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Audits and Evaluations

Audit of Readiness for the Implementation of the Policy on Internal Control

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Appendix A – Audit Approach

Methodology

A standard audit process was used, based on professional standards that are in compliance with the Institute of Internal Auditors' Standards for the Professional Practice of Internal Auditing. The approach, which includes planning, fieldwork and reporting phases, is summarized below.

Planning Phase

During the planning phase, an understanding of Library and Archives Canada's (LAC) financial management environment was developed through preliminary interviews with the Director General, Finance and Accommodation/Chief Financial Officer and key managers in the Finance and Accommodation Branch. Relevant documentation was also reviewed, including:

• LAC Risk-based Audit Plan (2009–2012)
• MAF Assessment (Round VI), Action Plan (Round VI), Self-Assessment (Round VII) for the following relevant areas of management: Values-based leadership and organizational culture; effectiveness of corporate management structure; corporate risk management; effectiveness of asset management; effective project management; effective procurement; effectiveness of financial management and control; and effectiveness of internal audit.
• LAC Governance Structure
• Terms of Reference for various governance committees with financial control oversight responsibilities, including the Departmental Audit Committee, the Management Board, Infrastructure Planning Advisory Committee, Digital Information and Technology Steering Committee, Collection Storage Facility Finance Committee, Nitrate Film Facility Finance Committee, Contract Review Committee
• LAC organizational structure, Finance and Accommodation Branch organizational structure (current), Finance and Accommodation Branch organizational structure (proposed)
• LAC financial statements for the year ending March 31, 2009
• Corporate Dashboard and explanation
• Delegation of financial authority and designation order with delegation charts
• Work descriptions and task lists for various levels of financial officers and clerks in accounting operations.
• Year-end procedures for the FreeBalance payables module
• Implementing the Policy on Internal Control, presentation to FMI PD Week participants, November 2009, by Sharon Smith, TBS-OCG, Director, Financial Operations.

This information helped identify inherent risks to which the processes that support the Internal Control over Financial Reporting (ICFR) assessment are exposed.

Working with the list of inherent risks, we identified key controls and associated audit criteria to address the audit. The audit criteria are set out in Appendix B.

Fieldwork Phase

During the fieldwork phase, the audit program was executed. The methodology consisted of:

• Document Review—Reviewing relevant documentation in support of controls in place over the ICFR assessment process, including:
  • A sample of agendas and minutes of key governance committees taken from the last six months.
  • LAC's hospitality policy, as an example of a financial policy
  • Internal Audit's Audit of Risk Management Report and Review of Privacy Report
  • FreeBalance functional classes matrix
  • Examples of aide-memoire pieces on topics related to accounting operations procedures in FreeBalance
  • Examples of internal training provided on topics related to accounting operations, financial planning, resource management, and contracting and material management.
• Interviews with staff—18 interviews were conducted; the sample of interviewees was drawn to give a good cross-representation of senior departmental managers, Finance and Accommodation Branch managers and financial officers, and the administrative services level.

Reporting Phase

Management of the auditable entity was given the opportunity to comment on the draft report.

This report was recommended by the members of the Departmental Audit Committee for approval by the Deputy Head.

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