School Board Audit Committee Training Introduction Overview of Provincial Initiatives - Audit Committees & Internal Audit

Session objectives After completing this session you will better understand: The Audit Committee and Internal Audit Initiative for the Province of Ontario

Background Province transfers $20+ billion in funding to the school board sector Transparency and accountability – key to public confidence Ministry identified opportunities to modernize governance in the sector Audit Committees Internal Audit

Pillars of Effective Governance Board of Trustees Management External Audit Internal Audit

Role of Audit Committees The primary role of the audit committee is to assist the board of trustees in fulfilling its duties related to governance and oversight The Audit Committee is a committee of the board and will report to the board of trustees, as such all final decisions rest with the board of trustees. The Audit Committee duties include reviewing: the financial reporting process internal controls internal auditing external auditing compliance matters risk management any other board proposed activity The Audit Committee is also responsible for recommending approval of the financial statements to the board of trustees

Audit Committee Regulation Regulation has been drafted in consultation with the 9 district school board Senior Business Officials and outlines: Composition (external members) Term of service Appointment of members Meetings Duties and powers Reports to board of trustees Sector consultation on the Regulation (March 2010) Effective date (September 2010) Every board shall establish an audit committee in accordance with the Regulation no later than January 31, 2011 The first meeting of an audit committee shall be held no later than March 31, 2011

Role of Internal Audit Internal audit will support the Audit Committees by providing advice and recommendations on: Financial and administrative policies Controls Compliance Financial reporting matters Risk management activities The internal audit function will report to the Audit Committee through the Regional Internal Audit Manager Internal audit is not responsible for the execution of the school board’s operational activities. They advise the audit committee and management regarding how to better execute their responsibilities

Internal Audit Objectives The Ministry’s funding model for internal audit is intended to promote the following 3 main objectives: To promote the efficient use of resources through collaboration among boards Share best practices in internal audit and risk management using a team approach Equitable distribution of resources taking into consideration board size, language and geographic coverage

Internal Audit Operational Model Regional model Based on geography (excluding French region) Impacted by other boards in your region Introducing concept of host board Funding flowed to host board FRENCH LANGUAGE (12) CSD cath du Centre-Est (Host) CSD catholique Franco-Nord CSD cath des Aurores-Boréales CSD cath des Grandes Rivières CSD cath du Nouvel-Ontario CSD du Grand Nord de l’Ontario CSD du Nord Est de l’Ontario CSD catholique Centre-Sud CSD des écoles cath Sud-Ouest CSD du Centre Sud-Ouest CSD des écoles publiques CSD cath de l’Est ontarien BARRIE (9) Simcoe County DSB (Host) Bluewater DSB Bruce-Grey Catholic DSB Durham Catholic DSB Durham DSB Kawartha Pine Ridge DSB Peterborough V N C Cath DSB Simcoe Muskoka Cath DSB Trillium Lakelands DSB SOUTH (10) Thames Valley DSB (Host) Avon Maitland DSB Brant Hald. Norfolk Cath DSB Grand Erie DSB Greater Essex County DSB Huron-Perth Catholic DSB Lambton Kent DSB London Catholic DSB St. Clair Catholic DSB Windsor-Essex Catholic DSB

Internal Audit Operational Model NORTH BAY/SUDBURY (8) Sudbury Catholic DSB (Host) Algoma DSB DSB Ontario North East Huron-Superior Catholic DSB Near North DSB Nipissing-Parry Sound Cath DSB Northeastern Cath DSB Rainbow DSB WEST OF CENTRAL (10) Waterloo Region DSB (Host) DSB of Niagara Halton Catholic DSB Halton DSB Hamilton-Wentworth Catholic Hamilton-Wentworth DSB Niagara Catholic DSB Upper Grand DSB Waterloo Catholic DSB Wellington Catholic DSB THUNDER BAY (8) Thunder Bay Catholic DSB (Host) Keewatin-Patricia DSB Kenora Catholic DSB Lakehead DSB Northwest Catholic DSB Rainy River DSB Superior North Catholic DSB Superior-Greenstone DSB OTTAWA (9) Ottawa Catholic DSB (Host) Algonquin & Lakeshore DSB Cath DSB of Eastern Ontario Hastings & Prince Edward DSB Limestone DSB Ottawa Carleton DSB Renfrew County Catholic DSB Renfrew County DSB Upper Canada DSB TORONTO & AREA (6) Peel DSB (Host) Dufferin-Peel Catholic DSB Toronto Catholic DSB Toronto DSB York Catholic DSB York Region DSB

Pictorial Illustration of Regional Funding Model Audit Manager Sr Auditor Boards A to C Boards D to F Auditor Boards A & B School Board A School Board B School Board E SAMPLE REGION # 1 Boards C & D Boards E & F Auditors have a portfolio of boards School Board C (Host) School Board D School Board F Audit Committee Board of Trustees Hiring Panel

Internal Audit Funding Funding allocation $2M for 2009-10 $5M for 2010-11 and onwards Funding is part of board administration and governance allocation Funding is enveloped – can only be spent to support internal audit function 2 components: Staffing representing 85% of allocation Other representing 15% of allocation for professional development, travel, supplies, etc.