Audit and Finance Committee Charter

1. Purpose

The purpose of the Audit and Finance Committee (Committee) is to assist the Workplace Safety and Insurance Board (WSIB) Board of Directors (BOD) in fulfilling its responsibilities with respect to:

1. The integrity of the WSIB’s financial reporting process and statements, and those of the WSIB Employees’ Supplementary Pension Plan.
2. The effectiveness of internal controls.
3. The performance of the actuarial functions.
4. The performance, independence, and qualifications of the internal and external auditing functions, including the statutory value-for-money audit.
5. The compliance with laws, regulations, and policies relevant to finances, financial reporting and the annual financial statements of the WSIB, its subsidiaries, and the WSIB Employees’ Supplementary Pension Plan.

2. Scope

This charter of the Committee describes the authority and responsibilities of the Committee. The charter should be read in conjunction with the Corporate Governance Policy and the Enterprise Governance Framework.

3. Authority of the Committee

3.1. Committee authority

The Committee has the authority to:

3.1.1. Review and approve the Auditor Independence Guideline every two years.

3.1.2. Approve all services and related fees, including specialized advisory and non-audit services, from the External Auditor, as permitted by the Auditor Independence Guideline and subject to the terms and conditions of the Audit Services Agreement.

3.1.3. Approve the Internal Audit Charter and all services and related fees with the Internal Auditor.

3.1.4. Approve the annual External and Internal Audit Plans.

3.1.5. Approve banking resolutions.

3.2. Committee Chair or the Vice-Chair authority

3.2.1. The Committee Chair or the Vice-Chair has the authority to approve the expenses of the Chair of the BOD in accordance with the Ontario Travel, Meal and Hospitality Expenses Directive and WSIB's Corporate Governance Policy as amended from time to time.

3.3 Other

3.3.1. The Committee may, with the approval of the Chair and a resolution by the BOD, appoint sub-committees as needed.

3.3.2. Without limiting the authority set out in 3.1, the Committee has the authority with the agreement of the Chair of the BOD, to engage independent counsel and other advisors as it determines necessary or desirable to carry out its duties and to set and pay the compensation for them.

3.3.3. In performing its functions, the Committee is entitled to rely on the advice, reports and opinions of management, counsel, accountants, auditors and other expert advisors.

4. Access to the Committee

4.1. The Internal Auditor, the External Auditor and the Auditor General of Ontario or a representative, shall have direct and unrestricted access to the Committee and to the BOD through the Committee.

4.2. The Committee Chair may reach out through the Chair's Office and the CEO's Office to access additional executive support and/or information as required.

4.3. The agenda for each Committee meeting shall include in camera session(s) with such individuals listed in 4.1, and such other senior members of staff who may support the Committee in assessing financial risk, as the Committee Chair deems appropriate. These individuals may be invited to attend the meeting at the discretion of the Committee Chair. Such sessions are to occur without management present and are to be treated as strictly confidential between the respective staff member and the Committee.

5. Composition, skills and competencies

5.1. The Committee shall consist of a minimum of three independent members of the BOD who demonstrate strong financial competencies or who are willing and able to acquire the necessary knowledge quickly. The Chair of the BOD is a member of the Committee and the President and CEO is an ex-officio member of the Committee.

5.2. Financial competencies include the ability to read and understand a set of financial statements that present a breadth and level of complexity of financial issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the WSIB’s financial statements and the WSIB Employees’ Supplementary Pension Plan financial statements.

6. Meetings

6.1. Frequency of meetings

The Committee will meet a minimum of three times per year, and more frequently as circumstances dictate.

6.2. Quorum

The majority of members of the Committee shall constitute a quorum for the transaction of business at a meeting. A decision of the majority is the decision of the Committee.

6.3. In-Camera Sessions

The Committee Chair and the members of the Committee may meet without any members of management or any other persons present except as deemed necessary by the Committee Chair.

6.4. Other

Additional information relating to Committee meetings is set out in the Corporate Governance Policy.

7. Role of the Committee Chair and Vice-Chair

The role of the Committee and Vice-Chair are as defined in the Corporate Governance Policy.

8. Responsibilities of the Committee

The specific functions of the Committee are:

8.1. Integrity of the financial reporting process

8.1.1. The Committee recommends to the BOD financial for public release, which includes:

8.1.1.1. The Annual Report, which includes the annual audited consolidated financial statements and management’s discussion and analysis (“MD&A”).

8.1.1.2. The Annual Sufficiency Report, which includes the audited sufficiency statement and sufficiency discussion and analysis.

8.1.1.3. The Quarterly Sufficiency Report, which includes the unaudited quarterly sufficiency statement and sufficiency discussion and analysis.

8.1.2. The Committee recommends to the BOD financial information that includes:

8.1.2.1. The actuarial valuation and report of the Vice President and Chief Actuary for the Insurance Fund.

8.1.2.2. The annual and Corporate Business Plan and the annual three-year budget.

8.1.2.3. Amendments to the Funding and Pricing Policy for the Insurance Fund and advice on the financial impacts.

8.1.2.4. The quarterly reviewed financial statements, discussion and analysis.

8.1.3. Through discussions with Management, the External Auditor, and the Vice President and Chief Actuary, the Committee provides direction and oversight on financial, audit and actuarial issues relevant to the BOD, including:

8.1.3.1. Whether the financial statements and reports are prepared in accordance with International Financial Reporting Standards (“IFRS”), and presented in a complete, clear, fair and transparent manner.

8.1.3.2. The appropriateness and quality of accounting policies, disclosures, and financial reporting practices, including complex or unusual transactions, significant estimates, judgments, changes in accounting policies, and alternative treatments under IFRS for material transactions.

8.1.3.3. The results of the external audit or quarterly review, including any difficulties encountered and any restriction on the scope of the External Auditor’s activities or access to information.

8.1.3.4. The appropriateness of the WSIB’s disclosure within MD&A.

8.1.3.5. Assessments of significant proposed changes to accounting standards by relevant accounting bodies.

8.2. Investment governance

The Committee recommends to the BOD the appointment of one or more custodians to hold the investments of the funds in safekeeping.

8.3. Actuarial services

The Committee ensures systems are in place to monitor and report on the WSIB’s compliance with all financial regulatory requirements and adherence to accepted actuarial practices and professional standards.

The Committee provides input on actuarial matters to help the WSIB meet its current and future benefit obligations. These include:

8.3.1. Reviewing that actuarial assumptions and methods used in the valuation of benefits and liabilities are in accordance with accepted actuarial standards of practice.

8.3.2. Reviewing results of actuarial assessments to ensure   appropriate provisions for benefit liabilities in financial statements.

8.3.3. Reviewing the results of peer reviews of actuarial liabilities.

8.3.4. As required, the Committee meets in camera with the Vice President and Chief Actuary to:

8.3.4.1. Provide direction on independence of Actuarial Service. 

8.3.4.2. Resolve any restrictions encountered in the course of the Vice President and Chief Actuary's work. 

8.4 Internal audit

The Committee, as the primary sponsor of Internal Audit, has the responsibility to oversee Internal Audit and its work concerning the evaluation and improvement of internal controls and governance processes.

8.4.1. The Committee recommends to the BOD the appointment and termination of the Internal Auditor with recommendations of the President and CEO.

8.4.2. The Committee approves the:

8.4.2.1. Internal Audit Charter and recommend updates as appropriate.

8.4.2.2. Annual Internal Audit Plan, including objectives, scope, timetable, and budget.

8.4.3. The Committee meets regularly with the Internal Auditor to:

8.4.3.1. Review the quarterly reports prepared by Internal Audit, including the status of management’s actions to address significant open issues. Inform the BOD of issues as deemed necessary by the Committee Chair.

8.4.3.2. Review the Internal Auditor’s annual attestation on the function’s independence.

8.4.4. The Committee regularly meets in camera with the Internal Auditor to:

8.4.4.1. Provide direction on the independence of the Internal Audit function.

8.4.4.2. Resolve any restriction or limitations on Internal Audit, such as significant difficulties and disagreements with management of scope restrictions encountered in the course of Internal Audit’s work.

8.5. External auditor

The Committee is responsible for the relationship with the External Auditor. The External Auditor reports to the BOD through the Committee. The Committee is responsible for high quality external audits so that it has sufficient information to recommend the approval of annual financial statements to the BOD.

8.5.1. The Committee recommends to the BOD:

8.5.1.1. Based on a Request for Proposals, the appointment of any External Auditor to the Auditor General for a Lieutenant Governor in Council appointment.

8.5.1.2. Any significant financial and/or internal control risks identified by the External Auditor.

8.5.1.3. The post-audit or management letter, if any, containing any material findings or recommendations of the External Auditor, including management’s response thereto and the subsequent follow-up to any identified internal control weaknesses.

8.5.2. The Committee approves: 

8.5.2.1. The Auditor Independence Guideline, every two years. 

8.5.2.2. The annual audit plan and deliverables, based on the multi-year contract, so that comprehensive information is available to ensure adequate financial oversight and direction. These deliverables include but are not limited to:

• The annual statutory external audit plan, the engagement letter, approach, scope, areas of risk, timing, proposed fees, staffing decisions, and materiality.
• Reports prepared by the External Auditor in connection with all services provided to the WSIB.

8.5.2.3. All services and related fees, including specialized advisory and non-audit services, from the External Auditor, as permitted by the Auditor Independence Guideline and subject to the terms and conditions of the Audit Services Agreement.

8.5.3. The Committee monitors and directs: 

8.5.3.1. The effectiveness of measures to safeguard the independence of the External Auditor and minimize institutional familiarity risk.

8.5.3.2. An assessment process of the effectiveness of the External Auditor after the completion of the external audit for the fiscal year.

8.5.4. The Committee regularly meets in camera with the External Auditor to discuss issues or concerns encountered in completing work.

8.6. Office of the Auditor General (OAG) of Ontario

The Committee has the responsibility to oversee the relationship with the OAG. The external audits and the value-for-money audits are performed under the direction of the OAG. As the Auditor General Act allows the OAG to undertake special audits of the WSIB at their discretion, the OAG is invited to regular quarterly Committee meetings.

8.7. Other Government directed audits

The Government of Ontario allows the Ontario Internal Audit Division to conduct all special audits of the WSIB at their discretion and the Committee is responsible for overseeing this relationship.

8.8. Statuary value for money audits

The Committee has responsibility to oversee the value for money audit required by s. 168 of the WSIA each year. The Committee will:

8.8.1. Recommend to the BOD for its approval a program for review each year. 

8.8.2. Recommend to the BOD the final audit report.

8.8.3. Establish requirements for updates to be provided to the Committee to monitor the timeliness and appropriateness of any open action items taken by management on the value for money audit report recommendations.

8.8.4. Advise the BOD as to whether appropriate steps have been taken on the value for money audit report recommendations, including whether additional review of the actions taken should be considered.

8.9. Financial compliance

The Committee will review and discuss with management the annual dedicated Financial Compliance Report that focuses on:

8.9.1. Financial laws, regulations and policies that affect the WSIB, its subsidiaries and the WSIB Employees’ Supplementary Pension Plan.

8.9.2. Significant financial findings of any examinations by regulatory agencies and advise the BOD of any financial compliance issues, including those related to subsidiaries that might have significant reputation risk and/or impact on financial reporting or the operations of the WSIB.

8.9.3. The effectiveness of the policies and controls that are in place for monitoring compliance with financial laws, regulations and policies.

8.10. Post-employment benefit programs

The Committee oversees financial issues in connection with the WSIB post-employment benefit programs. The Committee will recommend to the BOD:

8.10.1. The audited financial statements for the WSIB Employees' Supplementary Pension Plan. 

8.10.2. Proposals for contribution levels for the WSIB Employees’ Supplementary Pension Plan and WSIB Employees’ Pension Plan when plan sponsor approval is required.

8.10.3. Amendments to the Funding Policy for the WSIB Employees’ Pension Plan and advice on the financial impacts.

8.10.4. Advice on the financial impacts arising from amendments to the design and structure of the WSIB Employees’ Pension Plan and the WSIB Employees’ Supplementary Pension Plan.

8.11. Ethics and values

In accordance with the WSIB Ethics Framework, the Committee’s responsibilities include:

8.11.1. Reviewing with management the policies, plans and implementation of fraud prevention and detection programs and:

8.11.1.1. Assessing the effectiveness of controls to prevent and identify fraud, while safeguarding confidentiality.

8.11.1.2. Informing the Chair of the BOD and the BOD of significant irregularities or frauds.

8.11.1.3. Monitoring management’s action on such irregularities or frauds.

8.11.2. In respect of disclosure of financial wrongdoing:

8.11.2.1. Ensuring appropriate procedures are in place for the receipt and treatment of complaints received regarding accounting, internal control or audit matters and anonymous submissions by employees of concerns regarding questionable accounting or auditing matters.

8.11.2.2. Reporting to the Chair of the BOD and the BOD immediately of any allegations of financial wrongdoing.

8.12. Financial oversight and policies

8.12.1. The Committee is responsible for ensuring appropriate governance and procedures are in place with regards to internal controls and financial risk management.

8.12.2. The Committee reviews and endorses to the BOD financial oversight policies as appropriate.

8.13. Committee role in risk management

The Committee will assess any risks that are specific to its charter and address those risks or forward them to the Governance Committee for consideration.

8.14. Other 

The Committee provides input to the President and CEO on the performance evaluation of the Chief Financial Officer, the Internal Auditor, and the Vice President and Chief Actuary as primary resources to the Committee.

9. Committee charter review

The charter of the Committee is reviewed annually by the Committee.

May 2023