Members: David Smith, Chair; Helen Kearns, Hugh Mackenzie, Louis Martel, Jean Turmel

The Audit and Actuarial Committee reviews the annual financial statements, recommends the appointment of the external auditors and the independent actuary, and receives their reports. It also receives the reports of the internal auditor and the reports of the general counsel concerning compliance with the Code of Business Conduct.

Throughout “OTPP” refers to the corporate organization, the Ontario Teachers' Pension Plan Board, and “board members” refers to the members appointed to the OTPP.

Authority
Primary responsibility for the financial reporting, accounting systems and internal controls is vested in senior management and is overseen by the board members. The Audit and Actuarial Committee is a standing committee of the OTPP established to assist it in fulfilling its responsibilities including financial reporting and actuarial valuations.

The external actuary, external auditor and internal auditor are directly accountable to the Committee. The Committee shall have unrestricted access to all OTPP personnel and documents. The external actuary, the external auditor and the internal auditor shall have direct access to the Committee at all times.

The Committee is authorized to engage independent counsel and other advisors as it determines necessary to carry out its duties, and to set and pay the compensation for any advisors engaged by the Committee.

Responsibilities
Financial Information

• Review the annual financial statements of the Plan and the Retirement Compensation Arrangement and recommend their approval to the board members after discussing the statements and matters such as the selection of and/or changes in accounting policies, the quality of accounting principles, major accounting judgements, accruals, actuarial assumptions, valuations and estimates with management, the external actuary and the external auditor and amongst members of the Committee.
• Review the Management Discussion and Analysis (MD&A) in the Annual Report.
• Review other financial information included in the Annual Report.
• Review and recommend significant accounting policies for approval by the board members.
• Assess biennially the procedures in place for the review of the OTPP’s public disclosure of financial information extracted or derived from the financial statements.
• Review the annual Operating Expenses Budget and the Capital Budget for approval by the board members.
• Review the quarterly financial information.
• Review the appointment of the Chief Financial Officer.

External Actuary
Directly oversee the work of the external actuary, including:

• the actuary’s engagement letter;
• considering the recommendations of the actuary as to the assumptions to be used in the valuations;
• reviewing the actuarial valuations and recommending their acceptance to the board members;
• the management letter together with management's response;
• assessing the actuary’s performance;
• recommending the actuary for appointment by the board members as well as a fee for approval by the board members;
• meeting privately with the actuary to discuss pertinent matters.

External Auditor
Directly oversee the work of the external auditor, including:

• the financial statement audit engagement letter;
• the scope of the audit, including materiality, areas of audit risk, timetable, deadlines and co-ordination with internal audit;
• the management letter together with management's response;
• receiving the auditor’s written statement of relationship with the OTPP including non-audit services performed by the auditor;
• assessing the auditor's objectivity and independence, including rotation of audit partners;
• reviewing the auditor’s internal quality control procedures;
• assessing the auditor’s working relationship with management;
• resolving disagreements between management and the auditor regarding financial reporting;
• assessing the auditor’s performance;
• recommending the auditor for appointment by the board members as well as a fee for approval by the board members;
• approving any other audit, review or attest services, including the form of the report;
• meeting privately with the auditor to discuss pertinent matters; and
• when necessary, recommending the removal of the auditor.

Audit Services Department

• Review and approve the annual audit plan which includes the resources, budget and planned activities of the internal audit function.
• Review internal audit findings and determine that they are being properly followed up.
• Review annually the effectiveness of the internal audit function.
• Review and approve the terms of reference of the internal audit function on a biennial basis.
• Meet privately with the Vice-President, Audit Services to discuss pertinent matters.
• Review the appointment of the Vice-President, Audit Services.

Accouting Systems and Internal Controls

• Obtain reasonable assurance from discussions with and/or reports from management, and reports from external and internal auditors that the OTPP’s accounting systems are reliable and the internal controls are operating effectively.
• Review the annual internal controls certification.
• Review Quarterly Operations Risk Reports from management.
• Direct the auditors' examinations to particular areas, at the discretion of the Committee.

Corporate Governance Matters

• Establish the Consulting Fees Policy and receive an annual report on consulting fees from management. Review the Consulting Fees Policy on a biennial basis.
• Review annual reports on compliance with statutory and regulatory obligations, including securities regulatory reports, remittance of income taxes and other payroll withholdings.
• Review reports on compliance with the Code of Business Conduct.
• Establish procedures for receiving and dealing with complaints received by the OTPP regarding accounting, internal accounting controls, financial reporting, auditing matters, or other matters required to be reported under the Code of Business Conduct whether they are reported by OTPP employees or others. Review these procedures on a biennial basis.
• Establish procedures for receipt of confidential, anonymous submission by OTPP employees of concerns regarding questionable accounting, internal accounting controls, auditing matters, or other matters required to be reported under the Code of Business Conduct. Review these procedures on a biennial basis.
• Review Quarterly Reports on Whistle-blowing.
• Establish the hiring policy regarding partners, employees and former partners and employees of the present and former external auditor. Review the policy on a biennial basis.
• Establish the Policy on the Appointment of Auditors for the OTPP and its Subsidiaries and Joint Ventures. Review the policy on a biennial basis.
• Meet privately with management to discuss pertinent matters.
• Meet privately at each meeting of the Committee to discuss pertinent matters.
• Review the Terms of Reference of the Audit and Actuarial Committee on a biennial basis.
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Other Matters

• Advise the board members and carry out such other tasks, consistent with the above matters, as directed by the board members.

Position description for the Chair of the Audit and Actuarial Committee
The Chair of the Committee shall:

1. Provide leadership to enhance the Committee's effectiveness by
   1. ensuring that the areas of responsibilities of the Committee and management are understood and respected by both; and
   2. overseeing the discharge of the Committee’s responsibilities including its reporting to the board members
      
      
2. Act as the liaison between the Committee and management by working with the Chief Executive Officer or his delegatee
   1. to carry out the annual calendar of the Committee’s business;
   2. to set the agenda for each Committee meeting;
   3. to ensure that proper information is brought to the Committee including regular management reports and documentary materials in support of financial information, internal controls and actuarial valuations.
      
      
3. Review and oversee the investigation of the whistle-blowing reports directed to the Chair of the Committee in accordance with the Procedures for Responses to Whistle-blowing.