Audits
Auditor General of Canada
Our auditor is the Auditor General of Canada. The Auditor General performs special examinations and annual financial audits and audits the implementation of our Environmental and Social Review Directive.
We are a seven-time winner of the Auditor General's Award for Excellence in Financial Reporting.
Special Examinations
A special examination is a performance audit of a federal Crown corporation conducted by the Auditor General of Canada at least once every 10 years. The examinations provide an independent audit opinion to the Board of Directors and the appropriate Minister and Parliament on the management of EDC.
In particular, the Auditor General examines whether our financial, management and information systems and practices provide reasonable assurance that our assets are safeguarded and controlled; whether our financial, human and physical resources are managed economically and efficiently; and whether operations are carried out effectively.
The last Special Examination was conducted in 2009. The report noted: "The Corporation has in place the key elements of a good governance framework. It has a sound corporate planning process that provides clear direction for its activities and considers relevant information from a number of sources, including its Board of Directors.”
Internal Audits
Our Internal Audit group conducts annual audits as per a risk-based audit plan which is approved by the Audit Committee of the Board of Directors. After each audit, a report is issued which includes our opinion on the related internal controls, a summary of each finding and management’s remedial action plans.
Audit Opinions
Audit opinions relate to the process being audited, and do not reflect an overall opinion for EDC. There are four audit opinions.
- Strong controls: Key controls are effectively designed and operating as intended. Internal control system is comprehensive, well developed, and well understood by Management and staff. Objectives of the audited process are most likely to be achieved.
- Well controlled:Key controls are effectively designed and operating as intended. Objectives of the audited process are likely to be achieved.
- Opportunities exist to improve controls: One or more key controls do not exist or are ineffective. Objectives of the process may not be achieved. The risk of loss to the audited process is significant. Timely action is required.
- Not controlled: Multiple key controls do not exist or are ineffective. Objectives of the process are unlikely to be achieved. The risk of loss to the audited process is material. Action must follow immediately.
Audit Findings
- Major: A key control does not exist, is poorly designed or is not operating as intended and the financial and/or reputation risk is more than inconsequential. The process objective to which the control relates is unlikely to be achieved. Corrective action is needed to ensure controls are cost effective and/or process objectives are achieved.
- Moderate: A key control does not exist, is poorly designed or is not operating as intended and the financial and/or reputation risk to the process is more than inconsequential. However, a compensating control exists. Corrective action is needed to avoid sole reliance on compensating controls and/or ensure controls are cost effective.
- Minor: A weakness in the design and/or operation of a non-key process control. Ability to achieve process objectives is unlikely to be impacted. Corrective action is suggested to ensure controls are cost effective.
Audit Follow-up Process
As required by the standards of the Institute of Internal Auditors, Internal Audit monitors the disposition of audit engagement results communicated to management to ensure that action is taken on a timely basis. Follow-up testing is performed on a quarterly basis to ensure appropriate implementation of action plans. Follow-up audits assess the overall implementation rate of management’s action plans. A high implementation rate across the organization signifies management’s commitment to the continuous improvement of internal controls. A report is issued for follow-up audits using the following rating scale:
- Strong:100% of the audit recommendations due to be implemented in the current quarter were completed.
- Well controlled: 70% - 99% of the audit recommendations due to be implemented in the current quarter were completed.
- Opportunity Exists to Improve Implementation Rates: 50% - 69% of the audit recommendations due to be implemented in the current quarter were completed.
- Not controlled: less than 50% of the audit recommendations due to be implemented in the current quarter were completed.