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

Drafting Audit Objectives

All performance audits need clearly stated objectives that are worded in a manner that allows auditors to conclude against them. Audit objectives should be realistic and achievable and give sufficient information to audited organizations about the focus of the audit.

An audit can have one or several objectives depending on its breadth. Office practice will also influence the number of objectives and whether or not sub-objectives are used. (Some audit offices never use sub-objectives.) Sub-objectives can be included in audit plans (for example, one for each line of enquiry), but auditors who decide to do so will still be expected to conclude on their main audit objective.

The objective of an audit that will look at the financial assurances for the remediation of mining sites will depend on whether that is the sole focus of the audit. If the audit will broadly examine the development of the sector, including remediation, then a general objective will be appropriate. For example:

  • To determine whether the responsible organizations have taken effective measures to ensure mining activities are developed in accordance with government policies and objectives.

This objective could be supported by sub-objectives related to the main areas included in the audit. One of these sub-objectives could be about financial assurances for the remediation of mines:

  • To determine whether responsible organizations have systems for obtaining and managing financial assurances that reflect risks and minimize costs.

If the audit is strictly concerned with the environmental risks of mines, then the objective can be focused on this aspect while still being broad enough to enable auditors to examine the financial aspects of this subject area, including liabilities for the remediation of mining sites. For example, the objective could be:

  • To determine whether the department’s oversight mechanisms ensure that mining activities are conducted in ways that minimize their impact on the environment and that take into account the public interest.

In this case, a sub-objective on financial assurances could be added to support the main objective:

  • To determine whether the department has established an effective program to manage the financial risks associated with the remediation of mining sites.

If the audit is strictly about the financial assurances for the remediation of mines, then the sub-objective above could serve as the main audit objective. This objective could in turn be supported by sub-objectives:

  • To determine whether the department has established adequate controls to ensure it is holding sufficient financial assurances to cover potential remediation costs in the future.
  • To determine whether the department ensures that it releases financial assurances to leaseholders only when mining sites have met all applicable remediation standards.