Elections Canada Audit Committee Terms of Reference
This document sets out the terms of reference for the Audit Committee (the Committee) of the Office of the Chief Electoral Officer (Elections Canada, or the agency). A revised Treasury Board (TB) Policy Suite on Internal Audit, which includes the Directive on Internal Auditing in the Government of Canada, took effect on April 1, 2012. This new Directive replaces three directives and two guidelines in the Policy Suite on Internal Audit of July 2009. The policy requires Elections Canada, as an agent of Parliament, to set up an audit committee that includes a majority of members who are external to the federal public service. The Committee is an essential component of the governance and audit regimes of Elections Canada.
2. Effective Date
These Terms of Reference take effect on July 5, 2012. They replace the previous terms, which were approved on June 25, 2010.
These Terms of Reference define the Audit Committee's mandate, operations, membership, duties and responsibilities, and accountabilities.
The Audit Committee is an independent advisory committee that provides the Chief Electoral Officer (CEO) with objective guidance on risk management, control framework and reporting practices. Its mandate is to provide independent advice and assurance on the effectiveness of Elections Canada's governance, risk management, control, audit and reporting practices. In carrying out its mandate, the Committee ensures that the CEO receives independent and objective advice, guidance and assurance on the adequacy of Elections Canada stewardship, management and accountability practices.
The Committee also provides advice and guidance to the CEO in relation to his or her duties as Accounting Officer of Elections Canada, in accordance with requirements of the Federal Accountability Act and other similar legislation applicable to Elections Canada.
4. Legislative and Policy Requirements
These Terms of Reference take into account the requirements of sections 16.1 and 16.2 of the Financial Administration Act, requiring the CEO to ensure that the agency has internal audit capacity appropriate to its needs and to establish an audit committee in accordance with directives issued by TB. The Terms of Reference also ensure compliance with the TB Policy Suite on Internal Audit, which includes the Directive on Internal Auditing in the Government of Canada.
Section 2.4 of the TB Policy on Internal Audit provides that deputy heads of the agents of Parliament may authorize any departures from specific policy requirements that they deem appropriate in light of the governance arrangements, statutory mandate and risk profile of the organization. The Office of the CEO complies with the principles of the TB Policy Suite on Internal Audit. However, the CEO has authorized the following departures to preserve Elections Canada's independence as an agent of Parliament:
- The appointment of external members of the Audit Committee will be the sole responsibility of the CEO.
- The internal audit plan does not necessarily address risks or incorporate audits that the Office of the Comptroller General (OCG) may identify as part of government-wide or sectoral coverage.1
- While it uses the results of internal audits directed, led or performed by the OCG as part of the information gathered during preparation of the internal audit plan, Elections Canada does not necessarily have to ensure that the agency's internal audit plan appropriately addresses horizontal risks identified by the OCG.2
- The minister is not briefed periodically on significant matters arising from the work of internal audit and the Audit Committee. In addition, the minister is not offered the opportunity to meet with the Audit Committee at least once a year to discuss its annual report and any significant concerns that it may raise, or that may otherwise arise.3
- Access to information and employees, as well as support during audits by the OCG, is not required.4
- Elections Canada does not submit the Audit Committee's annual report to the OCG.5 However, it is posted on Elections Canada's website.
- Elections Canada does not submit its internal audit reports to the OCG. However, they are posted on Elections Canada's website.6
- The Chief Audit Executive's report will include an assessment of the effects of the proposed actions that were fully implemented and included in finalized reports, and it will comment on whether these actions address the risks identified.7
5. Committee Membership
The Audit Committee is composed of the CEO and three other members, with a majority of members external to the federal public service. The CEO will chair the Committee, and at least one member must be a financial expert with a recognized professional accounting designation (CA, CMA or CGA). The CEO, as an ex-officio member, is the only member internal to Elections Canada. Members internal to the federal public service are limited to deputy ministers, associate deputy ministers and assistant deputy ministers.
All members of the Audit Committee are appointed by the CEO. Members are selected in a manner whereby their collective abilities, knowledge and experience allow the Committee to carry out its duties competently and effectively.
The CEO will chair the Committee.
The chair of the Audit Committee has the following responsibilities:
- Propose a plan to the Committee to ensure that it addresses its annual and ongoing responsibilities and that meetings are scheduled based on requirements.
- Set the Committee's agenda, taking into account items proposed by other committee members and senior management, and lead committee proceedings.
- Ensure that the Committee provides proper advice and guidance to the CEO, oversees implementation of the Committee's decisions, and takes appropriate action on all matters relevant to its Terms of Reference.
- Ensure that the representatives from the Office of the Auditor General (OAG) are kept informed of the Committee's proceedings and that they solicit comments and advice from the OAG on matters relevant to the Committee and the internal audit function.
- Ensure that the Audit Committee Terms of Reference are relevant, and propose updates to them as appropriate.
The chair of the Audit Committee may meet as required with the Chief Audit Executive (CAE) and the OAG outside of Committee meetings.
Tenure and Terms of Office
External members serve at the discretion of the CEO, but generally for not more than eight years.
6. Committee Responsibilities and Duties
The Audit Committee has the following responsibilities:
Values and Ethics
- To monitor Elections Canada's compliance with laws, regulations, policies and standards of ethical conduct and to identify any legal or ethical violations and to ensure that they are dealt with, review and provide advice on Elections Canada systems and practices that the CEO has established. This includes the procedures and feedback mechanisms for monitoring conformance with Elections Canada's code of conduct and ethics policies, as well as the degree to which the agency's processes encourage and maintain high ethical standards.
Review and provide advice on the agency's risk management arrangements.
Management Control Framework
Review and provide advice on Elections Canada's internal control arrangements, and be aware of all significant matters arising from the work of others who provide assurances to senior management and the CEO.
Internal Audit Function
- Recommend, and periodically review, an internal audit policy or charter for the approval of the CEO.
- Advise the CEO on the adequacy of the internal audit function's resources.
- Annually review and, if appropriate, recommend for the CEO's approval the risk assessment and risk-based internal audit plan proposed by the CAE.
- Monitor and assess the internal audit function's performance.
- Receive and, if appropriate, provide guidance on communication strategies and recommend for the CEO's approval internal audit reports and management action plans to address the audit recommendations.
- Review regular reports on progress against Elections Canada's risk-based internal audit plan.
- Be briefed on internal audit activities that do not result in a report, and be informed by the CAE about all significant matters arising from such work.
External Assurance Providers
- Be informed and advise the CEO on
- All audit work relating to Elections Canada to be undertaken by external assurance providers, as well as management's response to those audits
- Audit-related issues and priorities raised by external assurance providers
Follow-up on Management Action Plans
- Verify whether effective arrangements are in place to monitor and follow up on management action plans in response to audit recommendations.
- Receive periodic reports from management on actions taken.
- Receive periodic reports from the CAE on whether management actions have been implemented, whether the actions taken are effective, and whether the CAE believes that management has accepted excessive levels of risk.
Financial Statements and Public Accounts Reporting
- The Audit Committee shall review and provide advice to the CEO on the key financial management reports and disclosures of the agency, including quarterly financial reports, annual financial statements and Public Accounts.
- The Committee will also review the annual Statement of Management Responsibility Including Internal Control over Financial Reporting and advise the CEO on the risk-based assessment plans and associated results related to the effectiveness of the agency's system of internal control over financial reporting.
- For financial statements that are audited, the Committee will review
- The financial statements with the external auditor and senior management; the Committee will then discuss any significant accounting estimates and adjustments in them, any statement adjustments required as a result of the audit, and any difficulties or disputes the auditor encountered with management during the audit
- Management letters arising from the external audit
- The auditor's findings and recommendations relating to internal controls for financial reporting; the Committee will then consider the effect of those recommendations on controls, risk management and governance processes
- Review the Report on Plans and Priorities, the Departmental Performance Report and any other significant accountability report to ensure that, to the best of Committee members' knowledge, those reports contain no material misstatements or omissions.
- The Audit Committee may also receive, as information, plans and reports prepared by Elections Canada's evaluation function.
Other Management Priorities
- The Audit Committee is a strategic resource for the CEO. As such, it provides advice and recommendations that the CEO requests on emerging priorities, concerns, risks, opportunities or accountability reporting.
7. Committee Meetings
Audit Committee meetings are arranged at the call of the chair, are normally held in person, and are scheduled at least twice each year.
The Committee chair will propose an annual plan to ensure that the Committee addresses its annual and ongoing responsibilities. The plan will be presented to the Committee for approval and will determine the number, timing and duration of the regular Committee meetings.
The Audit Committee has quorum if the chair and a majority of the members are in attendance.
The Committee may designate an external member as vice-chair, who may replace the chair in his or her absence during meetings. Only the chair may empower the vice-chair to temporarily act as his or her replacement for the conduct of meetings.
No alternates to members shall be permitted to attend, with the exception of persons acting in a formal capacity for ex-officio members who are on leave.
Members' Preparation and Attendance
To enhance the effectiveness of the Committee meetings, each member will
- Devote the time needed to prepare for and participate in each meeting by reading the reports and background materials provided
- Maintain an excellent meeting attendance record
Attendance by Non-members
The Chief Financial Officer (CFO) and CAE are expected to attend all meetings of the Committee. As necessary, the chair shall ask a senior representative of the OAG to attend. Other participants may be invited at the discretion of the chair.
The chair may request that certain agenda items be treated in camera (without the presence of some or all of the non-members who are attending the meeting).
Minutes of Meetings
Minutes of each meeting shall be kept and shall list the persons present. The minutes provide a record of decisions taken and a high-level summary of the discussion, providing insight into the topics and sub-topics discussed.
At each of its meetings, members of the Audit Committee will normally meet in camera with the CFO (as a group or individually, according to the topic they wish to discuss), as well as with the CAE, any representatives of external assurance providers in attendance, and any other officials the Committee may determine.
Access by and to the Committee
The Committee has unfettered access to the CAE and CFO, as well as to other employees of Elections Canada and to documentation (subject to applicable legislation) it requires to fulfill its responsibilities.
The CAE and CFO have unfettered access to the Committee and to its chair and vice-chair.
Committee Orientation, Training and Continuing Education
The Audit Committee can fulfill its role only if its members are well informed. Members shall receive formal orientation and training on the Committee's purpose, responsibilities and objectives, as well as on Elections Canada's business. A process of continuing education – such as briefings and information on emerging issues and risks – shall also be put in place.
Support to the Audit Committee
The Committee will be provided with the resources necessary to carry out its role, responsibilities and duties. To the extent it deems necessary to meet its responsibilities, and in keeping with its Terms of Reference, the Committee has the authority to retain independent advice and assistance.
Secretariat support to the operation of the Committee includes
- the timely preparation of all notices and agendas of meetings
- coordination of presentations and distribution of reports or related documents that are prepared for the Committee's information or consideration
- the timely preparation and distribution of minutes of meeting proceedings
- performance of other duties as assigned
The CAE of Elections Canada will act as Secretary to the Audit Committee and may provide a staff person to take minutes at meetings. Administrative support for the Committee and individual members will be provided by the Office of the CAE.
9. Assessment of Committee Performance
The Committee will self-assess its performance annually.
External Practice Inspection
As part of the internal audit function's practice inspection, the Committee's performance will be subject to periodic external assessment, led by a professional certified by the Institute of Internal Auditors.
10. Accountability Reporting by Committee
The Audit Committee is accountable to the CEO.
The Committee shall prepare an annual report to the CEO that
- summarizes the Committee's activities and the results of its review
- comments on Elections Canada's system of internal controls
- highlights any significant concerns the Committee may have in relation to Elections Canada's risk management, controls and accountability processes
- advises on the internal audit function's capacity and performance
- recommends any necessary improvements to risk management, controls and accountability processes, including improvements to Elections Canada's internal audit function
- provides any other information or documentation that the Committee deems important to convey a fair and complete picture of its activity and results – as well as the context within which this ought to be viewed (for example, it is good practice for the Committee to include its Terms of Reference in its annual report)
11. Review of Committee Terms of Reference
The Committee shall annually review the appropriateness of its Terms of Reference, for reaffirmation by the CEO.
1 Treasury Board of Canada, Policy on Internal Audit, April 2012, 6.4.7
2 Ibid., 6.2.3
3 Ibid., 6.1.6
4 Ibid., 6.1.8
5 Ibid., 6.1.8
6 Ibid., 6.1.8
7 Ibid., 6.1.7