Audit Committee tasks and outcomes
Description
Audit Committee Charter Matrix PURPOSE OF THIS TOOL: Preparing an audit committee charter is often referred to as a best practice and is required for many public companies. It is encouraged for most organizations and required by some states for not-for-profit organizations. However, the charter is often prepared and forgotten except for its annual review. This tool is designed to help audit committees make the charter a living document and use it to manage the agenda. This tool is meant as a sample of what might be considered to be a best practice. Users of the tool should put their own charter in the first column and use this example as a guide for defining the steps to accomplish each objective, the associated performance measure, and the scheduling. This tool is intended to serve not-for-profit organizations of all sizes and organizational structures. For instance, some small not-for-profit organizations cannot justify the expense of an internal auditor, while others have very large internal audit departments headed by a senior executive. It is becoming more common in larger organizations to refer to the person heading the internal audit function as the chief audit executive (CAE). As used in this tool, the terms chief audit executive and CAE refer to the person responsible for the internal audit function, irrespective of their title or organizational role. Similarly, relatively few not-for-profit organizations employ in-house legal counsel. ...
Informations
| Publié par | Mephar |
| Nombre de lectures | 77 |
| Langue | English |
Extrait
Audit Committee Charter Matrix
Copyright © 2005 AICPA, Inc.
Audit Committee Charter Matrix for th nding: ___________ e Year E
Steps to When to Audit Accomplish Achieve Committee the Ob ective Fre uenc Charter (Checklist) Deliverable Due Date) 1. The chair of the audit Test for independence, based on Indicate in the audit committee Affirm annually or whenever a committee shall be a member of the policies established by the minutes whenever a new member change in status by any audit the board of directors, in good organization. is appointed. committee member occurs. standing, and all members shall be independent in order to serve on Mwionuilmd apl rionhdiebipt eenmdeplnocyee setsa onrd tahrodss e this committee. with direct financial interests in Although not all audit committee entities serving the organization members need be members of the from serving on the audit board of directors, a majority of the committee. audit committee members should Additionally, an organization’ be members of the board of s directors. independent auditors should not serve on the audit committee or on the board of directors. 2. The audit committee should Ascertain that the audit committee Indicate in audit committee Affirm annually and when there is have access to financial expertise , has the requisite financial meeting minutes how financial a change in status. whether in the form of a single expertise as defined by the expertise is available to the audit individual serving on the organization. committee. committee, or collectively among committee members. If the financial expertise is provided by one individual, it is desirable that he or she be a member of the board of directors. When no single member of the board has the requisite skills, other arrangements should be made to ensure that the audit committee has the financial expertise to carry out its duties. (See the tool “Audit Committee Financial Expertise Considerations, in this toolkit.)
Date Completed
Ste s to When to Audit Accom lish Achieve Committee the Ob ective Fre uenc Charter Checklist Deliverable Due Date 3. Review the committee’s charter Review the charter each year. Report to the board on the Review annually, unless changes annually, reassess the adequacy Assess the appropriateness of appropriateness of the audit are needed during the course of of this charter, and recommend each point in the charter in light of committee charter and any the year. any proposed cha nges to the the previous year’s experience. revisions recommended. board of directors. Assess the completeness of the Consider changes that are pcrhaacrttiecre isn laignhdt noef wn elewg able osrt necessary as a result of new laws regulatory requirements. or regulations. 4. The audit committee will meet In-person meetings should be held Prepare minutes that document Minutes should be distributed as as needed to address matters on at least once each year. All decisions made and action steps soon as possible but no later than its agenda, but not less frequently members are expected to attend following meetings and review for before the next meeting. than twice each year. The audit each meeting in person, via approval. committee may ask members of management or others to attend tveildeepohcoonnef ecroennfceer.e nce, or wMitehe ttihneg bmoianrudt eosf sdihroeucltdo rbs.e filed the meeting and provide pert inent Telephone conference meetings information as necessary. may be held more frequently. The agendas for meetings should be prepared and provided to members in advance, along with appropriate briefing materials. 5. Conduct executive sessions Establish these sessions in Develop action steps to be taken, Review as necessary, but not less with the outside auditors, conjunction with regularly if appropriate. frequently than regularly executive director, and chief scheduled meetings or as scheduled meetings. financial officer (CFO). If the necessary. organization has a chief audit executive (CAE), general counsel, or outside counsel, executive sessions should be conducted with each of these individuals as well. Circumstances may dictate that additional executive sessions may be needed with the director of financial reporting, controller, or others as desired by the Committee. (See the tool “Conducting an Audit Committee Executive Session: Guidelines and Questions, in this toolkit.)
Date Com leted
Ste s to When to Audit Accom lish Achieve Committee the Ob ective Fre uenc Charter Checklist Deliverable Due Date 6. The audit committee shall be Establish a policy for the audit Prepare an engagement letter for Continually review the policy and authorized to hire independent committee to preapprove engaging each engagement. compliance with it as needed. auditors, counsel, or other ienxdpeeprtesn. dent auditors and other Report submitted byexternal consultants as necessary. (This may take place any time during the accountant, counsel, or year.) bDei secsutsasb lwishheethd efro ra tbhiusd pguert psohsoeu.l d consultant. (See the tool “Points to Consider Requests for proposals (RFPs) When Engaging External Resources, in this toolkit.) should be used if time permits. (See the tool “Sample Request for Proposal Letter for CPA Services, in this toolkit.) 7. Review and approve the Meet in executive session at each Report to the full board on the Conduct ongoing reviews, as appointment, replacement, meeting with the CAE. performance of the CAE, changes can be made at any time rCeAasEsignment, or dismissal of the Hold special meetings as may be including the effectiveness of the during the year. . necessary to address internal audit function. (See the tool “Guidelines for Hiring appointment, reassignment, or the Chief Audit Executive (CAE), dismissal of the CAE. in this toolkit.) The audit committee chair should be available if any unforeseen issues arise between meetings relating to the CAE. Meet at least once annually with other members of executive management and the independent auditors to discuss the performance of the CAE. Discuss job satisfaction and other employment issues with the CAE.
Date Com leted
Ste s to When to Audit Accom lish Achieve Committee the Ob ective Fre uenc Charter Checklist Deliverable Due Date 8. Appoint the independent At least once each year, discuss Document these discussions in Review soon after the audit has auditors to be engaged by the each of these items with the audit committee meeting been approved by the board, so organization, establish the audit management, the CAE, and the minutes. Report on findings and the recommendation for the fees of the independent auditors, board of directors. provide recommendations to the appointment of the outside auditor and preapprove any nonaudit Review total audit fee in relation to board as considered necessary. in the next fiscal year can be services provided by the any nonaudit services being documented in the board minutes. independent auditors, including tax provided by the independent services, before the services are rendered. auditors. Review with management the Review and evaluate the significance of bidding out audit professional relationship with the services. apuardtitnoerrs, , minacnluadgienrg, aconnd tisntuaiftf;y aonf d (See the tools “Sample Request level of service provided by for Proposal Letter for CPA auditors. Services and “Peer Review of Review the scope of all services tCoPolAk itF.i)r ms: An Overview, in this provided by the audit firm throughout the organization. 9. Review with management the Ensure written policies and Report issues, if any, to the policies and procedures with procedures exist. board. respect to officers, key employees Discuss with the CAE, or (executive director, CFO, chief equivalent, the need for testing by operating officer), disqualified (puenrdseorn Isn ates rdneafli nReedv ebny uteh eC IoRdSe ienitdheepr ethned einntt earnuadli taorusd,i toorr so,t her parties. Section 4958), expense accounts, and perks, including excess benefit transactions; consider the results of any review of these areas by the internal auditor or the independent auditors.
Review policies and procedures annually. Review any significant findings as they arise.
Date Com leted
Ste s to When to Audit Accom lish Achieve Committee the Ob ective Fre uenc Date Charter Checklist Deliverable Due Date Com leted 10. Inquire of management, the Document the material risks that Submit a risk report to the board Review at least once each year, CAE, and the independent the organization faces. Update as and the independent auditors and more frequently if necessary. auditors about significant risks or events occur. Review with including mitigation strategies and exposures facing the organization; management and the CAE on a quantifiable risks and insurance to assess the steps management has periodic basis. cover such risks, e.g., loss of taken or proposes to take to business. minimize such risks to the organization; and periodically review compliance with such steps. 11. Review with the independent Meet with external audit partner, Document the meeting in the On an annual basis, review the auditors, CFO, controller, and CAE CFO, controller, and CAE to audit committee meeting minutes. scope of the previous year’s the audit scope and plan of the discuss scope of the previous audit, and the interrelationship internal auditors, if applicable, and year’s audit, and lessons learned. between the internal and the independent auditors. Address Later, discuss planned scope for independent auditors with respect the coordination of audit efforts to audit of current year and the to the scope of the independent assure the completeness of standard of work to be followed. In auditors’ work. coverage, reduction of redundant addition, discuss the timing of At another of the meetings each efforts, and the effective use of progress reports, to be provided by year, review the plans of Internal audit resources. the independent auditors, and the Audit for audits in the current fcoollmowmeudn iicna ttihoen se vpernotc eofs sd etov ibatei ons year, if applicable. from the plan. 12. Consider reviewing with Review reports of all internal Report on the status of all internal Review at each meeting. management and the CAE: audits issued since the previous audits planned for the next • Significant findings on internal umpeceotimnign ag nyde aplr aanlnoendg fwoirt ht hteh e quarter and/or year. audits during the year and status of each planned audit. Internal Audit should provide a management’s responses thereto summary of findings for • Whether Internal Audit Review and discuss the findings completed audits, including encountered any difficulties in the for each audit completed since the fminadnage manednt’s plan to address rceosutrrisceti oofn ist so na uthdiet ss, csoupceh oaf si tas ny rperisopr omnseee ttion gt,h ea nred pmorat.n agement’s idenitnifgised. weaknesses work or access to required Discuss internal audit department information budget and staffing with the CAE.
When to Achieve Fre uenc Due Date
Ste s to Audit Accom lish Committee the Ob ective Charter Checklist Deliverable Discuss Internal Audit’s • Any changes required in the scope of its internal audit compliance with IIA Standards, if • The Internal Audit department’s applicable, including the requirement for a peer review once budget and staffing every five years. If the organization • The Internal Audit department’s receives federal funds, Internal charter Audit is required to have a peer review once every three years if • Internal Audit’s compliance with the independent auditors plan to (tIhIeA ’Isn) stSittuatned aofr dIns tfeorrn tahl Auditors’ rely on their work to reduce the Professional Practice oef Internal external audit scope. Auditing (Standards), if applicable. Review the internal audit charter Internal Audit should meet periodically and update, if separately with the independent necessary. auditors. 13. Inquire of the executive Discuss sources of support and Include an agenda for executive Review, as necessary, but at director and CFO regarding the revenue with the executive sessions. (See the tool least annually. sources of support and revenue of director, CFO, and other “Conducting an Audit Committee the organization from a subjective executives. Identify any issues Executive Session: Guidelines as well as an objective standpoint. addressed, and their resolution. and Questions, in this toolkit.) 14. Review with the independent Review the reports of the internal Report to the board on issues Submit a comprehensive report to auditors and the CAE: audit team for all audits completed relating to internal controls, with the board at a specified meeting since the prior audit committee emphasis on management’s each year. ability to override controls and the io • n rcgTlauhndeii znaagdt iecoqon’umsa picnuytt eeorrfi ntzahele d c ionnftorrolmsa, tion mReeveitienwg .k ey internal controls with monitoring and testing relating to cUhpadnagtee so tno atnhyet ihnitnegr nnael wc, oonrt raonl y this capacity. system controls and security the CAE, and understand how system, at every meeting. these controls will be tested during • a nAd nrye creolmatmede nsidgantiifoicnas notf ftihnedings the year. independent auditors and internal Review these plans with the audit services, together with independent auditors to management’s responses thereto understand their scope with respect to key controls.
Date Com leted
Ste s to When to Audit Achieve Accom lish Committee the Ob ective Fre uenc Charter Checklist Deliverable Due Date (See the tools “Internal Control: A Review with the CAE the plans for Tool for the Audit Committee, and audits of other elements of the “Fraud and the Responsibilities of control environment. the Audit Committee: An Determine that all internal control Overview in this toolkit.) weaknesses are quantified, reviewed, and addressed. 15. Review with management and Independently, through Record discussion and any action Review as necessary. the independent auditors the effect professional reading and steps in audit committee meeting of any regulatory and accounting continuing education, keep up-to- minutes. initiatives, as well as other unique date on new developments related transactions and financial to the not-for-profit industry, the relationships, if any. organization’s specific sector, and (See the tool “Unique Transactions tohreg aennivziartoionnm oepnte irna twesh,i cinh ctlhued ing and Financial Relationships, in this toolkit.) baen ys ruebjgeuclta ttoor. y requirements it may Discuss with management and the independent auditors in meetings. 16. Review with management, Discuss the financial statements Record discussion and any action Review as necessary. and the CAE, any interim financial with emphasis on changes in steps in audit committee meeting reports issued since the last reporting, new and unusual minutes. meeting. transactions, and financial trends. 17. Review with each public Discuss each matter, and related Submit reports and Review, at least annually, and/or accounting firm that performs an matters that may come to the documentation of discussions and in conjunction with the year-end audit: attention of the audit committee resolution of disagreements. audit. • All critical accounting policies tahnrdo/uogr ht hteh iisn dpreopceensdse. nt auditors and practices used by the organization. Create an action plan and follow-up plan as necessary.
Date Com leted
Ste s to When to Audit Accom lish Achieve Committee the Ob ective Fre uenc Checklist Deliverable Due Date Charter • All alternative treatments of financial information within generally accepted accounting principles that have been discussed with management of the organization, the ramifications of each alternative, and the treatment preferred by the organization. (See the tool “Issues Report From Management, in this toolkit.) 18. Review all material written Discuss each item with the Submit reports and Review, at the completion of the communications between the independent auditors and documentation of discussions, external audit. independent auditors and management (including the resolution of issues, and the management, such as any CAE) and conclude on the action plan for any items requiring management letter or schedule of appropriateness of the proposed follow-up and monitoring. unadjusted differences. resolution. 19. Review with management and Discuss each matter, and others Submit reports and Review at the completion of the the independent auditors: that may come to the attention of documentation of discussions, annual external audit. • The organization’s annual the audit committee through this resolution of disagreements, or process, with management action plan for any item requiring ffionoatnncoitael ss tatements and related (including the CAE ) and the follow-up. independent auditors. • The independent auditors’ audit Review with management the of the financial statements and their report thereon caonuyr saec tioof na rcetiqouni rtion gb feo tllaokwe-nu fpo. r • The independent auditors’ Monitor any follow-up action that judgments about the quality, not ontinued just the acceptability, of the rceoqmuimreitst ece interven taiound.i t organization’s accounting principles as applied in its financial reporting • Any significant changes required in the independent auditors’ audit plan
Date Com leted
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