Audit Committee Terms of Reference

Authority

Chair and Membership

The Audit Committee shall consist of a Chair, who is a Governing Council member, and a minimum of three (3) external members chosen by Governing Council on the advice of its Nominating and Governance Committee and the Office of the Comptroller General (OCG) and as appointed by Treasury Board.

The Governing Council member appointed to be the Audit Committee Chair may not be a member of the federal public administration.

To be eligible as External Members, candidates must be independent of and external to the federal public administration, and free of any real or apparent conflict of interest. Additionally candidates must:

  • Satisfy the requirement of the OCG Competency Profile for an Audit Committee.
  • Be familiar with financial reporting or undertake to become familiar within the first year of appointment.

Members must be selected so that their collective skills, knowledge, and experience will allow the Committee to undertake its duties competently and efficiently. At least one member shall be a financial expert who possesses a professional accounting designation in good standing.

Membership shall reflect Canada's gender, linguistic, minority, regional, and Indigenous diversity.

The President of CIHR shall be an ex-officio non-voting member of the Committee.

Terms

An external member of the committee is to serve no more than two terms and up to a maximum of six years. A single term must not exceed four years. The President is an internal member, and therefore these limitations do not apply.

Terms are to be arranged to ensure, as much as possible, that turnover is no more than one third of members per year.

Meetings

The Committee shall meet in person, at least twice per year at the call of the Chair or by request of the President. No alternates shall be permitted.

The President, the Chief Financial Officer (CFO), and the Chief Audit Executive (CAE) shall be expected to attend all audit-related meetings of the Committee. The Chair of the Committee may request the attendance of other CIHR officials.

The Chair shall, as necessary, invite representatives of external assurance providers to attend the Committee meeting to discuss plans, findings, and other matters of mutual concern.

The Chair shall, if necessary, ask Treasury Board of Canada Secretariat officials to attend a Committee meeting.

As part of each meeting, the Committee shall, if required, meet individually in camera with each of the following: the President, the CFO, the CAE, external assurance providers, and any other officials the Committee may identify.

Quorum

A majority of its members (50% plus 1).

Reference

Bourinot's Rules of Order, 4th Edition.

Mandate

Using a risk-based approach, reviewing all core areas specified in the Roles and Responsibilities of departmental management, control and accountability processes, as determined by the Comptroller General of Canada.

Roles and Responsibilities

The Audit Committee shall ensure that the President and the Governing Council have objective advice and recommendations on the sufficiency, quality, and results of internal audit engagements related to the adequacy and functioning of CIHR's frameworks and processes for risk management, control and governance. Upon request of the President, the Audit Committee shall provide advice and recommendations on matters for which the President, as accounting officer, is responsible to report and on other related matters as needed. The Committee shall have no executive authority. The Committee shall, using a risk-based approach, review the following areas of responsibility:

  • Values and Ethics
    • Review, at least annually, the arrangements established by the President and Governing Council to monitor, ensure compliance with laws, regulations, policies, and standards of ethical conduct and to identify and deal with any legal or ethical violations. This may also include the procedures and feedback mechanisms established to monitor conformance with its code of conduct and ethics policies, as well as how its processes encourage and maintain high ethical standards.
  • Risk Management
    • Review and provide advice on, at least annually, the corporate risk profile and risk management arrangements.
  • Management Control Framework
    • Review and provide advice, at least annually, on management's internal control arrangements, and be informed on all matters of significance arising from work performed by others who provide assurances to senior management and the deputy head.
  • Internal Audit Function
    • Recommend a CIHR Internal Audit Policy for the Governing Council's approval and regularly review the Policy for its ongoing adequacy and effectiveness.
    • Provide advice to Governing Council on the adequacy of resources of the CIHR Internal Audit function.
    • Review and recommend for the Governing Council's approval the risk-based internal audit plan prepared by the Chief Audit Executive (CAE).
    • Review regular reports on progress against the risk-based internal audit plan.
    • Regularly review the performance of the CIHR Internal Audit function.
    • Advise the President and the Governing Council on the recruitment, appointment and performance appraisal of the CAE.
    • Receive and on behalf of Governing Council approve internal audit reports and management action plans to address recommendations.
    • Be made 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.
  • External Assurance Providers
    • Be informed and advise the deputy head on all audit work relating to the department to be undertaken by external assurance providers, including management's response; and all audit-related issues and priorities raised by external assurance providers.
  • Follow-up on Management Action Plans
    • The audit committee shall review regular reports by the CAE on the progress of the implementation of approved management action plans resulting from prior internal audit recommendations as well as management action plans resulting from the work of external assurance providers. This will include a review of the CAE’s assessment of the impact of the proposed actions and whether the actions will address the risks identified.
  • Financial Statements and Public Accounts Reporting
    • Review and provide advice to the President and Governing Council on CIHR's key financial management reports and disclosures of the department, including quarterly financial reports, annual financial statements and Public Accounts, the annual Statement of Management Responsibility Including Internal Control over Financial Reporting, and the risk-based assessment plans and associated results related to the effectiveness of the departmental system of Internal Control over Financial Reporting.

      When the financial statements are audited, the Committee shall review:

      • the plan for the audit of CIHR’s financial statements of the external audit firm retained for this purpose;
      • the audited financial statements with the external auditor and senior management, and discuss any significant accounting estimates and adjustments to the statements required as a result of the audit, and any difficulties or disputes with management encountered in the course of the audit;
      • management letters arising from the external audit of the financial statements or the Public Accounts; and
      • the auditor's findings and recommendations relating to the internal controls in place for financial statement reporting and consider their impact on controls, risk management and governance processes.
  • Accountability Reporting. Receive as information the Departmental Plan, the Departmental Results Report, evaluation plans and reports, and other significant accountability reports, for context on the deliberations of the Audit Committee and advice to the President and Governing Council.

Reporting

The President, on behalf of the Committee and if required, shall brief the relevant Minister periodically on significant items arising from the work of Internal Audit and the Committee. The Minister shall be offered the opportunity to meet with the audit committee, along with the deputy head, at least annually.

The Audit Committee shall normally report at each meeting of the Governing Council on all of its proceedings since the last meeting of the Governing Council.

The Committee shall prepare an annual report to the President and the Governing Council that:

  • Summarizes the results of the committee's reviews of areas of responsibility; and
  • Provides the independent members' assessment, and make recommendations as needed on the capacity, independence and performance of the internal audit function; and
  • Shall be comprised of, and indicate the fact that the views expressed are entirely and exclusively those of the independent members, notwithstanding any assistance given by departmental officials in its preparation.

The Committee shall respond to all matters related to the Committee's mandate as may be referred to it by the Governing Council.

CIHR will disclose proactively remuneration and expenses (including travel and hospitality) of individual external audit committee members, in the time and manner prescribed by the Comptroller General of Canada.

Evaluation

The Committee annually shall carry out a review of its Terms of Reference and re-affirm its membership.

Appointments

Approved at the 61st Governing Council Meeting of June 24-25, 2009.

Terms of Reference

Approved at the 54th Governing Council Meeting of March 18-19, 2008.
Last revised at the 109th Governing Council Meeting of June 21, 2017.

Conflicts of Interest

The President is responsible for ensuring that any situation that might give rise to a real or apparent conflict of interest with the audit committee member’s responsibilities is prevented or effectively managed.

Audit committee members must disclose all new activities, interests or appointments in order for the President to assess whether they may impair, or be seen to impair, the member’s ability to discharge his or her duties in an independent or objective manner. This will be done at least annually and for the duration of the member’s term.

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