Audit & Risk Committee
The official version of this document is housed with the University Secretariat. In the event of a discrepancy, the official version will prevail. A printable .pdf version of this document is available.
Audit & Risk Committee Terms of Reference
Approving Authority: Board of Governors
Original Approval Date: June 4, 2015
Effective Date: July 1, 2022
Date of Most Recent Review: June 22, 2022
Previous Reviews: June 23, 2021, October 16, 2018
The Audit & Risk Committee is responsible for assessing recommendations and reports on the finances, financial controls and risk exposures of the University. The Committee’s function includes review of financial reporting, internal controls, safeguarding of the University’s assets and general risk exposure. The Committee monitors the competence with which external and internal audits are conducted, confirms that auditors’ recommendations are given due consideration, and that auditors’ have independence in their relationship with University Administration. The Committee monitors the lines of communication between the External Audit Firm, President, Officer Responsible for Risk Management, Chief Internal Auditor and the Committee to confirm they support appropriate and timely action in fulfillment of the Committee’s responsibilities. The objective of the committee is to enhance accountability, provide transparency, and manage risk in order that the University be able to carry out its mission in a manner that is sustainable and consistent with its legal and other obligations.
2.1. External Audit
2.1.1. Review and recommend the appointment of the External Audit Firm to the Board of Governors, including the related engagement fees.
Review and approve the External Audit Firm’s Letters of Engagement and Independence and Scope of Services, consistent with the terms of appointment approved by the Board of Governors.
2.1.2. Review a list provided by the External Audit Firm describing its fees for other audits and non-audit services for the previous fiscal year.
2.1.3. Review and approve the External Audit Firm’s comprehensive audit plan, scope of the examination, and the nature and level of support to be provided by the internal audit function.
2.1.4. Review the External Audit Firms’ report upon completion of their audits.
2.1.5. At least once a year, meet privately with representatives from External Audit Firm. Seek such assurances as a necessary to confirm that the external audit function is effective and free of conflicts.
2.1.6. Monitor the performance of the external audit function.
2.2. Non-Audit Work
2.2.1. Review any requests to use the External Audit Firm for non-audit work. Non-audit work to be considered for provision by the External Audit Firm will not include any situations where the External Audit Firm will act in a managerial or strategic function or will involve either a potential conflict or impairment of independence. The Committee shall only permit the External Audit Firm to perform such non-audit work if the Committee has:
18.104.22.168. received confirmation from the External Audit Firm that, in its view, doing such non-audit work will not place the External Audit Firm in a conflict nor impair its independence and,
22.214.171.124. received similar confirmation from the Vice-President (Finance & Operations) or designate that the proposed engagement complies with the related requirements and limitations expressed in these Terms of Reference. Typically, the total expense of non-audit work should not be greater than the expense of the audit work in any given year without the approval of the Committee.
2.2.2. Non-Audit Work below $75,000
Where permission for non-audit work is required between regularly scheduled meetings of the Committee and time is of the essence, the Chair of the Committee, has the delegated authority to complete the necessary review following the procedures outlined in 2.2.1. above, subject to the following requirements:
126.96.36.199. the proposed non-audit work shall not entail a fee in excess of $75,000. Any non-audit work exceeding $75,000 must be approved by the Committee in accordance with the procedures outlined 2.2.1. above.
188.8.131.52. The Chair of the Committee shall report the outcome of any review of non-audit work to the Committee at its next meeting.
184.108.40.206. Notwithstanding the ability to use delegated authority, the Chair of the Committee may choose to refer the approval of any non-audit work to the Committee and/or consult its members in the decision-making on these matters.
2.2.3. Non-Audit Work below $10,000Administration may engage the External Audit Firm for prescribed types of non-audit work that do not entail a fee in excess of $10,000.
The Committee shall approve a schedule of prescribed types of non-audit work that Administration may engage the External Audit Firm for pursuant to this section. This list shall be appended to these Terms of Reference.
Administration has the delegated authority to complete the necessary review of prescribed types of non-audit work following the procedures outlined in 2.2.1. above, subject to the following requirements:
220.127.116.11. The proposed non-audit work shall not entail a fee in excess of $10,000.
18.104.22.168. The Chair of the Committee shall be informed on a timely basis and Administration shall report its engagement of the External Audit Firm for non-audit work to the Committee at its next meeting.
22.214.171.124. Notwithstanding the ability to use delegated authority, Administration may choose to refer the review of any prescribed non-audit work to the Chair of the Committee.
2.3. Internal Audit & Confidential Engagement
2.3.1. Review and approve the work plans of the internal audit function, seek assurances that work plans are sufficiently informed by the current risk environment, as well as reviewing significant findings or recommendations submitted by the Chief Internal Auditor and follow up on resultant action plans.
2.3.2. At least once a year, meet privately with the Chief Internal Auditor to confirm that the function is objective, free of conflicts, has the capacity and capabilities to perform the Work Plans, and has sufficient organizational authority to facilitate the provision of independent report from University Administration.
2.3.3. Monitor the performance of the internal audit function.
2.3.4. At least once per year, meet privately with the President.
2.3.5. At least once per meeting, meet privately as a Committee.
2.4. Chief Internal Auditor and Vice-President (Finance & Operations)
2.4.1. Unless the Committee determines otherwise, the Chair of the Committee or their designate from among the members of the Committee shall serve on any hiring committee for the Chief Internal Auditor.
2.4.2. The Committee shall be informed in advance, and provided with sufficient opportunity to comment on, any decision to hire, reassign, remove or materially change the conditions of employment of the Chief Internal Auditor.
2.4.3. The Chair shall be consulted as part of the search and hiring process for the position of Vice-President (Finance & Operations) in keeping with the provisions of the Policy on University Appointments.
2.5. Financial Statements
2.5.1. Review and recommend the University’s Annual Audited Financial Statements as well as reviewing significant findings or recommendations submitted by the External Audit Firm.
2.5.2. Review and recommend the University’s Heritage Fund Annual Combined Audited Financial Statements as well as reviewing significant findings or recommendations submitted by the External Audit Firm.
2.5.3. Review and recommend the University of Guelph-Humber Annual Audited Financial Statements as well as reviewing significant findings or recommendations submitted by the External Audit Firm.
2.5.4. Monitor any changes and impacts on the University of Guelph's financial statements with respect to the transition to the University Pension Plan, Ontario and monitor any addtional financial reporting requirements with respect to any retained assets until their ultimate disposition.
2.5.5. Review with University Administration and the External Audit Firm any changes to significant accounting and reporting principles, practices, and procedures applied by the institution in preparing its financial statements.
2.5.6. Receive periodic reports from the External Audit Firm on new accounting standards or practices, if any, that will affect the institution’s financial reporting.
2.6. Expenditure Oversight
2.6.1. Receive quarterly updates on the expenditures of the Office of the President. Updates shall include information on material variances against budget.
2.6.2. Receive an annual report on Board-related expense claims submitted by members of the Board and its committees.
2.7.1. Receive, at least annually, a report on outstanding and resolved litigation.
2.7.2. Receive, at least annually, a report on insurance coverage and claims.
2.7.3. Receive, at least annually, a report on information security.
2.7.4. Establish and maintain a safe disclosure policy. Receive updates on the disposition of safe disclosures, as provided for in relevant policy.
2.7.5. The committee is granted the authority to investigate any matter or activity involving financial accounting and financial reporting, as well as the institution’s internal control, risk management, and compliance matters. If appropriate, special counsel or other outside expertise may be retained by the Committee. The Committee shall have access to such University personnel and documentation that it deems necessary to complete an investigation.
Exercise oversight of policies within the Committee’s mandate, including the following policies and policy areas:
- Safe Disclosure
2.9.1. Review and approve annually, the Enterprise Risk Management framework for the organization, including risk appetite, that confirms that appropriate processes are in place to identify, assess and report on University Administration’s control framework and identify, assess and report on material risks, including actions being taken to address and/or mitigate these risks.
2.9.2. At least once a year, meet privately with the Officer Responsible for Risk Management to confirm that the function is objective and free of conflicts, has the capacity and capabilities to perform the work plans, and sufficient organizational authority to facilitate the provision of complete, accurate and timely reports to the Committee.
2.9.3. Receive regular reports from University Administration on areas of significant risk to the University, for example but not limited to significant investments or changes in systems of control, legal claims, environmental issues, health, safety, and other regulatory matters.
2.9.4. On an ongoing basis, confirm that material risks are being delegated to and addressed by the appropriate committee(s) of the Board and collect information from these committees to be able to provide comprehensive reporting to the Board at least annually.
3.1. The committee shall be comprised of the following:
3.1.1. Regular Voting Members
- Up to six external members appointed by the Board of Governors, who shall normally be members of the Board.
- Each committee member must be independent of University Administration and free of any relationship that would impair such independence. Independence shall be interpreted consistent with the provisions of the Good Governance Policy for the Board of Governors.
- Members shall be financially literate, with the ability to read and understand financial statements of a nature and complexity comparable to those of the University. At least one member of the Committee shall have accounting or related financial management expertise.
3.1.2. Ex-Officio Voting Members
- Chair, Board of Governors
3.1.3. Non-Voting Members
- University Secretary
3.2. No more than one regular voting member of the Finance Committee shall be a member of the Audit & Risk Committee.
3.3. The committee Chair shall be appointed by the Board of Governors from among the members.
4. Rules of Order
4.1.1. A quorum for the transaction of business at meetings of the committee shall consist of a majority of the regular voting membership.
4.1.2. In the event a meeting does not achieve quorum, any ex-officio voting members present may be counted as regular voting members for the purposes of establishing quorum.
4.2. Terms of Reference
4.2.1. The Committee shall review its terms of reference on an annual basis and recommend changes to the Governance Committee as necessary.