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Practice Guide to Auditing Mining Revenues and Financial Assurances for Site Remediation


Glossary

A

Audit conclusion

An informed judgment made by an auditor based on sufficient and appropriate audit evidence.

Audit focus

The breadth and depth of an audit, the risk areas, and the issues selected. Because different audit offices use the term “audit scope” in different ways, the Practice Guide avoids this word and instead uses “audit focus” to refer to the depth and breadth of an audit.

Audit observation

The outcome of an objective evaluation of audit evidence against selected audit criteria.

Audit program

A detailed outline of the audit work to be undertaken during the audit examination phase to gather sufficient and appropriate evidence. Each audit activity outlined in the program includes the applicable criteria to be used and the audit steps, tasks, resources, and time required to complete the work.

Audit recommendation

A measurable statement for corrective action made by the auditor and addressed to the audited organization. Recommendations must address the causes of deficiencies identified in audit reports.

Auditability

The ability to carry out an audit in accordance with professional standards and internal audit policies. Although some areas may be significant, they may not be auditable for the following reasons:

  • the audit team does not have or cannot acquire the required expertise,
  • the selected area is undergoing significant and fundamental change,
  • suitable criteria or approaches are not available to assess performance, or
  • the information or evidence required is not available or cannot be obtained efficiently.

C

Controls

The policies and procedures designed, put in place, and operated within an organization to mitigate the risks that threaten the achievement of the organization’s objectives.

Corruption

An abuse of public power, authority, trust, and resources for private or political gain. Corruption happens through the offering, giving, receiving, or soliciting, directly or indirectly, of anything of value to influence improperly the actions of another party.

D

Decommissioning

The action of closing down an extraction site and making it inoperative. This may involve dismantling all the equipment and facilities on site and decontaminating the soil and waters in accordance with regulatory standards.

E

Environmental liability

An obligation based on the principle that a polluting party should pay for any and all damage caused to the environment by its activities.

F

Financial assurance

A guarantee held in trust by a government to ensure that the remediation work outlined in a site closure plan is successfully performed, even in the event that the proponent of the project faces financial or legal troubles. The financial assurance should be equal to the estimated cost of the planned remediation work.

Fraud

An intentional act by one or more individuals among management, those charged with governance, employees, or third parties, involving the use of deception to obtain an unjust or illegal advantage.

M

Mineral reserve

Mineral resources for which extraction is known to be economically feasible.

Minerals

Inorganic, solid, and naturally occurring substances that have a definite chemical formula and a crystalline structure. While this strict definition excludes coal (an organic substance) and some metals that are not usually found in their pure form in nature (iron, for example), the Practice Guide uses the term “minerals” in a broad sense to refer to all commonly mined commodities, including metals, gemstones, gravel, and coal.

O

Oversight

The responsibility to review, monitor, and supervise public sector organizations and their policies, plans, programs, and projects, to ensure that they are achieving expected results and are in compliance with applicable policies, laws, regulations, and ethical standards. Oversight is a critical governance function performed by senior management, boards of directors, committees, or other internal or external bodies.

P

Performance audit

An independent, objective, and systematic assessment of how well government is managing its activities, responsibilities, and resources in a given sector of activity.

R

Remediation

The removal of pollution or contaminants from environmental media such as soil, groundwater, sediment, or surface water. Remediation may also involve the revegetation of a perturbed area with local species and returning an area’s topography to its pre-disturbance state.

Revenue framework

The specific mix of revenue sources adopted by a government to meet its fiscal objectives in relation to the development of a natural resource. The mix may include royalties, leases, fees, bonuses, penalties, or other revenues sources.

Risk

An event or action that may adversely affect an organization’s ability to achieve its objectives. Assessing risk involves considering the probability (or likelihood) of the event occurring and the potential impact of that event.

Royalties

The price that the owner of a natural resource (usually a government) charges a private company for the right to develop the resource. The Supreme Court of Canada has defined royalties as a property right, specifically a contractually stipulated share of production or the proceeds thereof.

Royalty return

The relative importance of a matter within the context in which it is being considered, including quantitative and qualitative factors. Such factors include the magnitude of the matter in relation to the subject matter of the audit, the nature and effect of the matter, the relevance of the matter, the needs and interests of third parties, and the impact of the matter to the audited program or activity.

S

Significance

The relative importance of a matter within the context in which it is being considered, including quantitative and qualitative factors. Such factors include the magnitude of the matter in relation to the subject matter of the audit, the nature and effect of the matter, the relevance of the matter, the needs and interests of third parties, and the impact of the matter to the audited program or activity.

Small-scale and artisanal mining

Informal mining activities carried out using low technology or with minimal machinery.

T

Transfer mispricing

Transfer pricing is a business practice that consists of setting the price for the purchase of a good or service between two “related parties” (e.g. subsidiary companies that are owned or controlled by the same parent company). Transfer pricing becomes abusive when the related parties distort the price of a transaction to reduce their taxable income. This is known as transfer mispricing.