Practice Guides

In Canada and other resource-rich countries, the extraction of minerals can generate a significant proportion of regional and national government revenues. However, these revenues can vary significantly from year to year and from project to project, making their assessment and collection by governments a complex task that requires reliable information, sufficient capacity, strong controls and adequate oversight.

The extraction of mining resources can also create financial liabilities related to the remediation of project sites once operations have ceased. Governments are expected to mitigate the risk of inheriting liabilities for site remediation by collecting financial assurances from mining producers or by establishing and managing a remediation fund to which producers must contribute. Failure to implement proper systems and practices may result in taxpayers having to foot the bill for cleaning up mining extraction sites.

We are pleased to announce the release of our newest publication: Practice Guide to Auditing Mining Revenues and Financial Assurances for Site Remediation – A guide that will help public sector auditors in Canada and abroad to plan, carry out and report on audits of the mining sector.

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How will this guide help?

The Practice Guide provides information and guidance that will help performance auditors to complete the successive steps involved in planning, conducting, and reporting the results of an audit of the mining sector. This guidance will be especially useful to auditors who wish to audit:

• mining revenues, including royalties, fees, bonuses and penalties; and
• the financial assurance systems put in place by governments to manage the potential liabilities that may arise from the remediation of mining extraction sites.

In addition to examples of audit questions, objectives and criteria, the Practice Guide includes information on the following topics:

• the range of government responsibilities in the mining sector;
• the typical life cycle of mining projects;
• the different types of revenues that governments can derive from mining extraction; and
• how financial assurance requirements help governments to manage potential financial liability associated with the remediation of mining extraction sites.

The Practice Guide also includes a glossary and a list of references (with hyperlinks to quickly access audit reports and other relevant documents).

How was this guide developed?

This new Practice Guide is the result of recent research and consultations with experienced performance auditors from Canada and abroad.

The development of our Practice Guides would not be possible without the significant contributions of the thought leaders and professionals from across Canada who provide their time and expertise, and bring their diversity of experience to bear on the content.

Members of the core project team, who guided the design and development, included representatives from the:

• Canadian legislative audit community (British Columbia, Ontario, Quebec and Canada)
• Federal government (Natural Resources Canada)
• Private Sector

The guide also benefited from the input of other representatives from:

• The Auditor General of Alberta and the Office of the Auditor General of Quebec
• Members of the INTOSAI Working Group on the Audit of Extractive Industries (WGEI), including the national audit offices of Uganda, Vietnam and Indonesia.

The Practice Guide has received a very positive reception. The Auditor General of Alberta, Mr. Merwan Saher, has noted that “I will be recommending to my colleagues that we make full use of this Guide. It’s very useful.” The new Guide has been presented to Members of the INTOSAI Working Group on the Audit of Extractive Industries (WGEI) in Washington D.C. in September 2017, where it was well received.

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