Internal Audit Charter 

March 2010

A. PURPOSE

Internal audit supports the continuous improvement of programs, policies and initiatives at Environment Canada and contributes to the achievement of departmental objectives by providing timely and objective information, assurance and advice to the Deputy Minister, the Associate Deputy Ministers, the External Audit Advisory Committee, the Departmental Evaluation Committee, and departmental management. 

The internal audit function, as part of the Audit and Evaluation Branch, is guided by the Branch’s Vision, Mission, Mandate and Value statements (annex 1)

B. INDEPENDENCE AND OBJECTIVITY

The Internal Audit activity must be independent, and internal auditors should be objective in performing their work. The independence of the Internal Audit function allows internal auditors to make assessments impartially and without bias, while avoiding conflicts of interest. 

To ensure Internal Audit independence, the Chief Audit Executive reports organizationally to the Deputy Minister while the External Audit Advisory Committee provides a functional oversight to Internal Audit.   

The objectivity of internal auditors implies that they should use rigorous approaches and methods in carrying out their engagements. They should neither subordinate their own assessments to those of others, nor place themselves in situations where they would be unable to make objective professional assessments.

Work of the internal audit is conducted in accordance with the Institute of Internal Auditors definition of internal audit, its Code of Ethics, its Standards, as well as with the Treasury Board Policy on Internal Audit.

C. AUTHORITY

The Deputy Minister is responsible for establishing an Internal Audit capacity appropriate to the needs of the department. Authority in this regard is derived from:

  • The Federal Accountability Act that came into effect on December 12, 2006;
  • The Financial Administrative Act (Part I.1);
  • Internal Audit Policy suite of Treasury Board Secretariat in effect on April 1, 2009.

The Directive on Chief Audit Executives in effect on April 1, 2006 states that the Chief Audit Executive has:

  • access to all departmental records, databases, workplaces and employees, and the right to obtain information and explanations from departmental employees and contractors;
  • full capacity to carry out their duties, including reporting on their findings to the Deputy Minister, the External Audit Advisory Committee and, when appropriate, to the Comptroller General.

D. RESPONSIBILITIES

D.1 of the Deputy Minister:

D.1.1 Ensuring an internal audit capacity appropriate to the needs of the department and that operates in accordance with the Internal Audit Policy and professional internal auditing standards;

D.1.2 Establishing an independent External Audit Advisory Committee that includes a majority of external members who have been recruited from outside federal public administration;

D.1.3 Appointing a qualified Chief Audit Executive at a senior executive level to lead and direct the Internal Audit function;

D.1.4 Approving the departmental internal audit plan and budget;

D.1.5 Putting in place effective procedures to ensure systematic monitoring and assurance regarding the soundness of risk management, control and accountability processes within the department;

D.1.6 Taking into account the results of internal audits directed, led and/or performed by the Office of the Comptroller General and other external auditors. This includes a requirement to ensure that departmental internal audit plans appropriately address horizontal risks identified by the Office of the Comptroller General;

D.1.7 Ensuring that the External Audit Advisory Committee receives all of the information and documentation necessary to fulfill its responsibilities, subject to applicable legislation;

D.1.8 Ensuring that managers prepare action plans that adequately address the recommendations and findings arising from internal audits, and that the action plans are effectively implemented;

D.1.9 Ensuring that the Minister is briefed periodically on significant items arising from the work of Internal Audit and the External Audit Advisory Committee. It is expected that the External Audit Advisory Committee will provide the deputy head with advice and recommendations on the sufficiency, quality and results of assurances respecting departmental risk management, control and governance frameworks and processes.  Further, it is expected that the Minister will be offered the opportunity to meet with the audit committee, along with the deputy head, at least annually, to discuss the annual report of the audit committee and any significant concerns that may be raised therein or that may otherwise arise;

D.1.10 Ensuring that the Office of the Comptroller General and its agents, as well as the central agencies of government, for the purpose of carrying out assigned responsibilities, are given:

  • full access to departmental records, databases, workplaces and employees, and have the right to obtain information and explanations from departmental employees;
  • management representations pertinent to supporting the planning, conduct, and reporting of audits by the Comptroller General.

D.2 of the Chief Audit Executive: 

D.2.1 Establishing appropriate policies and procedures to guide the Internal Audit function;

D.2.2 Establishing risk-based audit plans to set out the priorities of the Internal Audit function, consistent with the department's objectives;

D.2.3 Ensuring that the annual internal audit plan is based on a risk assessment, done at least annually, and:

  • covers the various risks the department is facing, including fraud risk; 
  • considers the input of senior departmental management, the External Audit Advisory Committee and Treasury Board Secretariat,
  • includes internal audits identified by the Comptroller General and other external auditors as part of government-wide coverage,
  • is designed to support the provision of assurance services on all significant aspects of risk management, control and governance processes,
  • is designed to provide an independent annual assurance report to the deputy head on the adequacy and effectiveness of risk management, control and governance processes within the department;

D.2.4 Coordinating internal auditing activities and plans with other internal and external providers of assurance and consulting activities to ensure proper coverage and minimize duplication of effort;

D.2.5 Communicating the plan of engagements and resource requirements for the Internal Audit function, including significant interim changes and the impact of resource limitations, to the Executive Management Council, to the External Audit Advisory Committee and to the Deputy Minister. This communication shall include the impact of resource limitations;

D.2.6 Ensuring that Internal Audit resources are appropriate, sufficient and effectively deployed to achieve the approved plan;

D.2.7 Ensuring the timely completion of internal auditing engagements;

D.2.8 Ensuring that reports on internal auditing engagements are provided to the External Audit Advisory Committee with a minimum of delay;

D.2.9 Ensuring that completed internal audit reports are:

  • posted on the departmental web site within two weeks of approval, in both official languages. These reports must respect the Access to Information Act and the Privacy Act,
  • sent to the Office of the Comptroller General, to the Office of Auditor General and to department library;

D.2.10 Ensuring that internal auditors have appropriate professional qualifications and skills, and opportunities for sufficient training and development to maintain and develop their internal auditing competence and to obtain Certified Internal Auditor designation;

D.2.11 Developing and maintaining a quality assurance and improvement program that covers all aspects of the Internal Audit function, and continuously monitoring its effectiveness;

D.2.12 In collaboration with the External Audit Advisory Committee and the Comptroller General, ensuring that a practice inspection or other external review of the Internal Audit function is conducted at least every four years, by the Office of the Comptroller General or a qualified, independent reviewer, or external review team, and that the results of this external assessment are communicated to the Deputy Minister, the External Audit Advisory Committee and the Comptroller General;

D.2.13 Discussing with the External Audit Advisory Committee:

  • The need for more frequent external assessments, and
  • Prior to employing contractors, the qualifications and independence of the external reviewer or review team, including any potential conflict of interest.

D.2.14 In collaboration with the External Audit Advisory Committee, on a periodic basis according to need, address the issues of:

  • a possible need for additional external assessments (based upon EAAC’s recommendations),
  • the qualifications and independence of the external reviewer or review team, including any potential conflict of interest;

D.2.15 Ensuring that professional internal auditing standards are followed;

D.2.16 Reporting at least annually to the External Audit Advisory Committee on the Internal Audit function's conformance with professional internal auditing standards;

D.2.17 After discussion with the Deputy Minister, informing the Comptroller General without delay of any issue of risk, control or management practice that may be of significance to the government and/or require Treasury Board Secretariat's involvement;

D.2.18 Ensuring that action plans in response to audit recommendations are adequate and facilitate audit follow-up procedures; and that management has put in place the measures it has planned;

D.2.19 Ensuring that Executive Management Council is briefed on the results of External Advisory Audit Committee meetings in order to share lessons learned;

D.2.20 Reporting to the Executive Management Council, to the External Audit Advisory Committee and to the Deputy Minister, on the internal audit activity’s purpose, authority, and responsibility, if these are modified.

D.3 of Managers of programs being audited:

D.3.1 Supporting their Executive Management Council member in preparing and implementing management action plans in response to audit recommendations;

D.3.2 Ensuring that Management Action Plans include timeframes and identify responsibilities and accountabilities.

D.4 of Employees:

D.4.1 Taking into account the results of audits including those conducted by the Office of the Comptroller General;

D.4.2 Ensuring that Internal Audit, the Office of the Comptroller General and external auditors, for the purpose of carrying out assigned responsibilities, are given:

  • full access to departmental records, databases, workplaces and employees, and have the right to obtain information and explanations from departmental employees,
  • management representations needed to support the planning, conduct, and reporting of audits by the Comptroller General;

D.4.3 Developing risk-based audit framework when required;

D.4.4 Conducting recipients’ audit for contribution agreements.

D.5 of Executive Management Committee Members:

Executive Management Council Members are responsible for ensuring that relevant managers prepare action plans that adequately address the recommendations and findings arising from internal audits, that the action plans are effectively implemented, and that evidence demonstrating implementation are provided to internal audit.

D.6 of the External Audit Advisory Committee:

For the responsibilities of the External Audit Advisory Committee, see the charter of the External Audit Advisory Committee.

Approvals

……………………………………………………………………………………………..

Recommended by the Chief Audit Executive on March 16, 2010

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Recommended by the External Audit Advisory Committee on March 19, 2010

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Approved by the Deputy Minister on March 19, 2010

Annex 1: Vision/Mission/Values/Mandate

Vision: 

Strategic partners in the achievement of departmental outcomes through excellence in audit and evaluation services.

Mission: 

To enable the department to efficiently and effectively achieve its strategic objectives and enhance its accountability to Canadians.

Values:

The value statements of the Audit and Evaluation Branch reflect the collective principles, values and ethics of the Branch, guide the Branch’s operational activities and strategic direction, and demonstrate its commitment to fairness, respect and professionalism.

  • We promote and uphold the Values and Ethics Code for the Public Service in our activities
  • We are committed to providing value-added services, continuous improvement and to the ongoing development of employee knowledge, skill sets and competencies.  
  • We uphold the highest levels of integrity, objectivity and professionalism in all that we do. 
  • We cultivate diversity and inclusivity in the workplace, promote collegiality and team spirit in our interactions, and encourage open and respectful exchange of opinions and ideas.
  • We recognize that our team is our most important resource. 
  • We encourage and celebrate innovation, excellence and the valued contributions of our employees.

Mandate:

To support the continuous improvement of programs, policies and initiatives at Environment Canada and to contribute to the achievement of departmental objectives by providing timely and objective information, assurance and advice to the Deputy Minister, the Associate Deputy Minister, the External Audit Advisory Committee, the Departmental Evaluation Committee, and departmental management. 

The legislative and policy framework governing the roles and responsibilities of the Audit and Evaluation Branch is based on the Financial Administration Act, the 2006 Federal Accountability Act, the 2009 Treasury Board Policy on Internal Audit, the 2009 Treasury Board Policy on Evaluation, the 2008 Treasury Board Policy on Transfer Payments, and the Institute of Internal Auditors Standards.