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A.1. Forensic audits are examinations conducted by a qualified independent auditor using specific auditing procedures designed to identify and gather evidence to support or deny an assessment of possible irregularities, including the misappropriation of funds or assets, reported fraud or specific allegations on the part of a recipient or an individual.
A.2. The Department takes allegations of misuse of public funds very seriously and conducts forensic audits to ensure that there has been no misappropriation of public funds, and that funds transferred to recipients are used in the manner for which they were intended.
A.3. In the event that AANDC receives allegations regarding the misuse of funds transferred to a recipient, an independent audit firm or contractor will be contracted to perform a scoping exercise. The purpose of the scoping exercise is to determine if the allegations have merit and if a forensic audit is required.
In situations where the allegations are found to not have merit through the scoping exercise, the case is closed and no forensic audit work is conducted. If however, the allegations are deemed to have merit and require a forensic audit to determine if they are founded, the Department contracts an independent audit firm or contractor to perform a forensic audit.
A.4. As part of the findings, forensic auditors often provide recommendations to the recipient on how to improve their management practices. The Department suggests that the recipient follow these recommendations in order to improve their management practices. Of course, regions and programs will assist, whenever possible and appropriate. However, there is no requirement or mechanism for the Department to compel recipients to adopt the recommendations.
It should be noted that the results of forensic audits may affect a recipient's overall General Assessment score in the future.
A.5. The main purpose of conducting a forensic audit is to prevent wrongdoing and ensure the funds transferred to recipients are being used for purposes they are intended. In cases where the findings of a forensic audit indicate the misuse of funds, the Department will seek to recover funds.
A.6. Based on AANDC's Receivables Management Policy, the process for setting up and managing an Accounts Receivable arising as a result of a recipient audit is as follows:
The Department sends a management letter to the recipient outlining the results of the audit, identifying the repayment amount, the time-frame required for the repayment and suggestions for management improvements and/or financial controls, etc. The letter is copied to the appropriate AANDC regional office for their information and in order to support the recipient in the follow-up required.
Discussions between the Department and the recipient normally take place soon after the management letter is sent to the recipient. The discussions include determining the repayment amount (dollar amount may have changed as a result of discussions or the recipient providing additional information, etc.) and the schedule for the repayment plan. The Department will confirm the repayment amount and the schedule for the repayment plan with the recipient; the repayment amount and the schedule will be approved by Chief Financial Officer.
The recovery of funds will be monitored on a regular basis through the regional offices, and reported at an aggregate level to the AANDC Audit Committee.
A.7. Should AANDC find indications of criminal wrongdoing, the information would be turned over to the appropriate policing authority. This information is not publicly disclosed.
A.8. Following normal procedures for the release of forensic audit reports, a summary of findings is posted to AANDC's website, unless information has been turned over to a policing authority.
A.9. Forensic audit findings are disclosed in the form of a summary report as it provides a summary of the findings in the audit without divulging sensitive or personal information about the recipient or individuals involved. Under the Access to Information Act, AANDC is prohibited from disclosing, without consent, some information contained in forensic audits as it may contain proprietary third-party financial information of a recipient.
A.10. Audit firms are selected from AANDC's standing offer list. Firms who are on the standing offer list have successfully demonstrated they have the required expertise to conduct forensic audits on behalf of the Department through a rigorous competitive process managed by PWGSC.
A.11. Forensic audits require very rigorous and thorough examination phases in order to arrive at sound conclusions and comprehensive recommendations.
The speed at which audit work can be completed is dependent on the level of complexity of the work and the cooperation of those people who need to be consulted or interviewed to provide the auditors with the necessary information for the examination, as well as the availability of necessary documentation.