX) draft report issued to the corporation contains a complete set of draft recommendations. In a letter accompanying this draft, the OAG’s engagement leader offers to meet with the Head of the corporation or other senior management official to discuss the recommendations. The discussion should include, among other things, how suitable and practical the draft recommendations are, and what the corporation’s probable responses to them will be.
The letter asks the corporation’s management to send a formal, written draft response to the recommendations and provides a deadline for the response.
The subsequent transmission draft report for the audit committee contains the full text, the recommendations, and the corporation’s draft responses. The team asks the Chair of the audit committee to confirm, in writing, that the report is factually accurate and to comment on any disagreements. The team also asks the Chair of the audit committee to confirm that the responses to the recommendations (in both official languages) are final.
Responses to recommendations are not a vehicle for disagreeing with the audit findings. The audit team and the corporation must try to resolve any unsettled disputes. If this is not possible and the corporation does not agree with the recommendation, the response must state the reason, which will be included in the report.
If a matter has not been resolved by the time the audit committee draft is issued, the team will raise it with the Assistant Auditor General. Failure to respond within the specified time frame could result in the final report being submitted to the board of directors and published without the corporation’s responses.
Parliamentarians are more likely to react favorably to responses that are clear and concise and that describe specific actions and time frames.
The Office of the Auditor General of Canada (OAG) has established limits on the content and publication of corporation responses and will not normally include in the final report
- general responses or global comments to reports;
- the corporation’s responses where no recommendations were made; and
- the corporation’s responses to any recommendations made in previous special examination reports.
The OAG determines whether the wording of the corporation’s responses is appropriate and sufficient, and expects a response to
- clearly indicate whether the corporation agrees or disagrees with the recommendation;
- have a maximum of 200 words;
- be consistent with the “Agreed” or “Disagreed” statement; and
- provide a basis for a potential future follow-up, including timelines and actions that the corporation’s senior management intends to take to respond to the recommendations, and clear accountability from senior management.
Final responses to the audit committee draft, in both official languages, must be received within OAG-specified time frames to be included in the final report to the board of directors.
Publishing a corporation’s response to a recommendation gives it the opportunity to inform Parliament whether the corporation agrees with the recommendation, and how and when the corporation intends to act.
The OAG reserves the right to
- edit responses,
- decline to include material that does not respond to a recommendation,
- omit material that repeats report content, and
- exclude from a final report to the board of directors responses, or parts of responses that it believes false or misleading.
The audit team informs the corporation of any significant changes made to final responses.
The Financial Administration Act (FAA) requires the corporation’s board of directors to make the special examination report available to the appropriate Minister and the President of the Treasury Board within 30 days of receiving it. The FAA also requires the board of directors to make the special examination report available to the public within 60 days of receiving it. Exact dates for distribution should be discussed with the Office of the Auditor General of Canada (OAG) audit team. The Special Examination Plan will outline the key dates for report distribution.
When the corporation makes the special examination report public, the audit team has to ensure that the report is reproduced accurately and that any other information presented with the report is consistent with the report’s content and does not undermine its credibility. The Financial Administration Act (FAA) does not specify the means of making a special examination report public; however, regardless of the method of publication, the Office of the Auditor General of Canada (OAG) will need to review the report before it becomes public.
If published on the corporation’s website. When a Crown corporation intends to post the special examination report on its website, the audit team will provide the corporation with an electronic version of the report, that is, a locked PDF file with an index function that is ready for posting on the website. The audit team will compare the posted version with the report as originally issued to determine whether the report has been reproduced accurately. Please note that the OAG has no obligation to monitor subsequent amendments to the corporation’s website.
If published in print. When a Crown corporation intends to make public a hard copy of its special examination report, the audit team will read a draft or the printer’s proof before the document is printed. Later, the audit team will check the wording of the printed document against that of the report that was originally issued to determine whether the report has been reproduced accurately.
In either electronic or printed format, the appearance of the special examination report should be of similar quality to that of the report issued to the board of directors. Where a Crown corporation includes other information with the hard copy version or on its web pages, the audit team will ask the corporation’s management to identify all instances that refer to the OAG and the report and will review the information to ensure that it does not undermine the report and is consistent with the audit mandate for the special examination and the information that the team obtained while carrying it out.
In exceptional cases, certain information contained in special examination reports may be redacted from the public version. Redaction means removing classified information from a public record. The only situation where a redaction should take place is where there is classified information that cannot be made public in a special examination report. Classified information is information that is classified as Top Secret, Secret, or Confidential.
Information could be classified for different reasons. According to the Access to Information Act, Crown corporations may refuse to disclose to the public any records that contain information related, among other things, to the following areas:
- information obtained in confidence (as outlined in subsection 13(1) of the Act);
- international affairs and defence;
- security; and
- economic interests (trade secrets or financial, commercial, scientific or technical information).
The corporation is responsible for classifying its information. However, it could happen that the audit team will not agree with the corporation’s classification or will not agree with issuing a redacted version of the report to take out classified information. Management and the board of directors will need to discuss redacting any information with the engagement leader and, as appropriate, the Assistant Auditor General leading the audit team. The audit team will then seek approval from the Auditor General.
After the special examination report has been made public by the corporation, it is reproduced in the next report of the Auditor General and tabled in Parliament.
The Auditor General provides a 30-day written notice to the Speaker of the House of Commons of his intention to make available his upcoming reports for tabling.
On the day that a report of the Auditor General or the Commissioner of the Environment and Sustainable Development is tabled in the House of Commons, the OAG participates in
- a confidential preview for parliamentarians,
- a preview for journalists (media lock-up),
- a news conference for journalists, and
- media interviews.
Confidential preview for parliamentarians
All members of Parliament and senators are invited. Parliamentarians who attend the preview receive copies of the report and related communications material.
Accredited members of the Parliamentary Press Gallery who attend the media lock-up receive copies of the report and related communications material.
The news conference is open only to accredited members of the Parliamentary Press Gallery.
The corporation should make their own arrangements to view the news conference, either with the National Press Theatre or by watching it online.
The Auditor General is available for interviews with journalists following the tabling of the report.
In some instances, members of Parliament, the Senate, the media, or the public want additional information about the audited entities or audit subject matter not included in the report.
It is OAG policy to not provide such information. Therefore, any questions for further information or background are referred to the corporation.
To understand its past performance and to identify possible areas for improvement, the Office of the Auditor General of Canada (OAG) believes that obtaining feedback from Crown corporations that have recently undergone a special examination is important.
The OAG conducts post-examination surveys on various aspects of the examination experience after reports have been finalized.
The Chair of the board of directors and the Head of the Crown corporation receive the survey and are expected to respond in a timely manner. A summary of the results is reported to Parliament in the OAG’s performance report.
The Auditor General and other OAG officials often appear before House of Commons and Senate committees to answer questions about reports after they are tabled.
The Auditor General most frequently appears before the House of Commons Standing Committee on Public Accounts, which has a specific mandate to review and report on all of the Auditor General’s reports, as well as on the OAG’s reports on plans and priorities, and annual performance reports. Other parliamentary committees also hold hearings on matters raised in the Auditor General’s reports.
The Standing Committee on Public Accounts usually invites the Head of the corporation and other corporation officials to appear at the same time as the Auditor General and his or her senior officials.
The Standing Committee on Public Accounts has adopted the following motion:
That any organization that has been subject to a performance audit or a special examination by the Office of the Auditor General of Canada, provides a detailed action plan to address the audit recommendations which have been agreed to—including specific actions, timelines for their completion and responsible individuals—to the Public Accounts Committee and the Office of the Auditor General of Canada within six months of the audit being tabled in the House of Commons; and,
- That organizations that are invited to appear before the Public Accounts Committee to discuss the findings of an audit should, when feasible, provide an action plan to the Committee prior to the hearing; and
- That action plans and progress reports received by the Committee be published on the Committee’s website.
This action plan should include specific actions and timelines for addressing recommendations and specify the individuals responsible for addressing them. Crown corporations invited to appear before the Standing Committee on Public Accounts to discuss the audit findings should provide the plan to the Committee prior to the hearing and to the OAG.
The audit team may identify issues that are less important than those included in the report tabled in the House of Commons, or that fall outside the audit scope but are of interest to the corporation. The team communicates these issues to the CEO or the head of its internal audit function, as appropriate, through a
- verbal communication, or
- formal management letter.
If a management letter is issued, the OAG may request a written response to the issues 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.
Audit teams at the Office of the Auditor General of Canada (OAG) have a right to access the following within corporations, in accordance with federal legislation:
- documents, and
OAG auditors are entitled to receive all information that they determine is relevant and necessary to enable them to carry out their audits and examinations. This may include documents, reports, or explanations from members of the public service and from officers, employees, or agents of the Crown corporation.
As OAG auditors identify the information they need and who they need to interview, the corporation is to give them access. The information that the corporation should supply, upon request, includes all forms of communication—written, visual, auditory, and electronic—whether in final or draft form, with the exception of draft Treasury Board submission material.
OAG auditors are entitled to access documents that may be subject to solicitor-client and other privileges. To ensure that this access does not affect the privilege attached to the documents, the OAG makes a formal written request for access to such documents at the start of the audit.
The OAG issues an engagement and solicitor-client privilege letter to the Head of the corporation requesting timely access to information and personnel under the powers granted by the Financial Administration Act and, among other things, to documents that may be subject to solicitor-client and other privileges.
The Head of the corporation is expected to acknowledge in writing that the corporation will comply with its duty under the Act and that providing the documents to the OAG does not constitute a waiver of any privilege attached to the documents. The exchange of letters maintains the privileged nature of the information provided to the OAG for audit purposes.
The OAG respects the confidentiality of the documents and does not refer to them in its reports.
When the audit team identifies staff of the corporation for an interview, the staff must be made available. It is unacceptable and inappropriate for the corporation to coach staff prior to an interview with auditors or filter information requested by the OAG. As a general rule, to encourage candour and complete responses, only staff being interviewed should be present during the interview. Under certain circumstances, the audit team and the corporation may agree that observers at an interview are appropriate, but it is up to the OAG to decide when they are.
The Auditor General’s access to Cabinet confidences is set out in two orders-in-council: PC#1985-3783 and PC#2006-1289.
An audited entity is responsible for identifying the following to OAG auditors:
- memoranda to Cabinet,
- Cabinet decisions,
- Treasury Board submissions, and
- decisions related to the audit.
These are made available to the Auditor General through a separate process that involves the Privy Council Office or the Treasury Board of Canada Secretariat, as appropriate.
The fact that a document is not accessible to the public, through an Access to Information request, is not a valid reason for denying access to OAG staff. The provisions of the Access to Information Act do not apply to the Auditor General’s access to information for audit purposes.
Auditors encountering problems obtaining information during an audit, such as delays, will report the problems to the engagement leader. If the problems continue, the engagement leader will attempt to resolve the issue with the corporation’s OAG liaison, or if necessary, with senior management.
In some circumstances, a delay in providing requested documents or information can amount to a denial of access. The Auditor General may report such cases to Parliament.
Electronic information is preferred, but hard copies are acceptable.
Information can include all forms of communication—written, visual, auditory, and electronic—whether in final or draft form.
This includes but is not limited to any relevant
- pictorial or graphic work,
- sound recordings,
- videotapes, or
Auditors may take extracts and make photocopies, unless security classifications dictate otherwise.
The audit team maintains a register of documents requested and received during an audit.
Access to information and to privileged information begins once
- the corporation has been notified of the start of a special examination, and
- the Head of the corporation has responded to the OAG’s engagement and solicitor-client privilege letter.
The corporation’s officials should instruct their employees to make themselves and information available, as they would for any other important corporate business. Timely access to information is essential to meet audit timelines as set out in the Special Examination Plan. Corporation officials should respond expeditiously to OAG requests for information.
The time required to produce information can be affected by such factors as the information’s format and location, and an individual’s availability.
Five working days
Requiring additional work to compile (such as data manipulation or archive searches)
Audit team and corporation discuss and agree on time frame.
Audit team members have access to a corporation’s
- information for which they have the required level of security clearance, and
- staff who can provide the information.
Auditors must comply with the same security requirements that apply to the corporation’s employees.
At the start of an audit, the audit team provides the corporation’s OAG liaison with the names and security clearance levels of OAG and contract staff initially assigned to the audit. If any changes need to be made to this list during the audit, the team notifies the OAG liaison.
- Financial Administration Act
- Access to Information Act
- Auditor General Act
- Guidance to departmental and entity legal counsel, and OAG audit liaisons on providing the Auditor General access to information in certain confidences of the Queen’s Privy Council (Cabinet confidences)
- 2010 Protocol Agreement on Access by the Office of the Auditor General to Cabinet Documents
- Communiqué (TBS–OAG): Office of the Auditor General’s Access to Records and Personnel for Audit Purposes (distributed by email to deputy heads on 7 August 2007)
- Order-in-Council PC#1985-3783 dated 27 December 1985
- Order-in-Council PC#2006-1289 dated 6 November 2006
During the special examination process, the Office of the Auditor General of Canada (OAG) and the corporation exchange information that needs to be handled and treated with due care.
One underlying principle of auditing is a duty of confidentiality with respect to a corporation’s affairs.
The OAG makes every effort to ensure that it keeps audit information in its direct possession. The OAG’s Code of Values, Ethics, and Professional Conduct requires that all staff be familiar with the security aspects of their work and consider it an important and essential individual responsibility.
For all information received from the corporation, auditors must, at a minimum, comply with the same security arrangements that apply to the corporation’s employees.
The following table shows various means by which the OAG ensures the confidentiality of entity documents.
|Timeline||Documents from OAG||Documents from entity|
Start of audit
End of planning phase
One week after tabling
During the audit, the audit team provides the corporation with controlled documents, such as the principal’s (PX) draft report and the transmission draft report for the audit committee. If deemed necessary, the audit team might also treat the Special Examination Plan as a controlled document. These protected documents are OAG property.
Corporate officials are required to respect the confidentiality of the content of OAG-controlled documents and must ensure that these documents are not copied, reproduced, distributed, republished, downloaded, displayed, posted, or transmitted in any form or by any means without the prior written consent of the OAG.
References to controlled documents should contain only section and paragraph numbers. The contents of these documents must be treated with appropriate discretion. Disclosing the Auditor General’s findings prior to the approval by the board of directors is viewed as an infringement on the rights and privileges of the board.
By default, controlled documents are submitted electronically to the corporation’s OAG liaison and to pre-identified recipients, and can only be accessed during a specific period of time, until their access expires. Upon request from the entity, audit teams may provide a maximum of two hard copies of OAG controlled documents.
When OAG-controlled documents in hard copy are submitted, they are numbered and must be returned to the OAG within one week after the relevant report is finalized.
Corporations must track the internal distribution of the provided OAG-controlled documents in hard copy (if any) and return them to the OAG. Corporations are not permitted to destroy or shred these documents and are expected to immediately inform the OAG if any are lost or made public.
The Access to Information Act, section 16.1(1), requires the Auditor General of Canada to refuse to disclose any record requested under the Act that contains information obtained or created by the OAG or on its behalf in the course of an investigation, examination, or audit conducted by the OAG or under its authority. Members of the public cannot access special examination plans, draft special examination reports, or other special examination documents, such as audit working papers, held by the OAG.
At the start of the audit, the corporation’s OAG liaison confirms by email the language preference for the audit, in particular for the Special Examination Plan, the PX and audit committee transmission drafts.
During a special examination, audit teams often need to interact with the internal audit office of the corporation being audited.
The internal audit office usually plays the liaison role with the Office of the Auditor General of Canada (OAG) and facilitates the exchange of information and the access to the corporation’s staff.
|Meetings||Goal of meeting||Attendees|
Reporting phase meetings
Internal audit offices should instruct employees to make themselves and information available, as they would for any other important corporate business.
The internal audit office is expected to make every effort to ensure that the appropriate officials attend an opening meeting to discuss the planned audit.
During the fact validation and review of the principal’s (PX) draft report, the corporation’s OAG liaison should facilitate the process of obtaining and coordinating responses from the responsible parties within the corporation and providing the audit team with
- the corporation’s position on the accuracy of the text,
- any facts in dispute,
- the Head of the corporation’s written confirmation that the corporation has provided all information of which it is aware that has been requested or that could significantly affect the findings or the conclusion of the audit report (excluding Cabinet confidences), and
- the corporation’s consolidated comments from parties responsible for audited areas.
During the reporting phase of the special examination, the corporation’s OAG liaison is expected to facilitate the OAG’s access to senior officials to get their views.
When coordinating responses to recommendations, the corporation’s OAG liaison needs to ensure that final responses to the transmission draft report for the audit committee are provided in both official languages and received within the specified time frames to be included in the final report.
When the audit team identifies corporation staff for an interview, the staff must be made available. It is unacceptable and inappropriate for the internal audit office to coach staff prior to an interview with auditors or filter information requested by the OAG.
The audit team informs the corporation’s OAG liaison of
- the progress made throughout the audit, and
- new developments when they arise, such as emerging findings.
The process for ensuring ongoing communication, such as meetings at predetermined points, is usually determined by the team and the corporation’s OAG liaison at the start of the audit.
At its discretion, the audit team may request advice from the audited entity on who would be useful external advisers on the audit. If the team has any concern about whether a potential adviser has a conflict of interest, it may seek the advice of the entity.
The entity is expected to provide advice to the team to help identify potential external advisors. The entity may wish to consult with its departmental audit committee.