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

The Collection of Financial Assurances

Auditors can also audit the collection of financial assurances and the administration of the program in place. This implies examining whether the responsible organization:

  • has a complete and up-to-date list of leaseholders and their mining sites;
  • ensures that it receives all remediation plans and financial assurances from leaseholders in a timely manner;
  • has the necessary human resources and IT systems to carry out this work effectively and efficiently; and
  • coordinates its activities with other organizations, where applicable.

Table 15 includes examples of knowledge of business questions about the collection of financial assurances that auditors can ask during the planning phase. Examples of related audit objectives and criteria are provided in later sections of the Practice Guide.

Table 15 – Collection of Financial Assurances: Examples of Knowledge of Business Questions


Knowledge of Business Questions

Controls over the collection of financial assurances

  • Is there a database of leaseholders that are expected to submit financial assurances? Is there a database of all mining sites in the jurisdiction? If so, are these databases regularly reviewed and updated? When was the last update completed?
  • Is there a database of all legacy sites? Is this list regularly reviewed and updated?
  • Is there an IT system to track financial assurances submitted by leaseholders?
  • Are there systems and procedures to determine what is owed, to identify late reports and payments, and to ensure amounts owed are paid and letters of credit (or other guarantee) are still valid?
  • Is there guidance for staff on how to collect and manage financial assurances, including managing late payments or submissions?
  • Is there segregation of duties between the assessors and collectors of financial assurances?
  • Are there penalties or fines applicable in cases of non-compliance? Are these penalties or fines sufficient to change behaviours? Does the organization apply penalties or fines in cases of non-compliance?
  • Is follow-up action promptly taken in cases of late payment or underpayment (above a certain percentage of the amount due)? Are penalties applied in practice?
  • Is the organization tracking its performance in assessing and collecting financial assurances?
  • Does the organization prepare a report every year to provide assurance on the completeness of the financial assurances collected and the supporting remediation plans?
  • Have internal audits or financial audits previously identified issues with control over the collection of financial assurances?

Staffing and training

  • Has the required number of staff necessary to handle financial assurances been determined? Are all required positions staffed
  • Does the current staff have the expertise necessary to review the adequacy of remediation plans and cost estimates?
  • Are there challenges related to ensuring there is always sufficient qualified staff to handle financial assurances submissions?
  • Is training provided to staff?
  • Are there policies on conflicts of interest, ethics, and independence?


  • Where there is more than one responsible organization, is there a formal coordination agreement in place (memorandum of understanding or other)?
  • Are the roles and responsibilities of all parties clearly documented?
  • Is there an agreement on what information needs to be shared between organizations to ensure effective environmental monitoring of sites?

Once auditors have obtained answers to their knowledge of business questions, they can better assess the risks related to the administration of the financial assurance program.

Auditors should consider including the administration of the financial assurance program in their audit plan if their preliminary audit work indicates the following:

  • The database of leaseholders and their mining sites is not regularly updated.
  • There is no guidance for staff on how to collect and manage financial assurances.
  • There is no periodic review of received assurances to ensure they are still valid.
  • Penalties and fines are not applied as intended in cases of non-compliance with the rules of the financial assurance programs.
  • The responsible organization does not report annually on the amount of financial assurances it has collected for the purpose of safeguarding the government against liabilities for the remediation of mining sites.

This list of potential audit issues is indicative, not exhaustive. It is the responsibility of audit teams to review and analyze the information they collect in the planning phase in order to identify and assess significant risk areas. Only after conducting this work will auditors be able to decide whether to include the administration of the financial assurance program in their audit plan.