THE STANDING COMMITTEE ON AUDIT AND OVERSIGHT
EVIDENCE
OTTAWA, Wednesday, April 29, 2026
The Standing Committee on Audit and Oversight met with videoconference this day at 1:32 p.m. [ET], to supervise and report on the Senate’s internal and external audits and related matters; and, in camera, for consideration of a draft report.
Senator Marty Klyne (Chair) in the chair.
[English]
The Chair: I am Marty Klyne, senator from Saskatchewan, Chair of the Standing Committee on Audit and Oversight.
Participating in today’s meeting are Senator Colin Deacon, deputy chair from Nova Scotia; Madam Hélène Fortin, external member from Quebec, who will be joining us shortly; and Mr. Robert Plamondon, external member from Ontario, who is in the room. I should advise you that Senator Saint-Germain is not available today, and Senator David Wells from Newfoundland and Labrador is also unavailable today.
For everyone’s awareness, staff from committee members’ offices may also be participating in this hybrid meeting. I think we all know the drill here. To make sure that this is privileged and confidential information, we must ensure that everyone understands that, so if you’re joining in a hybrid manner, make sure that you have confidential surroundings.
We will start with the external audit, which deals with a meeting with the external auditor on the 2026 financial statement audit and the plan for fiscal year 2025-26 for review. We have set aside 45 minutes for this.
With that, I will welcome, from Ernst & Young, Sonia Leblanc, Partner; and Suzie Gignac, Partner. Thank you both for being here today.
Before giving the floor to Ernst & Young to provide an overview of the 2026 audit plan, I would like to note that, due to a scheduling conflict, the CFO and the Comptroller-Deputy CFO were unable to join us today. As a result, the CFO provided Audit and Oversight with an update by email, which is included in your bundle on page 20. Finance has indicated that there are no new or revised policies or accounting standards anticipated to impact the Senate’s financial statements for the 2025-26 fiscal year.
Ms. Leblanc, the floor is now yours.
[Translation]
Sonia Leblanc, Partner, Assurance Services, Ernst & Young LLP: Thank you very much. I am pleased to be here this afternoon to present our audit engagement plan for the Senate’s financial statements for the fiscal year ending March 31, 2026. Our audit strategy will be based on a substantive approach, like last year’s, so there are no major changes to the strategy.
We will implement substantive analytical procedures, as well as confirmations and tests of details. We will be applying a combination of those procedures in our audit. Our fees are set in accordance with our contract with the Senate. Materiality is set at $3.5 million, which represents 2.5% of the budgeted expenditures for the year. We will revise our materiality during our audit and adjust it accordingly if expenditures deviate from the budget.
[English]
The calendar of our audit is also in line with the calendar of our audit from the prior year. We conducted our planning procedures back in November and December of 2025 in order to be able to present this audit plan today. We will be conducting the remainder of our audit over the months of June and July to conduct most of our testing procedures. We will be able to finalize our results package by the end of July and will be meeting subsequently based on the committee meeting that will lead to the approval of the financial statements in the fall of 2026.
Our areas of audit emphasis are also consistent with those of the prior year. They consist of salaries and benefits, as well as administrative and other operating expenses. We will also be focusing on accounts payable, accrued liabilities, vacation pay, compensatory leave and any changes in accounting standards.
As also mentioned by the CFO and the Finance team’s update, as you just alluded to, there are no accounting changes in the standards that we are aware of, and we have not been made aware of any changes in accounting policies for the fiscal year March 31, 2026.
In response to fraud considerations and in response to the presumed risk of management override that is present in all audits of financial statements in Canada, we will be doing some procedures over journal entries where we obtain the full population of journal entries — or the general ledger dump, as we call it — and we will run some analytical procedures to identify patterns, trends or unusual characteristics in those entries. We will be leveraging some of our data analytics tools to assist with those procedures.
Also included in our package are our required communication; I have covered some already, but I just wanted to indicate that we are not aware of any independence matters to bring to your attention today, and we will be conducting our standard inquiries with the members of the committee in camera.
We have included some thought leadership, as well as appended our engagement letter to this report. The engagement letter is also consistent with the one in prior years, so no significant unusual additions or changes there.
I will stop now and see if there are any questions.
The Chair: Thank you for that.
Before I open the floor to questions, I would like to remind committee members that we are in public. We will have an opportunity to meet the auditor in camera without any staff present after the first portion of the meeting. I suggest that you keep some of those questions until then. We can begin with questions for the panel.
Senator C. Deacon: Thanks for being with us.
Can you highlight any changes in your identification of unusual trends? Obviously, with work around the world, you would be constantly updating what you look for. Can you give us some sense of how that changes from year to year and what you see? You don’t need to say what they are, but I want to understand that is a constantly evolving analysis that you bring.
Ms. Leblanc: Yes, indeed, it does evolve, especially now with the use of our data analytical tools. We are deepening our understanding of our clients’ data, and so we are also able to deepen those analyses in identifying trends and patterns.
There are a set of common characteristics that we would look at, but they are unique to each organization. Some of the trends or booking patterns that we’re looking at are based and driven by the process in place. For instance, if we understand that there is a process in place and a certain type of expense is only recorded quarterly, presuming they are material, if we do see such expenses being booked outside of the quarterly pattern, for instance, this would be unusual.
That’s just one simple example to demonstrate some of the characteristics we are looking at. We would also be looking at and understanding who is booking the entries within the organization. Before looking at the data, we understand who is allowed to post entries, who should post entries, who should not post entries, and what types of entries they would be allowed to post. When we run our analytics, we then compare and see how that aligns with our expectations and what falls outside of our expectations.
Senator C. Deacon: I pick up from that your list is more static than agile over time?
Ms. Leblanc: It would evolve over time based on how the processes of our clients are changing as well.
Senator C. Deacon: What do you see as any emerging or new risks that you need to be watching for in the organization based on world events, based on what you know about the organization? Are there any changes in terms of risks or unique elements that you need to be watching for?
Ms. Leblanc: As our clients are continuing their transformation journey in terms of the technology of information and perhaps adopting some AI tools, I think that’s probably one of the top priorities. Emerging risk for us in the audit is understanding the impact that such implementation of new technology or new tools — whether it includes AI or not, it could be automation, it could be AI as well — is understanding the impact that it has on the financial reporting process.
What I was able to witness thus far is that organizations are adopting new tools, but sometimes it’s a bit slower to impact financial reporting processes, as other operating sides of the business are using or leveraging those types of technologies; I would say technology as well as AI is probably one of the most emerging risks.
Senator C. Deacon: In terms of finding areas where corrections have been made, is that perhaps where entries were done improperly or not cross-referenced appropriately, do you examine those more carefully?
Ms. Leblanc: Yes, those would also come out of our data analytics over our journal entries, where we would see corrections or things being reversed out. Those usually come up, and we do get an understanding of those and see if there is a certain pattern; if there are a lot of them coming up, if there is a certain root cause that we need to be looking at and whether this actually needs to be considered in our risk assessment, if there is a risk that is perhaps not addressed by the current process or controls in place.
Senator C. Deacon: Thank you very much.
Mr. Plamondon: The main purpose of your work is to follow generally accepted auditing standards in order that you can express an opinion on the financial statements and the results of operations, that they present our finances fairly consistent with accepted accounting principles.
There is the possibility that you’ll have another form of communication associated with the audit, which would be a management letter, where you have observed certain risks or transactions, issues, and comments on internal controls that you think should be brought to management’s attention.
What’s the nature of the circumstances that would lead you to issue a management letter? What can or should we draw from the fact we haven’t had a management letter? I’m not sure if we have ever had one, but certainly not at the time that I’ve been on the committee.
Suzie Gignac, Partner, Ernst & Young LLP: From a management letter perspective, often what we do in smaller organizations is have a conversation with management. The extent to which you want or need to actually document in an extensive letter and have responses — because that then requires responses from management as well — really depends on how pervasive the issue is and how significant you think it is. Based on that, you may or may not bring it to the attention of the committee.
Smaller items have been identified over the years, and we have had discussions with management about them. They haven’t been significant enough to bring to your attention and/or to document in a full-management letter. If we were to see something that was more significant, that we felt was significant enough that management needed to respond to it and actually address it — a lot of the time we find that management has addressed it before we even identify it. You have a strong process in place. In many cases, they will have actually addressed it or dealt with it in advance and so there isn’t really a purpose for a full-management letter with a response as well, and so that’s generally our view on it.
In some cases, we will then report something in the results as well, not as a full-management letter, but we might say, “This difference was identified and management has corrected the issue and there’s no further follow-up required,” for example. The management letter is really where there are a number of items that require more extensive follow-up and we want a response from management on how they dealt with them. We haven’t identified that through our work with the Senate since we’ve been the auditor.
Mr. Plamondon: Mr. Chair, I just asked the question, for the benefit of the committee, that in the conduct of your work and in the issuance of your audit opinion, it’s an attestation to the credibility of our financial statements. It doesn’t mean that they are putting a stamp of approval on the efficiency of our practices or the adequacies of all of our internal controls. It’s that the financial statements present fairly, which where there are issues around the economy and efficiency and effectiveness, that’s more grounded in our internal audit activities.
The external audit is important but quite limited in the information that we would use to make improvements around the operations of the Senate. I ask the question for that reason.
But, if something comes to your attention, I would encourage you to bring it to the committee, either in a formal letter or in our in camera. We would certainly welcome your observations that don’t make it into your audit letter. If there’s something that’s in the actual audit opinion, then we’re really in trouble, and that’s never happened. Thank you.
The Chair: I have a couple questions that maybe you can shine some light on. It’s not ones you haven’t heard before.
Ms. Leblanc, in your opening remarks, you mentioned the timeliness, and I heard some comments coming into the end there again. This is something we’ve just struggled with, it seems, but maybe there are some root signals that we can focus on.
We previously noted in observations to the Senate that the financial statements should be published in a timely manner, and that financial statements for fiscal 2024-25 were published almost seven months after year end. In the previous audit to that, it was six months.
Is this a situation where they are short staffed, short resourced and can’t get things through the final fast enough, or is it just if they were to hire some people? Do you think they are a little gun shy in terms of every time they increase expenses, The Globe and Mail seems to have an article or an op-ed for them?
I’ve never been in an organization where you don’t get that final statement within the next 30, 60 days of completing an audit. Do you observe anything that might be causing this to stretch out that far?
Ms. Leblanc: From our perspective, we have agreed with the timelines with the finance team. We are finding that they are responding in a timely fashion to our requests.
It was discussed in previous meetings over the years that the finance team also has other priorities as well, in terms of reporting as part of the public accounts. It just was always agreed that June and July, for both parties, were the right periods to conduct the audit.
As I said earlier, our audit work will be substantially complete by the end of July. Then, subsequent to that, the complexity comes with the scheduling or the frequency of the meetings with the different relevant committee have the ability to review the financial statements and ask us questions, and for us present our results to them.
That’s kind of explaining the latter part of the delay or, yes, the time lapse between the fiscal year end as well as the publication of the financial statements.
We have no concern in terms of the capability of the finance team to prepare the financial statements and to have a proper financial reporting process in place, so nothing to bring to the attention or discussion today.
The Chair: If they got a direction to have them done by June, would they be able to do that? You’ve already entered into the contract, but next year.
Ms. Leblanc: I would actually defer the question to the finance team because I wouldn’t want to give a response. I’m not necessarily aware of all of their other priorities and perhaps other constraints that they have.
I’m not sure, Suzie, if you wanted to add something.
Ms. Gignac: The other thing I would add is that there’s always a cost benefit too. Many organizations may have more staff in finance. Maybe there would be the ability to do it faster if there were more people, but there’s a cost-benefit to that, right? You have to decide what the benefit is, and that’s really a finance team discussion from a management perspective as to what the right investment is in that in order to turn it around in a faster time frame.
The Chair: Both of your answers make sense. I understand and I don’t disagree. It just seems to be something we can’t get a hold of.
There seem to be a few or several vacant positions. Did you observe that the last time? There were some vacant positions; are they critical to producing the outcome of the audited financial statements?
Ms. Leblanc: Not to the extent of the people that we are in frequent contact with as part of the audits. Our main point of contact, there has been a lot of continuity, or at least the people responsible are taking responsibility for those tasks.
The Chair: Thank you for that.
Ms. Fortin: Ms. Leblanc and Ms. Gignac, you mentioned earlier that if there were more people in the finance team, perhaps they could do the work faster, so this is quite understandable.
My question pertains not necessarily to the number of staff on the finance team, but what about — and I’d like to hear you — the next level review, approval, by the time they get back to you and say, “Okay, we can proceed and go ahead with this.”
I may be wrong, but I believe that what we concluded over the past five years — it’s amazing how time flies — is that it wasn’t necessarily the total number of people on the team, but the length of the process to approve.
I’d like to hear if you do benchmarking with your other clients. Is that process, especially the review process up above, as long as it is here at the Senate? You must have some idea to compare quickly.
Ms. Gignac: Honestly, every entity is different. Public companies are going to be much faster, and private entities vary. The Senate is entirely unique, as we would expect in Canada. It’s a very different organization, and it has different committees and different processes to approve things. It’s not going directly to an audit committee and a board that is the following day, in most of my entities. Your audit committee is one day, and your board is a day or two later. You may have an audit committee, and you are waiting for some kind of — sometimes it can be a month, but I would say it’s not usually longer than that. I would say the process of the committees that have to approve it has an impact on the timeline of when it actually gets approved and finalized.
We have had discussions as well, though, to Sonia’s point earlier, that the finance team has other requirements to report on the public accounts as well, and so that happens by a certain deadline in May, and then they can focus on the audit. So there’s a mixture of two. If the committee could happen at the end of July, could it be approved at the end of July? Probably, yes. Does it get approved at the end of July? No, because of the timelines of the committee. Hopefully, that helps answer the question.
Ms. Fortin: That’s a very good answer, and I think we need to focus on where is it that we could make a little difference with regard to the timing and length, so I think we will explore this avenue based on your answer. Thank you very much.
The Chair: If I may, just to complement what you’ve said, you’ve kind of alluded to that committee’s issue in your remarks, but I recall previous panel questioning, and it was CIBA and SEBS and others, some of those committees in there, seem to take a long time to get through it, and it’s not a sense of urgency for them. We can probably speak with the chair and maybe find some common ground on that.
Ms. Fortin: Yes.
The Chair: Thank you for that. Are there any other questions? Thank you for your presentation and for answering our questions. We will now move in camera.
(The committee continued in camera.)