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Departmental Audit Committee (DAC)

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Departmental Audit Committee Charter

Approved this 16th day of November, 2009.

Original signed by
Daniel J. Caron
Librarian and Archivist of Canada
Chairman of Library and Archives Canada
Audit Committee

1. Introduction/ Preamble

The Treasury Board (TB) Policy on Internal Audit (revised and effective as of July 1, 2009) has as objective to strengthen public sector accountability, risk management, resource stewardship and good governance by strengthening and reorganizing internal audit across government. Derived from this policy and the TB Directive on Departmental Audit Committees, the Deputy Head has the authority and responsibility for establishing an Audit Committee for their department/agency. Both aforementioned documents set the basic parameters for the composition and operation of the Departmental Audit Committee as well as its responsibilities, duties and accountability. In addition under the provisions of the Directive the Audit Committee is required to document its role, responsibilities and operation in terms of reference or a charter.

2. Purpose

To ensure that the Deputy Head has independent, objective advice, guidance and assurance on the adequacy of Library and Archives Canada risk management, control and governance processes.

3. Authority

The departmental audit committee has authority to conduct or authorize investigations into any matters within its scope of responsibility.

4. Departmental Audit Committee membership

4.1. Composition
The committee shall be composed of three external members and the Librarian and Archivist of Canada. External members shall be selected jointly by the Librarian and Archivist of Canada and the Comptroller General and approved by Treasury Board on the recommendation of Treasury Board's President. The Committee must have a majority of external members who do not occupy a position in the federal public administration. The Chief Audit Executive, and the Chief Financial Officer shall be participating as management representatives.

4.2. Chair
The Librarian and Archivist of Canada.

Role of the Chair: to establish the plan for the committee and, upon its approval by the committee, to ensure its fulfillment; to call committee meetings, set the committee meeting's agenda and manage the meetings; to establish effective relationships with management and, as applicable, external stakeholders.

4.3. Vice-chair
One of the external members may serve as a Vice-Chair with such duties and responsibilities assigned by the Chair.

4.4. Tenure and terms of office
External members shall not serve more than two terms. A full term of office is four (4) years.

5. Departmental Audit Committee meetings

5.1. Frequency
The committee shall meet four times per year. Additional meetings may be scheduled by the committee as needed. The meeting schedule shall normally be set out one year in advance so that LAC management and internal auditors can prepare the information and reports required to support the committee's work. Rescheduling of meetings will be by exception only.

5.2. Quorum
The quorum for a meeting is the majority of the members, including the Chair. No alternates are permitted.

5.3. Preparation and attendance by members
To enhance the effectiveness of the committee, members are required to maintain excellent attendance record (at least 75%) and to devote enough time to read the reports and background documents provided for the meeting.

5.4. Attendance by non-members
The Chief Financial Officer and the Chief Audit Executive are expected to attend all meetings of the committee. The Committee Chair may require the attendance of other departmental officials. As needed the Chair may ask a senior representative of the Office of the Auditor General to attend the meeting to discuss the Office's plans, finding and other matters of mutual concern. The Chair may as needed also ask Treasury Board Secretariat officials to attend.

5.5. Minutes of meetings
Record of decisions of each meeting shall be kept and will contain a record of the individuals present, decisions taken and a high-level summary of the discussion providing insight on the topics and subtopics discussed.

5.6. In-camera meetings
As part of each meeting the Committee might meet individually and, as deemed necessary, in camera with each of the following:

• LAC Chief Financial Officer
• LAC Chief Audit Executive,
• The representatives of the Office of the Auditor General when in attendance
• Any other officials as determined by the committee

6. Operations of the Departmental Audit Committee

6.1. Access to/by the Committee
The committee has unfettered access to the Chief Audit Executive, and Chief Financial Officer, as well as other LAC employees and documentation (subject to applicable legislation) as may be required to fulfill its responsibilities.

The Chief Audit Executive and Chief Financial Officer have unfettered access to the Committee, the Committee Chair and Vice-chair.

6.2. Committee Plan
The Chair of the committee will prepare a plan to ensure that the annual and on-going responsibilities of the committee are scheduled and fully addressed. The plan will be presented to the committee for approval.

6.3. Committee orientation, training and continuing education
The committee can fulfill its role only if its members are well trained and informed. Members will receive formal orientation and training on the committee's purpose, responsibilities and objectives, and on the business of Library and Archives Canada.

6.4. Support to the Committee
The committee shall be provided with the resources necessary to carry out its role and responsibilities. To the extent it deems necessary to meet its responsibilities and keeping with its terms of reference, the committee has the authority to retain independent advice and assistance. Secretariat service to the committee shall include:

• Timely preparation of all notices and agendas of meetings
• Coordination of presentations and distribution of reports and/or related documents
• Timely preparation and distribution of minutes of meeting proceedings
• Performance of such other duties as may be assigned.

7. Responsibilities and duties of the Departmental Audit Committee

7.1. Values and Ethics: the committee shall review, at least annually the arrangements, established by management to exemplify and promote public service values and to ensure compliance with laws, regulations, policies, and standards of ethical conduct.

7.2. Risk Management: the committee shall review, at least annually, the corporate risk profile and departmental risk management arrangements.

7.3. Management Control framework
The committee shall:

• Review, at least annually, departmental internal control arrangements, including the relevancy of audits performed by LAC's Internal Audit Function;
• Consider the effectiveness of LAC's internal control system including information technology security and control;
• Review, at least annually, the effectiveness of the system for monitoring compliance with laws and regulations and the results of management investigations and follow-ups (including disciplinary action) of any instances of non-compliance;

7.4. Internal Audit function
The committee shall:

• Recommend, and review regularly, a Departmental Internal Audit Charter/policy for approval by the Librarian and Archivist of Canada;
• Review regularly the adequacy of resources for the internal audit function;
• Review and recommend for approval the risk assessment and internal audit plan prepared by the Chief Audit Executive;
• Review regularly the performance of the internal audit function (including a review of the conclusions of external practice inspections referred to in section 8.2. and related remedial actions taken);
• Advise the Deputy Head on the appointment and performance appraisal of the Chief Audit Executive;
• Receive and recommend for approval internal audit reports and management action plans to address recommendations;
• Be aware of audit engagements or tasks that do not result in a report to the committee, and be informed of all matters of significance arising from such work.

7.5. Office of the Auditor General (OAG) of Canada and Central Agencies
The committee shall:

• Ensure that management has adequate arrangements to support the OAG and Central Agencies in doing audit work in the department;
• Be fully briefed on audit work related to LAC to be undertaken by the OAG, other agents of Parliament or Central Agencies;
• Review the audit reports of the OAG and central agencies that have departmental or government-wide implications and recommend for approval departmental responses and action plans;
• Be briefed on audit-related issues and priorities raised by Central Agencies and advice the Deputy Head on required action;
• Be briefed on, and advise the Deputy Head on, the impact of government-wide initiatives to improve management practices;

7.6. Follow up on management action plans
The committee shall:

• Ensure that there are effective mechanisms in place to monitor and follow up on management action plans responding to recommendations from internal audits, the OAG, or other sources;
• Periodically receive reports from management on actions taken.

The Chief Audit Executive shall:

• Report periodically to the committee on whether management's action plans have been implemented and whether the actions taken have been effective;
• Identify any areas where she/he believes management has accepted a level of risk that is unacceptable to the department or to the government;

7.7. Financial statements and Public Accounts reporting
The committee shall:

• Review the departmental financial statements with management and all significant accounting estimates and judgments therein and recommend to the Deputy Head whether they should be accepted.

When the departmental financial statements are being audited by an external body, the committee shall review:

• The audited financial statements with the external auditor and senior management, discuss any significant adjustments to the statements required as a result of the audit, and any difficulties or disputes with management encountered in the course of that audit;
• Management letters arising from the external audit of the department's financial statements or the Public Accounts;
• The auditor's findings and recommendations relating to the internal controls in place for financial statement reporting;
• The performance of the external auditor.

7.8. Risk and departmental accountability reporting
The committee shall review:

• The Departmental Corporate Risk Profile
• The Report on Plans and Priorities
• The Departmental Performance Report
• Other significant accountability reports to ensure that to the best of its knowledge, there are no material misstatements or omissions

8. Assessment of Departmental Audit Committee performance

8.1. Committee self-assessment
The committee shall periodically self-assess its performance. The objective of this self-assessment is to contribute to a continuous improvement process in the committee's execution of its responsibilities via promoting discussion among members of the results and implications of the self-assessment.

8.2. External practice inspection
At least every four years the performance of the Committee shall be subject to external assessment by the Office of the Comptroller General.

9. Accountability reporting by the Departmental Audit Committee

The committee will prepare an annual report, which shall:

• Summarize the activities undertaken by the committee and the results of its reviews;
• Provide the committee's assessment of the department's system of internal controls;
• Document any significant concerns the committee may have in relation to LAC's risk management, controls and accountability processes;
• Provide the committee's assessment of the capacity and performance of the internal audit function;
• Provide, as needed, recommendations for the improvement of risk management, controls, compliance and accountability processes including recommendations for the improvement of LAC's Internal audit function;

The committee will also provide such other documentation or information that it deems important to best convey a fair and complete picture of its activity and results- and the context within which this ought to be viewed.

10. Review of Departmental Audit Committee Charter

The Committee will review annually the appropriateness of its charter for reaffirmation by the Deputy Head.

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