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Elections Canada Audit Committee Terms of Reference (2018–19)

1. Introduction

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).

2. Effective Date

These Terms of Reference take effect on April 1, 2018. They replace the previous terms that came into effect on April 1, 2017.

3. Purpose

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 their 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. Policy Requirements

A revised Treasury Board (TB) Policy Suite on Internal Audit, which includes the Directive on Internal Audit in the Government of Canada, took effect on April 1, 2017 and replaces the Policy Suite on Internal Audit of April 1, 2012.

The revised policy suite introduced a number of changes applicable to all federal institutions that served to streamline the instruments, remove conflicting audit requirements and clarify the roles and responsibilities of the Comptroller General.

Furthermore, under the new policy instruments, agents of Parliament (AoPs) continue to be excluded from the application of a number of requirements. In some instances, Elections Canada may decide to take action in the spirit of these requirements.

As a result, Elections Canada identified several key changes that potentially impacted the operation of its audit function and audit committee, and warranted further examination.

These policy changes were discussed with the Audit Committee at their August 2017 meeting, which resulted in the following decisions:

Mandatory Internal Audit Function

The policy suite states that the internal audit function is mandatory only in departments that have a reference level of more than $300 million per year. Given EC's environment and its status as an AoP (with limited oversight by central agencies), EC will continue to have an internal audit function.

Qualifications of the Chief Audit Executive

CAEs designated by AoPs are specifically exempted from having an internal audit certification or a professional accounting designation. The audit committee recommends that the CAE obtains her internal audit certification.

Departmental Audit Committee Chair Eligibility

Although the policy suite introduces a new requirement for audit committee chairs in departments to be from outside of the federal public administration unless an exemption is granted by the Comptroller General of Canada, AoPs are exempted from this requirement. The CEO will continue to be the Chair of the Audit Committee until otherwise decided.

Audit Members to Proactively Disclose Remuneration and Expenses Annually

As an agency, Elections Canada is not required to proactively disclose individual external audit committee remuneration and expenses (including travel and hospitality) as is the case with departments. However, this has been adopted as a best practice by Elections Canada. This will be implemented in 2018–2019, based on guidelines provided by the Office of the Comptroller General technical bulletin.

Audit Members to Disclose Activities Annually

As an agency, Elections Canada is not required to proactively disclose—at least annually, as required by departments—all new activities, interests or appointments of the external audit committee members. This is done to assess whether they may impair, or be seen to impair, their ability to discharge their duties in an independent and objective manner. However, this has been adopted as a best practice for Elections Canada. It will be implemented in 2018–2019.

CAE and DAC Annual Reports No Longer Required

The policy suite no longer requires the preparation of the Departmental Audit Committee (DAC) annual report and the CAE annual report. However, these may be prepared as required by the Deputy Head. The CAE and Audit Committee will collaborate to produce a single annual report.

5. Committee Membership

Composition

The Audit Committee is composed of the CEO and three other members who are external to the federal public service.

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 is the only member from Elections Canada.

Chair

The CEO will chair the Committee as per the decision mentioned above.

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 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, pursuant to the eight areas of management oversight articulated in the TB Directive on Internal Auditing:

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.

Risk Management

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 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.

Accountability Reports

Review the Departmental Plan, the Departmental Results 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

Meetings Schedule

Audit Committee meetings are arranged at the call of the Chair, are normally held in person, and are scheduled four times 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.

Quorum

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 their absence during meetings. Only the Chair may empower the Vice-chair to temporarily act as their 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 CAE is 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.

In Camera Meetings

At each of its meetings, members of the Audit Committee will normally meet in camera. Representatives of external assurance providers and/or any other senior officials may be requested to attend.

The Chief Audit Executive and the Chief Financial and Planning Officer (CFPO) will also meet in camera with the audit committee members at least once per year.

8. Operations

Access by and to the Committee

The Committee has unfettered access to the CAE and CFPO, as well as to other employees of Elections Canada and to documentation (subject to applicable legislation) it requires to fulfill its responsibilities.

The CAE has 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

Committee Self-assessment

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, in collaboration with the CAE, 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.

11. Review of Committee Terms of Reference

The Committee shall annually review the appropriateness of its Terms of Reference, for reaffirmation by the CEO.