ARCHIVED - Departmental Audit Committee Terms of Reference

1.0 Introduction

The current Treasury Board (TB) Policy on Internal Audit for the federal government came into effect on April 1, 2017. The objective of the 2017 TB Policy on Internal Audit is to ensure that the oversight of public resources throughout the federal public administration is informed by a professional and objective internal audit function that is independent of departmental management. This function provides assurance as to whether government activities are managed in a way that demonstrates responsible stewardship to Canadians. In this context, the NRC Departmental Audit Committee is an essential component of the National Research Council's governance structure and a critical aspect of a strong and credible internal audit regime.

The President for NRC is responsible, in consultation with the Comptroller General of Canada, for establishing and maintaining an independent departmental audit committee that includes a majority of external members recruited from outside the federal public administration and appointed by Treasury Board. Authority in this regard is derived from the Treasury Board Policy on Internal Audit ( 2017).
The Directive on Internal

Audit (2017) sets out the mandatory attributes for the composition and operation of the Departmental Audit Committee ; while the Policy on Internal Audit (2017) sets out the Departmental Audit Committee's responsibilities.

2.0 Purpose

The NRC Departmental Audit Committee is advisory to the President. The committee provides the President with objective advice and recommendations regarding the sufficiency, quality and results of internal audit engagements related to the adequacy and functioning of NRC's frameworks and processes for risk management, control and governance.

Using a risk‑based approach, the committee reviews all areas of responsibility for departmental audit committees related to departmental management, control and accountability processes as determined by the Comptroller General of Canada.

The Committee also provides advice and recommendations on matters for which the President, as accounting officer, is responsible and other related matters as needed or requested by the President.

3.0 Audit committee membership

3.1 Composition

The Committee is composed of up to four members, and is intended to reflect Canada's diversity in terms of gender, official languages, Indigenous Canadians, minority groups and regional representation.

• At least two members are external to the federal public service.
• A maximum of one member of NRC Council.
• External members (non Council) are jointly selected by the President and the Comptroller General for approval by the Treasury Board.
• All members of the Committee are to be familiar with financial reporting, or are to become familiar with such reporting within the first year of their appointment.
• At least one external member is to be a financial expert holding a professional accounting designation in good standing.

The President is an ex officio and a non‑voting member of the Committee.

3.2 Chair

An external member, appointed by the President, chairs the Committee.

The chair is to be from outside the federal public administration unless an exception is granted by the Comptroller General of Canada.

Briefly stated, the role of the Chair is to prepare, in consultation with the other members of the Committee, a plan for recommendation to the President and to ensure that the responsibilities of the Committee are scheduled and fully addressed. In consultation with the President, the Chair calls the meetings of the Committee, sets the meeting agenda, and manages the meetings. The Chair also establishes effective relationships with NRC management and, as applicable to the business of the Committee, external stakeholders.

3.3 Tenure and terms of office

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. To ensure adequate continuity, the terms for the members of the Committee should be staggered.

All documents and information received by Committee members are the property of NRC and, as such, shall be destroyed or returned to NRC at the end of a member's tenure.

4.0 Audit committee meetings

4.1 Frequency

The frequency of audit committee meetings will be set annually in accordance with the approved annual plan and in consideration of a minimum of four meetings per year, one of which will be held by video or teleconference, with the authority to convene additional meetings if circumstances dictate. The Committee's meeting schedule for in‑person meetings will normally be set out one year in advance so that NRC management and internal auditors can prepare the information and reports required to support the Committee's work. Rescheduling of Committee meetings will be by exception only.

The Chair is required to call a meeting if requested to do so by the President or another Committee member.

4.2 Quorum

The quorum for a meeting is a simple majority of the Committee members. No alternates are permitted.

4.3 Preparation and attendance by members

To enhance the effectiveness of the Committee's meetings, each member:

• devotes the time needed to prepare for and participate in each meeting by reading the reports and background materials provided for the meeting; and
• maintains an excellent meeting attendance record^{Footnote 1}.

While in‑person meetings are preferred, meetings may be held through video and telephone conferences and other electronic means.

4.4 Attendance by non‑members

The Chief Audit Executive (CAE) and Chief Financial Officer (CFO) are expected to attend all Audit Committee meetings. The Chair may request the attendance of other NRC officials. As appropriate, the Chair invites representatives from external assurance providers such as the Office of the Auditor General (OAG) of Canada or the Treasury Board of Canada Secretariat to attend Committee meetings to discuss plans, findings, and other matters of mutual concern.

4.5 Minutes of meetings

Minutes of each meeting will be kept and will contain a record of the persons present. The minutes provide a record of decisions taken and a high‑level summary of discussions, providing insight on the topics and subtopics discussed.

4.6 In‑camera meetings

As part of each meeting, the Committee will normally meet individually in camera with each of the following:

• the CAE;
• the CFO;
• the representative of external assurance providers when in attendance; and
• any other officials the Committee may determine.

5.0 Operations

5.1 Briefing NRC's Council

NRC's Council is to be kept informed of the activities of the Departmental Audit Committee by:

• written reports prepared by or on behalf of the Chair summarizing each Committee meeting including the Annual DAC Report of its activities; and
• the President's responses to specific questions posed at Council.

5.2 Access by / to the Committee

The Committee has unfettered access to the CAE and CFO and to other NRC employees and documentation (subject to applicable legislation) as may be required to fulfill its responsibilities.

The CAE and CFO have unfettered access to the Committee and to the Committee Chair.

5.3 Annual Plan of the Committee

Each year, the Chair of the Committee prepares a plan to ensure that the annual and ongoing responsibilities of the Committee are scheduled and fully addressed. The plan is to be presented to the Committee for its approval at the beginning of the fiscal year.

5.4 Committee orientation, training, and continuing education

The role of the Committee can be fulfilled only if its members are well informed. Members will receive formal orientation and training on the Committee's purpose, responsibilities, and objectives and on the business of NRC. Members are expected to take advantage Audit Committee training events provided by the Office of the Comptroller General of Canada.

5.5 Support to the Committee

The Committee is to be provided with resources that are sufficient to carry out its role, responsibilities, and duties. To the extent it is appropriate to meet its responsibilities, and in keeping with these Terms of Reference, the Committee has the authority to retain independent advice and assistance.

Secretariat support to the operation of the Committee is to be provided by NRC. This includes:

• the timely preparation of all notices and agendas of meetings;
• coordination of presentations and distribution of reports and / or related documents that are prepared for the Committee's information or consideration;
• the timely preparation and distribution of minutes of meetings; and
• the performance of other duties as may be assigned.

6.0 Responsibilities and duties

The Comptroller General of Canada has prescribed a list of the areas of management for committee review and established detailed responsibilities for each. These areas are:

• Values and ethics
  • The Committee shall review and provide advice on NRC's system and practices established by the President to monitor compliance with laws, regulations, policies and standards of ethical conduct and 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
  • The Committee shall review and provide advice on the risk management arrangements established and maintained by NRC.
• Management control framework
  • The Committee shall review and provide advice on NRC 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 President. (e.g., audits of transfer payment recipients). (See also sections 6.2 "internal audit", 6.5 "financial statements", and 6.6 "departmental accountability reporting")
• Internal audit function
• External assurance providers
• Follow‑up on management action plans
• Financial statements and public accounts reporting
• Accountability reporting

The particular emphasis and priorities from among the committee's key areas of responsibility are to be set by the President in consultation with the Committee. Consideration should be given to NRC's mandate, objective and priorities, as well as the corresponding risks affecting NRC and the government.

7.0 Assessment of the committee's performance

7.1 External practice inspection

At least every five years, the Committee is to be required to participate in an external inspection of NRC's Internal Audit function that will include an examination of the performance of the Committee.

8.0 Review of the committee terms of reference

The Committee reviews, periodically, the appropriateness of its Terms of Reference, for reaffirmation by the President.

9.0 Conclusion and approvals

NRC's Departmental Audit Committee abides by the terms and conditions contained herein that meet or exceed the Government of Canada's Policy on Internal Audit and Directive, including the International Professional Practices Framework (IPPF) of the Institute of Internal Auditors.

Alexandra Dagger, Chief Audit and Evaluation Executive
(Submits the Departmental Audit Committee Terms of Reference for review and approval)

Richard Dicerni, Audit Committee Chair
(Recommends approval of the Departmental Audit Committee Terms of Reference to the President)

Iain Stewart, President
(Approves the Departmental Audit Committee Terms of Reference)