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 (OCEO). footnote 1
2. Effective Date
These terms of reference take effect on October 18, 2022. They replace the Departmental Audit Committee Terms of Reference that came into effect on October 6, 2020.
These terms of reference define the purpose, authority, membership and responsibility of the Audit Committee and are complementary to the Treasury Board (TB) Policy on Internal Audit (Policy) and its associated Directive as well as the TB Guidebook for a Departmental Audit Committee
The Audit Committee is comprised of three external, independent members and is chaired by the Chief Electoral Officer (CEO). The Committee is mandated with the oversight of the OCEO's governance, risk management, control, audit and reporting practices. In carrying out its mandate, the Committee ensures that the CEO receives objective advice and guidance on the adequacy of its stewardship, management and accountability practices.
The Committee also provides advice and guidance to the CEO in relation to his duties as Accounting Officer, in accordance with requirements of the Federal Accountability Act and other similar legislation applicable to the OCEO.
4. Policy Requirements
The revised Treasury Board Policy Suite on Internal Audit, which includes the Directive on Internal Audit in the Government of Canada, took effect on April 1, 2017.
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.
Under the new policy instruments, Agents of Parliament (AoPs) continue to be excluded from the application of a number of requirements. In some instances, the OCEO has decided to act within the spirit of these requirements.
As a result, the OCEO identified several key changes that potentially impacted the operation of its audit function and audit committee, and warranted further examination.
The policy changes were discussed with the Audit Committee members at their August 2017 meeting, which resulted in the following decisions:
AC Chair eligibility
Although the policy suite introduces a new requirement for audit committee chairs in departments to be from outside 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 Committee members to proactively disclose remuneration and expenses annually
As an agency, the OCEO is not required to proactively disclose individual external audit committee remuneration and expenses (including travel and hospitality), as is required of departments. However, the committee elected to adopt this best practice based on guidelines provided by the Office of the Comptroller General of Canada technical bulletin.
Audit Committee members to disclose activities annually
As an agency, the OCEO is not required to proactively disclose at least annually, as required of departments, all new activities, interests or appointments of the external audit committee members, to assess whether they may impair, or be seen to impair, each member's ability to discharge her duties in an independent and objective manner. However, the Committee elected to adopt this best practice.
CAE and DAC annual reports no longer required
The policy suite no longer requires the preparation of the DAC annual report and the CAE annual report, although these may be prepared as required by the Deputy Head. The CAE and AC will collaborate to conduct periodic self-assessments on the Committee's performance in support of continuous improvement.
5. Committee Membership
- 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 the OCEO.
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, considering items proposed by other Committee members and senior management, and lead Committee proceedings;
- 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; and
- 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 relationship and dialogue between the Audit Committee and the CEO is of particular importance. This Interaction should be marked by its candour so that discussions of risk exposures and areas for improvement are unambiguous and focus on effective remediation.
The Audit Committee has the following responsibilities, pursuant to the eight areas of management oversight articulated in the Treasury Board Directive on Internal Auditing:
Values and Ethics
- Monitor the OCEO'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, and to review and provide advice on systems and practices that the CEO has established. This includes the procedures and feedback mechanisms for monitoring conformance with the OCEO'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 Risk Management Framework, including reviews of corporate risks, and program risks and project risks as identified in the risk register.
- Provide advice and guidance on the development of a Risk-based Audit Plan.
Management Control Framework
- Review and provide advice on 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 recommend for the CEO's approval, internal audit reports and associated management action plans, and provide guidance on related communications plans.
- Review regular reports on progress against the OCEO 's Risk-based 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.
- Be informed and advise the CEO on:
- All audit work relating to the OCEO to be undertaken by external assurance providers, as well as management's response to those audits; and
- Audit-related issues and priorities raised by external assurance providers.
- 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.
- 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; and
- 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 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 the OCEO's evaluation function.
- 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.
- Devote the time needed to prepare for and participate in each meeting by reading the reports and background materials provided; and
- Maintain an excellent meeting attendance record.
- 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; and
- the performance of other duties as assigned.
External Assurance Providers
Follow-up on Management Action Plans
Financial Statements and Public Accounts Reporting
Other Management Priorities
7. Committee Meetings
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.
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 absence during meetings. Only the Chair may empower the vice-chair to temporarily act as 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:
Attendance by Non-members
Deputy Chief Electoral Officers, the CAE, the Chief Financial Officer and the Commissioner of Canada Elections 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. Representatives of external assurance providers and/or any other senior officials may be requested to attend.
The CAE and the Chief Financial Officer (CFO) will also meet in-camera with the Audit Committee members at least once per year.
Access by and to the Committee
The Committee has unfettered access to the CAE and CFO, as well as to other employees of the OCEO 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.
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 the OCEO'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 CAE 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.
External Practice Inspection
As part of the internal audit function's practice inspection, the Committee's performance will be subject to periodic external assessments, led by a professional certified by the Institute of Internal Auditors.
10. Review of Committee Terms of Reference
The Committee shall annually review the appropriateness of its terms of reference, for reaffirmation by the CEO.
Back to footnote 1 The Office of the Chief Electoral Officer includes Elections Canada and the Office of the Commissioner of Canada Elections.