Guidelines on Exemptions from Internal Audit

Subsection 131(3) of Part X of the Financial Administration Act (FAA) requires Crown corporations to have conducted internal audits in respect of themselves and their wholly owned subsidiaries. The Governor in Council may waive the requirement if it is not cost-beneficial. The steps to be followed to seek an exemption are detailed below.

An exemption from internal audit will be recommended to the Governor in Council for a three-year period, provided that the following conditions are met:

  • a request for an exemption from the corporation, including a resolution from the board of directors, consistent with their responsibility for the management of the businesses and affairs of the corporation, pursuant to section 109 of the Act;
  • a statement from the chief executive officer:
  1. detailing the mechanisms used to assess compliance with subsections 131(1) and (2), absent internal audit;
  2. indicating that the auditor (and examiner, if different from the auditor) is aware of, and concurs with, the request for exemption; copies of correspondence with the auditor, excerpts of audit/special examination reports, or Audit Committee minutes should be attached as appropriate to support such a statement;
  • a Treasury Board submission from the appropriate minister, who is ultimately responsible for the corporation on behalf of the government and before Parliament, indicating support of the exemption and demonstrating that the costs of internal audit exceed the benefits derived.

August 8, 1988
Revised January 13, 1998 to update FAA Part and section references.

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