Audit committees are responsible for overseeing a whistleblowing process for their organization, and audit committees should work with management and legal counsel to determine whistleblowing policies and procedures.

A whistleblower is a person who tells the public or someone in authority about alleged dishonest or illegal activities occurring in a government department, a public or private organization, or a company. The alleged misconduct may include a violation of a law, rule, regulation and/or a direct threat to public interest, such as fraud, health/safety violations or corruption. Whistleblowers may make their allegations internally (for example, to other people within the accused organization) or externally (to regulators, law enforcement agencies, the media or groups concerned with the issues).

CSA National Instrument 52-110, Audit Committees, states:

“An audit committee must establish procedures for:

  1. the receipt, retention and treatment of complaints received by the issuer regarding accounting, internal accounting controls, or auditing matters; and
  2. the confidential, anonymous submission by employees of the issuer of concerns regarding questionable accounting or auditing matters.”

The formal procedures for receiving and handling complaints should be designed to facilitate disclosures, encourage proper individual conduct and alert the audit committee to potential problems before they have serious consequences. These procedures should be adequately documented and communicated to employees and to the public.

The audit committee, legal counsel, and management should determine how often the audit committee should receive reports from the department that is responsible for investigating whistleblower complaints. They should also determine the qualitative and quantitative characteristics of complaints that would require immediate notification of the audit committee. The audit committee should determine a regular reporting schedule to the board, including identifying the types of events that should be immediately communicated to the board. Finally, the audit committee should consult with legal counsel regarding the adequacy of all procedures.

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