Foreword
The policy incorporated in this Guide on the Audit of Federal
Contributions is aimed at improving the cost effectiveness of the required audit
activity and minimizing the demands placed on recipients of federal contributions.
It was developed by Treasury Board of Canada's Office of the Comptroller General
to address concerns raised at the federal and provincial levels regarding the need
to eliminate duplication of audit effort and to clarify the roles and responsibilities
of federal officials in the management of federal contributions.
Since the early 1970s there has been a substantial increase in both the
number and dollar value of federal contribution programs; amounting to
expenditure levels in fiscal year 1982/83 of more than $23 billion. The policy
contained herein covers 50 major programs through which $12 billion in federal
funds is made available to other levels of government and the private sector. The
policy excludes co-funded programs under the Federal Provincial Fiscal
Arrangements and Established Programs Financing Act, such as Medicare, and
under special statutes such as Unemployment Insurance.
The growth in government contribution programs brought with it an
added emphasis for full accountability by those entrusted with responsibility for
their delivery. Auditing is an integral element of this accountability and each
department that provides federal funds is responsible for ensuring appropriate audit
coverage of recipients of contributions. A major problem in auditing these
programs is that departments often limit their audits to the recipient's records and
the financial controls associated with their own programs, without concern for
related management controls or activity of other federal programs. This approach
has not provided adequate assurance that federal interests are properly protected
and has resulted in multiplicity, of audit effort and unnecessary disruption of
recipient's operations.
This new contribution audit policy will promote more cost-effective
audits, improved accountability and better information flow for program managers,
Parliament and the taxpayers of Canada. It is also a significant example of
federal-provincial co-operation, since all provinces have expressed a willingness to
cooperate with us in an effort to streamline the audit of these important programs.
The Guide on the Audit of Federal Contributions applies to all departments and agencies of the Government of Canada and should be of interest to
Crown corporations, other levels of government, public accounting firms and others
involved in the audit of federal contributions.
Donald J. Johnston
President of the Treasury Board of Canada
September, 1982
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