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

Selecting Audit Criteria

Audit criteria represent the standards that audited organizations are expected to meet. Audit criteria are a key contributor to an audit’s strength and potential impact. Audit procedures focus on determining whether criteria are met or not met. Suitable criteria are relevant, complete, reliable, neutral, and understandable.

Finding suitable criteria is a challenge for any performance audit, especially where there is no recognized source of accepted criteria. There is no such recognized source of criteria for auditing financial assurance programs for the remediation of mining sites.

The examples of criteria presented in Tables 17 and 18 have been compiled from published audits and modified to be uniform in style. Where there were gaps, criteria were added. The list of criteria was then discussed by members of the Advisory Group created to support the development of this Practice Guide. Improvements were made as necessary based on their comments. Finally, all the audit offices represented by the Canadian Council of Legislative Auditors had an opportunity to comment on the proposed criteria before the Practice Guide’s publication. (Comments were also received from some members of the INTOSAI Working Group on the Audit of Extractive Industries.)

The criteria in Tables 17 and 18 are not exhaustive and can be modified according to the specific needs of auditors. They can also be used as sub-criteria in cases where it is possible to draft a criterion with a broader coverage. The tables provide sample audit criteria in the following areas:

Table 17 – Examples of Audit Criteria for Auditing the Design of Financial Assurance Programs for the Remediation of Mining Sites


Audit Criteria

Establishing the financial assurance program

  • The financial assurance program was established after potential options were evaluated using evidence-based methods.
  • Industry and other stakeholders were consulted as part of the policy-making process.
  • The rationale for final decisions has been documented.
  • Remediation cost baselines based on current remediation technologies have been established to serve as a reference for reviewing remediation plans and financial assurances provided by mining companies.
  • The financial assurance program reflects good practices and protects the government from inheriting responsibility for new, unfunded liabilities arising from abandoned mining sites.
  • Roles and responsibilities for assessing and collecting financial assurances for site remediation are clearly defined and documented.
  • The program design includes a right to audit clause.

Clear rules and guidance

  • Regulations, policies, and directives clearly set out mining site remediation requirements.
  • The responsible organization has provided guidance to the industry on how and when leaseholders should prepare decommissioning plans and provide financial assurances for site remediation.
  • The responsible organization regularly keeps leaseholders informed of changes to site remediation and financial assurance requirements.

Program reviews and updates

  • The financial assurance program is reviewed periodically and modified as needed to take into account new remediation technologies, updated remediation cost estimates, and other relevant factors.

Table 18 – Examples of Audit Criteria for Auditing the Administration of Financial Assurances for the Remediation of Mining Sites


Audit Criteria

Controls over financial assurances

  • The organization has a complete and up-to-date list of all mines in its jurisdiction and their status.
  • The organization ensures that companies submit their financial assurances and related data in a timely manner and follows up on late submissions.
  • To encourage compliance, the organization imposes meaningful penalties on leaseholders that do not provide financial assurances and supporting documents on a timely basis.
  • When necessary, the organization exercises its legal rights to obtain the information it requires from leaseholders.
  • Automated systems are in place to track remediation plans and financial assurances submitted for each extraction site.
  • The organization reviews remediation plans and related cost estimates to assess their completeness, accuracy, and validity.
  • The organization ensures that remediation plans are reviewed for completeness and quality by qualified, independent experts (internal or external) and revised as needed.
  • The organization has a process in place to communicate deficiencies found in the remediation plans, corrective action to be taken, and the expected timelines for completing corrective action.
  • The organization ensures that follow-up on recommended corrective actions is done in a timely manner.
  • The organization regularly reviews the status of non-cash securities to ensure they are still valid.
  • The organization ensures that financial assurances are returned to leaseholders only after it has been verified that all remediation requirements have been met.
  • In cases where the organization accepts that a company self-insure, there is a process in place to regularly review the company’s global financial health.
  • The organization has systems and processes for promoting the consistent application of the financial assurance program, including providing information to mining companies on the interpretation of legislation and regulation, and the results of recent judgments.

Staffing and training

  • The organization has identified its staffing requirements and ensured that it has sufficient qualified personnel to process financial assurance files in a timely manner.
  • The organization has sufficient qualified personnel to ensure that all site inspections are conducted in a timely manner.
  • Staff receive adequate training in a timely manner to ensure they can perform their duties effectively.
  • Systems and processes are in place to ensure that staff (especially inspectors) and contractors are independent from mining companies.
  • Strategies are in place to reduce staff turnover and retain skilled staff to ensure that there is always sufficient staff to process and review financial assurance files.


  • Responsible organizations have clearly defined their respective roles and responsibilities.
  • Responsible organizations have clearly identified what information they need to share with each other.
  • The responsible organizations coordinate their activities to ensure an effective and efficient oversight over financial assurances for site remediation.