Audit Sub-Committee Workshop Members of the Regions Audit Sub - - PowerPoint PPT Presentation

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Audit Sub-Committee Workshop Members of the Regions Audit Sub - - PowerPoint PPT Presentation

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Audit Sub-Committee Workshop Members of the Regions Audit Sub Committee & Halton Community Housing Corporations (HCHC) Audit Committee April 10, 2019 Presented by: Cyndy Winslow, Director, Financial Services & Payroll Karen

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Audit Sub-Committee Workshop

Members of the Region’s Audit Sub Committee & Halton Community Housing Corporation’s (HCHC) Audit Committee April 10, 2019 Presented by: Cyndy Winslow, Director, Financial Services & Payroll Karen Cinq-Mars, Chief Internal Auditor

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Workshop Agenda

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Governance 20 minutes Terms of Reference Committee Membership Role of the Committee

  • Appointment of External Auditors
  • Terms of Engagement
  • External Audit Work Plan
  • External Audit Report
  • Overview of Financial Statements
  • Internal Audit Charter and Work Plan

10 minutes

  • Internal Audit Report

Questions 15 minutes

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Governance

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Regional Council / HCHC Board Region Audit Sub-Committee / HCHC Audit Committee Management Internal Audit

Governance

Deloitte Partner Steve Stewart Deloitte Senior Manager Scott Finkel Chief Administrative Officer Jane MacCaskill Regional Treasurer Mark Scinocca HCHC Treasurer Cyndy Winslow Chief Internal Auditor Karen Cinq-Mars

External Audit

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Terms of Reference

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Terms of Reference

  • Role of the Committee
  • Authority
  • Composition and Term
  • Meetings
  • Scope and Responsibilities
  • Reporting

HCHC Board Report HC-01-19 Regional Council Report LPS-03-19 (CS-93-07)

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Committee Membership

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Committee Membership

Region Audit Sub-Committee (of Region Administration and Finance Committee) HCHC Audit Committee (of HCHC Board)

  • Chair Carr
  • Councillor Adams
  • Councillor Malboeuf
  • Councillor Sharman
  • Councillor Somerville
  • Chair Carr
  • Mayor Burton
  • Councillor Fogal
  • Councillor Stolte

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Year Term 2018-2021 Fiscal Periods

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Role of the Committee

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Role of the Committee

Appointment of External Auditors Review Terms of Engagement Communication with Management and External Auditor Review Work Plan for External Auditor (Audit Service Plan) Receive External Audit Reports Recommend Approval of Financial Statements Review Internal Audit Charter and Work Plan Receive Internal Audit Reports

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Appointment of External Auditors

Request for Proposal Staff Evaluation Evaluation Committee Recommendation to Council

  • Score submissions using

Council/Board approved evaluation criteria

  • Summarize technical

proposals

  • Review technical proposals
  • Evaluate presentations by all

proponents

  • Recommend to Council –

highest ranked overall proposal

  • 2017 Bids
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Role of External Auditors

Develop work plan (audit service plan) Conduct audit in accordance with Canadian Generally Accepted Auditing Standards (GAAS) Review internal controls over financial reporting Deliver audit results report Provide an opinion on Financial Statements Maintain independence and report to audit sub-committee

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Role of the Committee

Appointment of External Auditors Review Terms of Engagement Communication with Management and External Auditor Review Work Plan for External Auditor (Audit Service Plan) Receive External Audit Reports Recommend Approval of Financial Statements Review Internal Audit Charter and Work Plan Receive Internal Audit Reports

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Terms of Engagement & Communication

Deloitte: External Auditors for Fiscal Periods 2017-2021

External Audits

  • Regional Municipality of Halton

– Consolidated

  • Halton Community Housing

Corporation (HCHC)

  • Regional Municipality of Halton

Trust Funds

  • Special Purpose Audits

Performance of External Audits

  • In accordance with Canadian

GAAS and/or Ministry requirements

  • Obtain audit evidence
  • Evaluate application of

accounting policies

External Audit Results Report

  • Due on completion of audit
  • Summarize findings from the

audit

  • Committee is responsible for the oversight of the financial reporting process
  • External auditor will communicate with the Committee should any matters arise

Communication

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2018 Fiscal Year External Audit Deliverables

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Work Plan Financial Statements

January 2019 May 2019 May 2019

Audit Results Report

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Work Plan Financial Statements

October/ November May May

Audit Results Report

2019-2021 Fiscal Periods External Audit Deliverables

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Role of the Committee

Appointment of External Auditors Review Terms of Engagement Communication with Management and External Auditor Review Work Plan for External Auditor (Audit Service Plan) Receive External Audit Reports Recommend Approval of Financial Statements Review Internal Audit Charter and Work Plan Receive Internal Audit Reports

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Audit Service Plan at a Glance

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Role of the Committee

Appointment of External Auditors Review Terms of Engagement Communication with Management and External Auditor Review Work Plan for External Auditor (Audit Service Plan) Receive External Audit Reports Recommend Approval of Financial Statements Review Internal Audit Charter and Work Plan Receive Internal Audit Reports

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External Audit Report

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External Audit Report

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External Audit Report

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External Audit Report

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Role of the Committee

Appointment of External Auditors Review Terms of Engagement Communication with Management and External Auditor Review Work Plan for External Auditor (Audit Service Plan) Receive External Audit Reports Recommend Approval of Financial Statements Review Internal Audit Charter and Work Plan Receive Internal Audit Reports

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Includes the activities of all committees of Council, Halton Regional Police Service and the Halton Community Housing Corporation (HCHC).

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Management Report

The management of The Regional Municipality of Halton has prepared the accompanying consolidated financial statements and is responsible for their accuracy and integrity. These financial statements consolidate all operations for which Halton Region has legislative and financial responsibility, as well as the operations of the Halton Regional Police Service and Halton Community Housing Corporation. The consolidated financial statements have been prepared by management in accordance with Canadian public sector accounting

  • standards. The adoption of these standards provides the reader of the consolidated financial statements a more complete view of Halton

Region’s assets and financial obligations. The reader is encouraged to review the summary of the significant accounting policies that are disclosed in Note 1 to the consolidated financial statements. To meet its responsibility, management has developed and maintained a comprehensive system of financial and internal controls which includes an organizational structure that appropriately segregates authorization and recording functions, employs highly qualified professional staff and is built on sound budget policies, all of which are subject to a continuing program of internal audit. These controls ensure that the assets of Halton Region are properly safeguarded and that the business transactions of Halton Region are carried out within the legislative authority of the Province of Ontario and within the policies authorized by Regional Council, and that these transactions are completely and accurately reflected in Halton Region’s consolidated financial statements and reports. The Audit Sub‐Committee of Regional Council reviews and approves the consolidated financial statements before such statements are submitted to the Administration and Finance Committee, Regional Council and published for the residents of Halton Region. As mandated by resolution of Council, the internal and external auditors have access to and regularly meet with the Audit Sub‐Committee to discuss their audits and the results of their examination. The 2017 consolidated financial statements have been examined by Halton Region’s external auditors, Deloitte LLP, Chartered Professional Accountants, Licensed Public Accountants and their report precedes the financial statements.

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Independent Auditor’s Report

Identifies the audited financial statements Management’s role in preparing financial statements Defines the scope of the audit Expression of the audit opinion Other reporting

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Changes To Auditor’s Report In 2018

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Consolidated Statement of Operations Notes to Consolidated Financial Statements Consolidated Statement of Financial Position Consolidated Statement of Cash Flows

Key Components of the Consolidated Financial Statements

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Assets that can be used to discharge existing liabilities or finance future

  • perations

Assets that are used or expected to generate future cash flow Obligations of the Region Region’s net worth Difference between Financial Assets and Liabilities

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Region expenses categorized by program

C C

Region revenues by significant type Approved budget converted to PSAS accrual basis Transfer to reserves Tangible Capital Assets (TCA) and Reserves set aside by Council

TCA $4,879,934 80% Reserves $1,073,253 17% Other $ 163,092 3% ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ Total $6,116,279

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Cash-generating activities Cash used/generated by the Region’s investing policies Funds received/paid for long-term debt financing Spend/receipts on tangible capital assets Activities during the period involving cash

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Role of the Committee

Appointment of External Auditors Review Terms of Engagement Communication with Management and External Auditor Review Work Plan for External Auditor (Audit Service Plan) Receive External Audit Reports Recommend Approval of Financial Statements Review Internal Audit Charter and Work Plan Receive Internal Audit Reports

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Internal Audit Division

Karen Cinq-Mars, Chief Internal Auditor Luis Engel, Internal Auditor Sarah Klasz, Internal Auditor Angela Myers, Internal Auditor

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Difference Between Internal Audit and External Audit

Internal Audit External Audit Auditors

Staff employed by the Region

External to the Region to provide assurance

services; must be Licensed Public Accountants

Reporting

Reports administratively to CAO & functionally to the Audit Sub-Committee Reports to the Audit Sub-Committee on financial statements

Focus

Provides assurance on internal controls through internal audits; consultative services; and fraud investigations Issues an independent auditors opinion on the financial statements

Risk

Identifies & qualifies key business risks & makes recommendations Obtains audit evidence about the amounts and disclosures in the consolidated financial statements

Follow Up Follows through with program areas to

ensure all management action plans are effectively implemented Limited to the scope of the external audit

service plan

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What is Internal Auditing?

  • Independent and objective assessment of operations.
  • Assurance that the organization is operating as management

intends and risks are identified.

  • Insight for improving processes, procedures, performance, risk

management and controls.

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Internal Audit Charter

  • Unrestricted access to all functions, records, property and

personnel.

  • Authority to allocate resources, set frequencies, select subjects,

determine scopes of work, and apply the techniques required to accomplish audit objectives.

  • Obtain the necessary assistance of personnel in units of the
  • rganization where audits are performed, as well as other

specialized services from within the organization. Internal Audit Charter CA-15-15

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Ethics and Integrity

  • Standards of professionalism, ethics and integrity are upheld by

the Internal Audit Charter

  • Charter requires that work is carried out in compliance with the

Institute of Internal Auditors’ International Professional Practices Framework:

  • Definition of Internal Auditing
  • Code of Ethics and,
  • The International Standards
  • Successfully completed an externally validated Quality

Assessment in 2015

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Rolling, Flexible Audit Plan

  • Potential “auditable activities” are compiled from
  • The Strategic Business Plan
  • The budget and the strategic investment forms
  • Ongoing review of Council documents
  • Discussions with senior management
  • Discussions with External Auditors
  • Audits conducted in other municipalities
  • Ongoing observations made by Internal Audit staff
  • These actions help Internal Audit maintain its awareness of the

Region’s objectives and the risks to achieving them

  • Being a part of the organization allows Internal Audit to develop

trust and respect with staff resulting in an interactive risk assessment process

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The risk based methodology is applied using the following risk factors:

  • Financial Risk
  • Systems Risk
  • Regulatory Risk
  • Reputational Risk
  • People/Employee Risk
  • Fraud Risk

Risk Based Methodology Applied

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Audit Sub-Committee’s Role

  • Once the Internal Audit Plan has been created, it

is brought to the Audit Sub-Committee for approval. Work Plan Approval CA-05-16

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Role of the Committee

Appointment of External Auditors Review Terms of Engagement Communication with Management and External Auditor Review Work Plan for External Auditor (Audit Service Plan) Receive External Audit Reports Recommend Approval of Financial Statements Review Internal Audit Charter and Work Plan Receive Internal Audit Reports

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Carrying Out the Audit Plan

We objectively review controls to:

  • assess whether they are designed and operating efficiently and effectively

based on stated objectives and principles of good control, and

  • provide recommendations for improving the controls, processes and

procedures, performance, and overall risk management.

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Management Action Plans

  • As part of the audit process, management responds to the audit

recommendations with action plans that include a responsible party and target dates to make needed improvements.

  • The management action plan document is provided to management with the

audit report.

  • The audit reports are provided to the Audit Sub-Committee twice yearly.

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Follow up on Recommendations

A database of the status of management action plans is updated quarterly to monitor their progress.

  • When deemed complete by management, a follow up audit is conducted.
  • Follow up audits are reported to Audit Sub-Committee.
  • Internal Audit is currently implementing audit software which will enhance its

practices for monitoring the implementation of action plans.

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Audit Sub-Committee’s Role

  • Work Plan Update Reports are provided to the Audit Sub-

Committee twice a year.

  • The reports include:
  • Work plan status (To be initiated, In progress, Complete)
  • Follow up process status
  • Internal Audit reports

Work Plan Update CA-11-17

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Data Analytics Program

  • Data analytics can be described as the thoughtful processes used to

explore data in meaningful ways.

  • It is a method used to perform control and risk assessments on a more

frequent basis.

  • Potential issues can be identified quickly and audit coverage is increased

substantially.

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Categories of Analytics Projects

Computer Assisted Auditing Techniques (CAATs)

Currently use ActiveData software to carry out work plan audit testing where possible

Electronic Continuous Auditing (ECA)

Ongoing analysis of management’s use of data for monitoring controls

Data Analysis

Assessing data through queries, matching, merging, extracting, etc.

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Data Analysis – Project Selection

Establish Strategy Assess Availability of Data Design Tests Determine Frequency Assess Test Results Communicate Results

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Other Activities

  • Additional services provided to the organization
  • Investigations
  • Consulting
  • Training
  • Quality assurance and continuous improvement
  • Audit Effectiveness Questionnaires
  • Performance Metrics
  • Continuous professional education and development (CIA, CFE, CRMA designations)
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Role of the Committee

Appointment of External Auditors Review Terms of Engagement Communication with Management and External Auditor Review Work Plan for External Auditor (Audit Service Plan) Receive External Audit Reports Recommend Approval of Financial Statements Review Internal Audit Charter and Work Plan Receive Internal Audit Reports

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Questions

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Contact

Cyndy Winslow Director, Financial Services & Payroll Cyndy.Winslow@halton.ca

  • Ext. 7048

Karen Cinq-Mars Chief Internal Auditor Karen.Cinq-Mars@halton.ca

  • Ext. 7532