Auditor General

An Auditor General is an independent public official who audits government accounts, operations and the use of public funds, and reports the findings to the legislature. In Canada, the federal Auditor General heads the Office of the Auditor General of Canada, and the mandate and powers of the role are set out principally in the Auditor General Act.

The term is used by the federal government and by provincial and territorial governments for their legislative audit offices. An Auditor General is an external legislative auditor, which separates the role from an organization's internal auditor, who works inside a department or agency. For suppliers, the term appears in the audit of government purchasing, in contract audit clauses, and in the way the Office itself buys services.

What the Auditor General Act authorizes

The Auditor General Act is the main statute governing the federal Auditor General. It reaches beyond departments themselves. Under the Act, the Auditor General may inquire into whether a recipient under a funding agreement fulfilled its obligations, used the funds economically and efficiently, maintained adequate records, and used the funds with regard to environmental effects. The relevant provisions are in the Act's text on funding agreement recipients.

The Act also allows the Auditor General to contract for professional services, subject to statutory conditions and limits. Those terms are found in the Act's provisions on professional services. This means the Office is itself a buyer of services, working under authority written into its own legislation.

How the Office examines federal purchasing

The Office of the Auditor General audits federal purchasing and contracting practices. These audits look at whether procurement is conducted economically, efficiently and fairly, and in accordance with the applicable rules. The Office publishes this work, including a report titled "Government Purchasing," available through the Office of the Auditor General's parliamentary reports page.

These audits are directed at government, not at individual suppliers. Their findings shape how departments run competitions, document decisions and manage contracts, and so they influence the conditions suppliers bid under.

Contract audit clauses and record retention

Separate from the Auditor General's legislative audits, federal contracts commonly carry their own audit rights. A federal review of procurement practices found that most of the contracts it examined provided for examination, inspection or audit of the supplier's books and records. These provisions can also let the government recover overpayments or payments made in error. The review is available from the Office of the Procurement Ombudsman.

• Suppliers are generally required to retain supporting documentation for six years.
• Supporting records include timesheets, invoices and subcontractor agreements.
• Suppliers must provide the facilities reasonably required for an audit or inspection.

These requirements are described in the Procurement Ombudsman's chapter on contract audit and inspection provisions.

Audits on major Crown projects and defence contracts

Audits are not always optional. They may be mandatory for some major Crown projects, and also when an audit of a Canadian defence contractor is requested by the U.S. military or NATO. Suppliers in defence and security work should expect these audits as part of the contract relationship, as set out in the same Procurement Ombudsman chapter.

What it means for a supplier bidding on Canadian public contracts

The practical obligation is to comply with every audit, inspection, examination, record-retention, access and repayment requirement written into the solicitation or the resulting contract. Audit rights depend on the clauses in each contract, so read them before you bid and again before you sign.

• Set up record-keeping that can support a six-year retention period.
• Keep timesheets, invoices and subcontractor agreements organized and retrievable.
• Flow audit and record requirements down to subcontractors.
• Plan for repayment if an audit identifies an overpayment or an erroneous payment.

Suppliers that receive funding under a funding agreement should also keep adequate records, since the Auditor General may inquire into how those funds were used.