Annex E : The Office of the Auditor General of CanadaThe Canadian system of parliamentary democracy requires that the government of the day, before it collects or spends public monies, must have the express approval of Parliament and must account to Parliament for its handling of the funds entrusted to it. The Office of the Auditor General of Canada (OAG) seeks to make a difference for the Canadian people by promoting, in all its work for Parliament, answerable, honest and productive government. Its independent audits and examinations provide objective information, advice and assurance to Parliament, and promote accountability and best practices in government operations. In helping to hold the government to account, the Auditor General is mandated to examine the accounts of federal government departments, agencies and many of its Crown corporations.
The OAG is a part of the legislative branch and is independent of the government of the day. The Office has the freedom to recruit its own staff and set the terms and conditions of employment for staff. The Auditor General is appointed for a 10-year period and has the right to ask the government for any information required to do these duties. Moreover, his reports are submitted directly to the House of Commons, through the Speaker. This independence is vital if the Office is to perform its work effectively and to make unbiased reports.
The main work of the OAG is carried out by the Audit Operations Branch, which audits federal government departments, agencies and other organizations such as Crown corporations for which the Auditor General has been appointed auditor. The Executive Office provides overall policy direction, legal support, a professional practice and review function, liaison with Parliament and international activities. The Corporate Services Branch directly supports these activities through functions such as strategic planning, finance, administration, contracting, human resources management, official languages and professional development. The Office of the Commissioner of the Environment and Sustainable Development assists the Auditor General in performing his duties that relate to the environment and sustainable development.
The Auditor General Act, Financial Administration Act and other legislation set out the duties of the Auditor General and the Commissioner of the Environment and Sustainable Development. Fulfilling the mandate of the Auditor General Act involves three components - financial attest, compliance and value-for-money - that are often referred to as comprehensive auditing. The Auditor General Act requires auditing the accounts of Canada, including those relating to the Consolidated Revenue Fund, and to express an audit opinion on them (financial attest) that is included with the publication of the Public Accounts of Canada every autumn.
The Act also mandates that the Auditor General report on anything he or she considers to be of significance and of such a nature as to warrant the attention of the House. These reportable matters include instances of misuse or mismanagement of public funds, fraud, overexpenditure of appropriations, expenditures not authorized by Parliament and other irregularities (compliance).
The Auditor General is also required to report cases where he or she has observed that public funds have not been spent with due regard to economy and efficiency and where there are no satisfactory procedures in place to enable those who administer programs to measure and report on the effectiveness of these activities (value for money). In addition to an annual Report, periodic Reports are produced up to three times a year, and contain comprehensive audits of federal departments and agencies, and of issues that cross departmental lines; government-wide audits; follow-up reports which review the actions taken by departments in response to previous audits; and audit observations, which are significant matters that are not included in any of the above-noted audit reports.
An important element in value-for-money auditing is the use of audit criteria: reasonable standards against which management practices, controls and reporting systems can be assessed. These criteria are used to judge the degree to which an audited organization conforms to expectations that have been explicitly described and authorized.
Under the Financial Administration Act, Crown corporations are also subject to a form of comprehensive audit. While the Auditor General may not be the auditor of all Crown corporations, the audit provisions for those organizations are the same. They include an annual audit opinion on the fairness of the presentation of the financial statements and on compliance with authorities; a provision to raise other matters as the Auditor considers appropriate; and, a periodic special examination, including an audit opinion on the fulfilment of management responsibilities.
The Commissioner of the Environment and Sustainable Development, on behalf of the Auditor General, reports annually to the House of Commons on all matters related to the environment and sustainable development that he or she considers should be brought to its attention. In addition, government departments must publish annual sustainable development strategies and action plans that are audited by the Commissioner. The Commissioners annual report also includes his or her observations on the number, nature and status of environmental petitions sent to the Auditor General.
Although the Auditor Generals Reports attract considerable attention upon release, their long-term impact is felt when they are examined by parliamentary committees. The Public Accounts Committee (PAC) of the House of Commons bases much of its work on the Auditor Generals Reports.
Throughout the year, the PAC holds hearings attended by the Auditor General, the audit team, and senior public servants of the audited departments to review audit findings. After the hearings, the PAC may report and make recommendations to the House of Commons. The audited departments are generally expected to report back to the PAC on what they have done in response to these recommendations. The PAC thus ensures completion of the accountability loop. OAG reports are also reviewed and discussed in hearings before other parliamentary committees.
The Auditor General is held to account annually by an external auditor, appointed by the Treasury Board. The Auditors report is submitted to the Treasury Board and tabled in the House of Commons. The Auditor General, like government departments, also submits annual spending estimates to Parliament, and the Public Accounts Committee calls on the Auditor General to explain the spending estimates and management practices of the Office.
A more detailed outline of how the OAG works, Auditing for Parliament, is at: http://www.oag-bvg.gc.ca.
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