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Audit Committee Roles & Responsibilities

Audit Committee Roles & Responsibilities. Audit Committee July 20, 2004. Audit Committee Roles. Office of Internal Auditing Charter (Policy 1.D.) Hire Executive Director (Policy 1A.4 Part 5) Preserve Independence of Audit Function Set Tone for Ethical & Legal Conduct. Audit Committee Roles.

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Audit Committee Roles & Responsibilities

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  1. Audit CommitteeRoles & Responsibilities Audit Committee July 20, 2004

  2. Audit Committee Roles • Office of Internal Auditing Charter (Policy 1.D.) • Hire Executive Director (Policy 1A.4 Part 5) • Preserve Independence of Audit Function • Set Tone for Ethical & Legal Conduct

  3. Audit Committee Roles • Approve Annual Audit Plan (June) • Select External Auditors (April) • OLA • CPA firms • Appraise Audit Quality • Review Audit Reports (Sept & Dec) • Annual Report (Sept) • Peer Review

  4. Audit Committee Roles • Monitoring • Significant Legal Violations • Unresolved Audit Findings • Performance Measurement

  5. Sarbanes Oxley ActImplications for theAudit Committee • Auditor Independence • Audit Committee Structure & Responsibilities • Ethics

  6. Sarbanes Oxley ActAuditor Independence • Objective is to ensure auditors: • Are free from potential or perceived conflicts • Maintain professional, arms-length relationship with management • Adequately assessing internal controls • Fulfill responsibilities diligently to detect reporting problems.

  7. Audit committee selects external auditor Auditors should be prohibited from non-audit work unless pre-approved by audit committee Lead audit partner should be rotated every seven years Current practice, could add to policy Current practice, could add to policy Contract is re-bid every three years, could require rotation as selection criteria Comparison to PolicyAuditor Independence The Act MnSCU

  8. Sarbanes Oxley ActCorporate Responsibility • Objective is to ensure governing board: • Acts independently of management • Acts with integrity and resolves conflicts appropriately • Understands and has expertise to examine financial reports • Is fully informed in timely manner

  9. Governing boards shall have an Audit Committee Members must be independent Oversees external auditors Includes at least one financial expert Current Policy Current Policy Current Policy, but consider adopting a Charter Consider role of candidate advisory council Comparison to Policy Audit Committees The Act MnSCU

  10. Senior managers should adopt a code of ethics and compliance measures Confidential employee complaint channel should be created Current practice - general statutory code of ethics. Consider – legislative additions for financial reporting and disclosure responsibilities Current practice – Policy requires reporting. Consider -establishing clear channel Comparison to PolicyEthics The Act MnSCU

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