8095 Submitting the Special Examination Report to the Board of Directors and Making it Public

Jul-2020

Communicating the special examination report to the board of directors

After the draft report has been communicated to the audit committee (including the Crown corporations’ responses) and it has been revised to reflect the feedback received, the audit team must obtain approval before submitting the final report to the Crown corporation’s board of directors. The audit team needs to get the approval from the engagement leader and Legal Services.

The audit team will provide the special examination report and transmittal letter in both official languages to the Crown corporation’s board of directors at least one week in advance of the meeting at which the special examination report will be presented.

The engagement leader will present the report to the board of directors and document any comments received.

In addition, the engagement leader should hand deliver the post-audit survey to the chair of the board of directors and the head of the Crown corporation at the time that the report is presented (to coincide with the date printed on the survey). Alternatively, if such a meeting is not held, the surveys should be mailed to the chair of the board of directors and the head of the Crown corporation.

During the course of the meeting at which the final special examination report is presented, the engagement leader should

• remind the board of directors of its responsibility to circulate the report within specific periods of time, as explained in the following section.

• inform the board of directors that the OAG is required, by professional standards, to review all communication related to the special examination report (e.g., news releases) to ensure that the report has been reproduced accurately and that the context in which any summary or extract of the report used is not misleading, as explained in the following section.

Board of directors responsibilities regarding the final special examination report

Once the audit team has provided the final special examination report to the Crown corporation’s board of directors, the board has the responsibility to circulate the report within specific periods of time, as set out in the Financial Administration Act:

1. within 30 days of receiving the final special examination report, the board must submit a copy of the report to the appropriate Minister and the President of the Treasury Board; and

2. within 60 days of receiving the final special examination report, the board must make the report available to the public.

Both the 30-day and 60-day periods commence on the same date; they are not additive. Rather, after the first 30 days have elapsed (by which time the copy of the report will have had to be submitted to the appropriate Minister and the President of the Treasury Board), the board has another 30 days to make the report available to the public. In most, if not all, cases, making the report available to the public is accomplished by posting a copy on the Crown corporation’s external website.

Interpreting the date on which the board receives the special examination report

In some circumstances, the Crown corporation receives the final special examination report on the day that it is presented to the board of directors. In this case, the final PDF versions in both English and French would be available on the day of the meeting. Therefore, in this circumstance, the meeting date would be interpreted to be the appropriate start date for the calculation of the 30- and 60-day reporting requirements.

In other circumstances, the Crown corporation receives the final special examination report after the report has been presented to the board of directors. This may be due to a number of reasons, including the fact that the board may request changes to the special examination report at the original board meeting. In this case, it is suggested that there be an acknowledgement included in the minutes of the board meeting indicating that when the finalized reports (PDF versions in English and French) are received by the secretary, or whomever the board designates, the report is deemed to have been received by the board. The date of receipt of the PDF versions would then become the start date for calculating the 30- and 60-day reporting requirements.

In other circumstances, the board may want to hold a board meeting in order to receive the final special examination report. Consequently, the board could take the position that the final report will be deemed as “received” at this board of directors meeting. In this case, the date of this meeting would mark the date of receipt of the special examination report and would determine the start date for calculating the 30 and 60 days.

Responsibility of the audit team before the special examination report is made public

According to CSAE 3001.67, before a Crown corporation makes a special examination report public, the audit team has to ensure that the report is reproduced accurately and that any other information presented with the report is consistent with the report’s content and does not undermine its credibility. If significant inconsistencies are identified, the audit team should discuss the matter with the representatives from the Crown corporation to resolve the situation before the report is made public and take further action as appropriate. The engagement leader may also need to consult with the assistant auditor general and Legal Services.

While not a professional requirement, the audit team is asked to provide the special examination report in a locked PDF to ensure that the corporation protects the report to at least the same degree as the OAG protects reports posted on its website.

Audit teams are expected to follow the protocol below regarding the reproduction of the special examination report.

Electronic reproduction

• Where a Crown corporation intends to post the special examination report submitted by the OAG on its public website, the audit team will provide the corporation with an electronic version of the report; that is, a locked PDF file with an index function that is ready for posting on the Internet. The audit team should request the electronic document with these features from Design and Publishing. Providing the reports in this form is in the interest of the OAG because they can be provided to Crown corporations, they are easily posted, and they reduce the risk that our messages and the quality of the report’s presentation will be modified. The locked PDF file may be shared by email.

• Where a Crown corporation intends to post its own reproduction of the special examination report on its public website, the audit team should compare the posted version with the report as originally issued by the OAG to determine whether the report has been reproduced accurately. Note that the OAG has no obligation to monitor subsequent amendments to the website. While not a professional requirement, the team should see that the layout of any reproductions of the special examination report are of similar quality to that of the report issued to the board of directors.

• Where a Crown corporation intends to include other information on its website, the audit team should ask the corporation to identify all web pages that refer to the OAG and/or to the report. The team should review those references to ensure that they do not undermine the report and that they are consistent with the OAG’s mandate for the examination and the knowledge obtained in carrying out the special examination.

• The team should deal with requests from Crown corporations for electronic files in HTML format on a case-by-case basis to ensure that the principles behind this protocol are not compromised.

Hard-copy reproduction

• Where a Crown corporation intends to make public a hard copy of its special examination report, the audit team should read a draft or the printer’s proof before the document is printed. Later, the audit team should check the wording of the printed document against that of the report originally issued to determine whether the report has been reproduced accurately. While not a professional requirement, the team should see that the layout of any reproductions of the special examination report is of similar quality to that of the report issued to the board of directors.

• Where a Crown corporation intends to include other information on the hard copy of the public document, the audit team should ask the corporation to identify all pages that refer to the OAG and/or to the report. The team should review those references to ensure that they do not undermine the report and that they are consistent with the OAG’s mandate for the examination and the knowledge obtained in carrying out the special examination.

Redacting information in the special examination report

In exceptional cases, certain information contained in special examination reports may be redacted from the public version. Redaction means removing classified information from a public record. The only situation where a redaction should take place is where there is classified information that cannot be made public in a special examination report. Classified information is information that is classified as Top Secret, Secret, or Confidential.

Information could be classified for different reasons. According to the Access to Information Act, Crown corporations may refuse to disclose to the public any records that contain information related, among other things, to the following areas:

• information obtained in confidence (as outlined in subsection 13(1) of the Act),
• international affairs and defence,
• security, and
• economic interests (trade secrets or financial, commercial, scientific, or technical information).

The corporation is responsible for classifying its information. However, it could happen that the audit team will not agree with the corporation’s classification or will not agree with issuing a redacted version of the report to take out classified information. The engagement leader will need to discuss redacting any information with the corporation’s management and board of directors. If needed, the audit team consults Legal Services to obtain advice. The team will then seek approval from the Auditor General for any action taken.

Given the nature and sensitivity of potential classified information, representatives from the department responsible for the Crown corporation may want to be included in the discussion to identify potential information to be redacted from the report. In this case, it may be more efficient to hold a three-party meeting (department, corporation, and the OAG) in order to reach an agreement faster. Given that the audited entity is the Crown corporation, and not the department, the OAG cannot initiate a discussion with the responsible department about the content of the special examination report. A three-party meeting could only be held if the Crown corporation agrees to do so. It is then the responsibility of the Crown corporation to engage the department using its regular communication process and invite the OAG to discuss potential redaction.

Reporting to the responsible Minister and/or Parliament

If the engagement leader, in consultation with the assistant auditor general and the Auditor General (if necessary), determines it necessary to bring specific information to the attention of the appropriate Minister, they will, after consultation with the board of directors, communicate that information directly to the Minister.

If the engagement leader, in consultation with the assistant auditor general and the Auditor General (if necessary), believes that the special examination report contains information that should be brought to the attention of Parliament, they will, after consultation with the Minister and the board of directors, prepare a report on that information for inclusion in the corporation’s next annual report and provide the board of directors and the Minister with copies of the report.

Tabling reproduction of special examination reports in Parliament

After the special examination report has been made public by the corporation, the report is reproduced in the next set of reports of the Auditor General and tabled in Parliament. Refer to OAG Audit 8090 Preparation for tabling of direct engagement reports, for details on work to be done in preparation for tabling.