Audit Committee Governing Responsibilities
Membership and Meetings
- The Committee shall be comprised of no fewer than three members as appointed by the Board of Directors. Each Committee member shall meet the independence, experience and other membership requirements upon recommendation of the Board Affairs Committee as defined in the Sarbanes-Oxley Act of 2002.
- The Board of Directors will appoint the Committee members and a Committee Chair from among such Committee members in accordance with the Organization’s Governance Principles. Consideration will be given to staffing the Committee with at least one member who is an audit committee financial expert as defined by the Act. Each Committee member will serve at the pleasure of the Board for such term as the Board may decide or until such Committee member is no longer a Board member.
- The Committee shall meet in person or telephonically as often as it determines, but not less frequently that three (3) times per year. Meetings of the Committee should be attended by representative of the Company’s principle external auditors (“independent auditors”), the Chief Executive Officer, the Chief Financial Officer and others as and when deemed appropriate by the Committee. The Committee shall meet privately with such persons or groups, whenever the Committee deems it appropriate.
- The Committee Chair shall be responsible for calling the meetings of the Committee, establishing meeting agenda with input from management and supervising the conduct of the meetings.
- A majority of the number of appointed Committee members will constitute a quorum for conducting business at a meeting of the Committee.
- The Committee will assist the Board in the oversight of (1) the integrity of the financial statements of the Organization, (2) the independent auditor’s qualifications and independence, (3) the performance of the Organization’s internal audit function and independent auditors, and (4) the compliance of the Organization with legal and regulatory requirements, and (5) the review of the Organization’s annual 990 report to the federal government.
- Authority and Responsibilities
- Relationship with the Independent Auditors
- The Committee has the sole authority to appoint or replace the independent auditor. Notwithstanding this authority, the Committee will continue its longstanding practice of recommending that the Board of Directors ratify the Committee’s selection.
- The Committee is responsible for the compensation and oversight of the work of the independent auditor for the purpose of preparing or issuing an audit report or related work. The independent auditor will report directly to the Committee.
- Pre-approval of Audit and Non-Audit Services
- The committee has the sole authority to pre-approve all auditing services and permitted non-audit services to be performed by the independent auditor. The Committee may delegate this authority to subcommittees consisting of one or more members when appropriate, including the authority to grant pre-approvals of audit and permitted non-audit services, provided that decision of such subcommittee to grant pre-approvals are presented to the full Committee at its next scheduled meeting.
- Resources of the Committee
- The Committee has the authority to retain independent legal, accounting or other advisors. The Organization will provide for appropriate funding, as determined by the Committee, for payment of compensation to the independent auditor and to any advisors employed by the Committee.
Reports to the Board
- The Committee will make regular reports to the Board.
- The Committee will review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval.
- The Committee will annually review the Audit Committee’s own performance.
The Committee, to the extent it deems necessary or appropriate, will:
- Financial Statement and Disclosure Matters
- Review and discuss with management and the independent auditor:
- The annual audited financial statements and quarterly unaudited financial statements, including disclosures made in management’s discussion and analysis.
- Significant financial reporting issues and judgments made in connection with the preparation of the Organization’s financial statements, including any significant changes in the Organization’s selection or application of accounting principles, any major issues as to the adequacy of the Organization’s internal controls and any special steps adopted in light of material control deficiencies.
- Review and discuss reports from the independent auditors on:
- All critical accounting policies and practices to be used.
- All material alternative treatments of financial information with generally accepted accounting principles that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditor.
- Other material written communications between the independent auditor and management, such as any management letter or schedule of unadjusted differences.
- Discuss with management the Organization’s major financial risk exposures and the steps management has taken to monitor and control such exposures, including the Organization’s risk assessment and risk management policies.
- Discuss with the independent auditor the matters required to be discussed relating to the conduct of the audit, including any difficulties encountered in the course of the audit work, any restrictions on the scope of activities or access to requested information, and any disagreements with management.
- Review disclosures made to the Audit Committee by the Organization’s Chief Executive Officer and Director of Accounting about any significant deficiencies in the design or operation of internal controls or material weaknesses therein and any fraud involving management or other employees who have a significant role in the Agency’s internal controls.
Oversight of the Agency’s Relationship with the Independent Auditor
At least annually, review a report from the independent auditor describing:
- The independent auditor’s internal quality control procedures,
- Any material issues raised by the most recent internal quality control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the firm,
- Any steps taken to deal with any such issues
All relationships between the independent auditor and the Agency
Evaluate the qualifications, performance and independence of the independent auditor, including considering whether the auditor’s quality controls are adequate and the provision of permitted non-audit services is compatible with maintaining the auditor’s independence. The review should also include an evaluation of the lead audit partner. The Committee shall present its conclusions with respect to the independent auditor and lead audit partner to the Board.
Ensure the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law. Consider whether, in order to assure continuing auditor independence, it is appropriate to adopt a policy or rotating the independent auditing firm on a regular basis.
Establish policies for the Organization’s hiring of employees or former employees of the independent auditor who participated in the audit of the Organization.
As appropriate, seek to discuss with the main office of the independent auditor issues on which they were consulted by the Organization’s audit team and matters of audit quality and consistency.
Meet with the independent auditor prior to the audit to discuss the planning and staffing of the audit.
Compliance Oversight Responsibilities
Review (a) the status of the Organization’s compliance with the applicable laws and regulations, (b) major legislative and regulatory developments which could materially impact the Organization, and (c) management’s efforts to monitor compliance with the Organization’s Professional Code of Ethics.
Review and investigate any matters pertaining to the integrity of senior management, including conflicts of interest or adherence to standards of conduct as required by Organization policy.
Establish procedures for the receipt, retention and treatment of complaints received by the Organization regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.
119.9 Limitation of Audit Committee’s Role
While the Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Committee to plan or conduct audits or to determine that the Organization’s financial statements and disclosures are complete and accurate and are in accordance with generally accepted accounting principles and applicable rules and regulations. These are the responsibilities of management and the independent auditor.
119.10 Audit Timing
The Committee will begin the annual audit function at the August Board meeting. Other timing issues follow:
The independent auditor acceptance letter will be filed with the federal funders by June 30.
The audit will commence no later than 12-01.
The draft audit will be submitted at the February Board meeting.
The final audit will be submitted to federal funders no later than March 31.
This Charter will be included on the Organization’s website and will be made available upon request sent to the Organization’s Board Secretary. The Organization’s annual report will state that this Charter is available on the Organization’s website and will be available upon request to the Organization’s Board Secretary.