The government of Canada has implemented several measures over the past few years to strengthen accountability and increase transparency in the public sector. These measures have included the creation of new oversight bodies; strengthening existing oversight bodies; and significantly bolstering the internal audit function across the federal government.
Internal audit (IA) in particular has been empowered through direct reporting relationships of Chief Audit Executives (CAE) with Deputy Heads; departmental audit committees with a majority of external members; and adoption of professional standards. As a result, IA functions have become a more effective internal oversight tool for Deputy Heads, albeit at the risk of increasing the audit burden and fatigue on management.
Assurance providers must be cognisant of audit burden and consider strategies that minimize duplication of efforts between oversight bodies. As members of the executive team, this is particularly important for CAEs whose mandates are to support the achievement of organizational objectives through the improvement of processes and provision of value-added advice. As such, IA has a responsibility to foster collaborative relationships with internal and external partners to maximize synergy and minimize duplication.
Within organizations there are several functions that have overlapping interests with IA, albeit from different perspectives. For example, the Chief Financial Officer (CFO) establishes, maintains and tests control frameworks; and Program Evaluation assesses the economy, efficiency and effectiveness of programs. Similarly, overlap may also exist with external assurance providers.
With both internal and external partners, IA must obtain buy-in to coordinate efforts by demonstrating that overlap exists, as well as the value of collaboration. This is inherently more challenging when engaging external partners, as it requires establishing new relationships and demonstrating the quality of IA’s work through adherence to professional standards.
Frequent engagement is necessary to enable communication of common priorities and create synergies to minimize duplication of efforts. For example, coordinating risk-based audit plans with external auditors requires coordination up to a year in advance to effectively identify overlapping projects, and align the timing of complementary projects. These relationships require patience and flexibility but can result in the greatest opportunities to minimize duplication.
The IA function within Natural Resources Canada (NRCan) has effectively applied these principles in recent years. We have collaborated and coordinated with Program Evaluation through joint interviews and testing, sharing findings and conducting joint annual audit/evaluation planning. Similarly, we have engaged the CFO to coordinate the timing of internal audits to facilitate the CFO’s reliance on audit findings and minimize duplication between our respective functions.
With regards to collaborating with external assurance providers, NRCan’s Audit Branch met frequently with the Office of the Auditor General enabling their reliance on our working papers for their annual audit on the public accounts. We also shared information regarding our respective audit plans in order to leverage our work. In addition, we often coordinate our work with the Office of the Comptroller General, as well as IA functions of other federal departments.
NRCan’s senior management has expressed appreciation for our commitment to minimize the audit burden through our collaborative efforts, further solidifying our seat at the executive table as value-added partners. A common message, however, has been to continue reducing the burden, whenever possible.
To achieve this, a more systemic approach to identifying potential duplication between internal and external assurance providers must be realized. One consideration could be greater central coordination of departmental IA plans with the audit planning activities of external assurance providers. This could enable improved audit coverage, more informed audit planning and more strategic allocation of resources, while minimizing audit burden across the public service.
An increase in oversight does not have to lead to an increase in audit fatigue, as long as assurance providers collaborate effectively to maximize synergies and minimize duplication. As a strategic partner, IA is well positioned to lead such collaboration and minimize the audit burden.