Report to/Rapport au :

 

Audit Sub-Committee

Sous-comité de la vérification

 

and / et

 

Finance and Economic Development Committee

Comité des finances et du développement économique

 

and Council / et au Conseil

 

19 May 2011 / le 19 mai 2011

 

 Submitted by/Soumis par: Kent Kirkpatrick, City Manager / Directeur municipal

 

Contact Person/Personne ressource : Steve Box, Manager, Policy Coordination and Outreach/ Gestionnaire, Direction de la coordination des politiques et du rayonnement

 (613) 580-2424 x 24200, Steve.Box@ottawa.ca

 

City Wide/à l’échelle de la Ville

Ref N°: ACS2011-CMR-OCM-0002

 

SUBJECT:

Quality Assessment Review - Office of the auditor general (OAG)

 

 

OBJET:

examen de l’évaluation de la qualité – Bureau du vérificateur général (BVG)

 

 

REPORT RECOMMENDATION

 

That the Audit Sub-Committee recommend that the Finance and Economic Development Committee recommend Council approve the contract amendments with Pricewaterhouse Coopers LLP to include a Quality Assessment Review of the Office of the Auditor General as outlined in Document 1; and that Pricewaterhouse Coopers LLP report back to the Audit Sub-Committee on the review’s findings and recommendations for implementing the Institute of Internal Auditors (IIA) standards.

 

 

RECOMMANDATION DU RAPPORT

 

Que le Sous-comité de la vérification recommande au Comité des finances et du développement économique de recommander à son tour au Conseil d’approuver des modifications au contrat passé avec Privewaterhouse Coopers LLP, afin d’y inclure un examen d’évaluation de la qualité du Bureau du vérificateur général conforme à la description donnée au document 1, et que PricewaterhouseCoopers LLP rende compte au Sous-comité de la vérification des conclusions et recommandations de l’examen en vue de l’application des normes de l’Institut des vérificateurs internes.

BACKGROUND

 

On 22 March 2011, the City Manager provided a verbal update to the Audit Sub-Committee with respect to the status of the external Quality Assessment Review of the Office of the Auditor General (OAG), further to Council direction received on December 8, 2010.  The City Manager received direction from the Audit Sub-Committee (ASC) to recommend to the Finance and Economic Development Committee (FEDCO) that the existing contract with Pricewaterhouse Coopers LLP (PWC) be amended to conduct the review of the Auditor General’s Office.    

 

The subsequent report to FEDCO on 5 April 2011 (ASC2011-CMR-OCM-0001) relayed this direction and specified that upon Committee and Council approval, PWC would be asked to prepare a draft Terms of Reference and criteria for ASC review and approval.  In addition, to ensure impartiality and independent analysis and reporting, PWC would be required to present its findings and any recommendations arising from the review directly to the ASC as its client.

 

On 13 April 2011, City Council approved the ASC direction to the City Manager to amend the existing contract with PWC to include a Quality Assessment Review of the Office of the Auditor General.  This report provides a proposed Statement of Work (Document 1) for committee approval.

 

The OAG currently operates in accordance with the 2004 Council approved by-laws governing the Office.  As such, it is most appropriate at this time to undertake a review of the audit function against the existing framework. It is further felt that implementing the Institute of Internal Auditors (IIA) standards is appropriate at this time in the evolution of the audit function. 

 

 

DISCUSSION

 

After discussion, the Auditor General and City Manager concurred that the most cost-effective manner in which to proceed in order to achieve a Quality Assessment Review of the audit function was to amend the existing contract the Office of the Auditor General (OAG) currently has with Pricewaterhouse Coopers LLP (PWC). 

 

Upon receiving direction from the City Manager that City Council endorsed the abovementioned approach, PWC prepared a draft Statement of Work for Audit Sub-Committee (ASC) review and approval (Document 1).

 

The Statement of Work proposes that PWC undertake an independent quality assessment review of the OAG and deliver findings and recommendations to the ASC with regard to the following three objectives:

 

  1. Assess the OAG against the duties and other requirements established within the framework (statute, mandate and by-law) which originally created the position of Auditor General in 2004;
  2. Identify and map those additional activities or other changes, if any, that would be required to support the OAG’s conformance with the Institute of Internal Auditors (IIA) Auditing Standards and Code of Ethics; and
  3. Identify opportunities, offer recommendations for improvement and provide counsel to the Auditor General and his staff for improving the effectiveness and efficiency of the OAG.

 

Further to the timelines indicated in the Statement of Work, it is expected that PWC will present its findings and recommendations to the ASC in the fall of 2011.

 

 

RURAL IMPLICATIONS

 

There are no rural implications associated with this report.

 

 

CONSULTATION

 

As this is considered an internal administrative matter, no public consultation was undertaken.

 

 

COMMENTS BY THE WARD COUNCILLOR(S)

 

N/A

 

 

LEGAL/RISK MANAGEMENT IMPLICATIONS

 

There are no legal/risk management impediments to implementing any of the recommendations arising from this report.

 

 

CITY STRATEGIC PLAN

 

The measures outlined in the report are in keeping with the directions contained in the 2010-2014 Council Governance Review report (ACS2011-CMR-CCB-0106) and strengthening the City’s overall accountability framework.

 

 

TECHNICAL IMPLICATIONS

 

N/A

 

 

FINANCIAL IMPLICATIONS

 

Funds to conduct the Quality Assessment Review outlined in this report are accommodated in the 2011 operating budget of the Office of the Auditor General.

 

 

SUPPORTING DOCUMENTATION

 

Document 1 -     Pricewaterhouse Coopers LLP - External Quality Assurance Review of the Office of the Auditor General: Proposed Statement of Work for the Audit Sub-Committee (issued separately to all Members of Council and held on file with the City Clerk)

 

 

DISPOSITION

 

Upon approval of the recommendation of this report by Council, Pricewaterhouse Coopers LLP will proceed under the terms outlined in the attached document.