Canadian Government Executive - Volume 21

/ Canadian Government Executive

// November 2015

Committee members should have com-

plementary backgrounds, Charles-Antoine

St-Jean told the Vancouver GIACC session.

“They do not all need a financial back-

ground, but they should have knowledge

of the department and an understanding

of the public sector,” he said.

Educating committee

members

To ensure that external members have the

necessary background knowledge, man-

agement — ideally supported by internal

audit — should provide information on

emerging risk management and corporate

governance issues specific to their sector.

New members should also receive the

audit committee charter and previous meet-

ing materials and minutes. Orientation will

ideally be tailored to the individual, and the

role he/she has on the committee.

“We provide orientation over one or two

days to external members,” Rick Kennedy

told the Vancouver session. “We give them

the committee charter, discuss the nu-

ances of the public sector, review previous

audit reports, and go over enterprise-wide

IT, operational and corporate plans.”

The need for careful

preparation

Audit committee meetings are more effec-

tive when they are scheduled well in ad-

vance. This allows time to build the agenda,

produce quality materials, circulate the ma-

terials to participants (ideally at least two

weeks in advance) and enable committee

members to be prepared to participate.

Pre-meeting briefings should be provided

to the Chair and Vice Chair well in advance

to ensure approval of the agenda and high-

light key areas of focus for decision and dis-

cussion purposes. Pre-briefings may also be

appropriate for other members.

Executives have limited time and com-

peting priorities and are not often able to

review extensive reports. According to KP-

MG’s 2015 Global Audit Committee Survey,

three quarters of audit committee members

surveyed said the time required to carry

out their duties has increased at least mod-

erately (24%) or significantly (51%).

Although reports in their entirety should

always be available, they should be sup-

ported by executive summaries that are

concise, include a clear purpose, highlight

items that require decision/direction or

further action, and set out next steps with

clear accountabilities and timelines.

Meeting agendas should be prioritized

to enable maximum discussion on top pri-

ority and decision items, and to identify

lesser priority or information-only items.

A well-structured agenda will keep the

discussion focussed and maximize the ef-

ficiency and effectiveness of meetings.

Conducting effective

meetings

A good audit committee meeting will pro-

vide plenty of opportunity for discussion.

Speaking points for the chief audit execu-

tive should emphasize actions, account-

abilities and next steps.

Effective internal audit services gener-

ally do not end with a finding, but instead

provide opportunities for advice beyond

what is in a final report. The audit commit-

tee meeting can serve as a forum to seek

such insights.

In-camera meetings provide an opportuni-

ty for members to privately discuss “delicate”

situations with internal/external auditors

without the presence of management.

A participant at a 2013 Ernst & Young

meeting of Canadian audit committee

chairs suggested the audit committee

chair and the chief audit executive meet

routinely, usually before an audit commit-

tee meeting. An audit committee is likely

to be far more effective where the chair-

CAE relationship is strong.

After the meeting

Clear and concise audit committee min-

utes should be distributed promptly after

each meeting. They should summarize the

key points regarding decisions and follow-

up actions with specific accountabilities

and timelines.

Internal audit can follow up on action

taken on audit committee decisions, and

then report back to the committee. This

assures the committee that it is fulfilling

its mandate, supports further engagement,

and promotes dialogue. Open communi-

cation is fundamental to maintaining a

strong relationship; it encourages a cul-

ture of transparency and integrity, helps

the audit committee achieve its mandate

and ensures there are no surprises.

Audit committees can improve their ef-

fectiveness by conducting periodic self-as-

sessments (with input from key stakehold-

ers) or by using similar mechanisms to

evaluate their performance. Internal audit

can explore lessons learned from each au-

dit committee meeting to support continu-

ous improvement.

A formal internal audit quality assur-

ance program, with external assessment

in accordance with professional practices

and standards, will also provide insights

on audit committee effectiveness – includ-

ing how well the internal audit function is

supporting the audit committee.

What makes a successful

audit committee?

Beverley Briscoe, at the Vancouver meet-

ing, provided a concise description of an

effective audit committee. She said it is one:

• With a clear mandate that everyone

knows;

• With the right people in room;

• Talking about the right things;

• With a strong relationship with the chief

audit executive, the external auditor,

and the chief executive officer.

Can audit committees be effective? Abso-

lutely. “We wouldn’t be there if we weren’t

making a difference,” Ms. Briscoe said.

ichard

ennedy

is the Chief Internal

Auditor and Assistant Deputy Minister,

Ontario Internal Audit Division, Trea-

sury Board Secretariat.

harles

-A

ntoine

-J

ean

is the

national partner for Public Sector in

Canada for Ernst & Young and member

of the Global Public Sector Council

for Ernst & Young. He rejoined Ernst &

Young in the fall of 2007 after serving

as the Comptroller General of Canada

for three years.

Internal Audit

Effective internal audit services generally do

not end with a finding, but instead provide

opportunities for advice beyond what is in

a final report.