In our city, three main groups are responsible for the quality of financial reporting: the city council, administrative management, and the independent auditors. Of these three, the city council is the most important because of its unique position as the ultimate monitor of the financial reporting process.
An audit committee is a practical means for the city council to provide much-needed independent review and oversight of the government's financial reporting processes, internal controls, and independent auditors. An audit committee also provides a forum separate from management in which auditors and other interested parties can candidly discuss concerns. By effectively carrying out its functions and responsibilities, an audit committee helps to ensure that management properly develops and adheres to a sound system of internal controls, that procedures are in place to objectively assess management's practices, and that the independent auditors, through their own review, objectively assess the government's financial reporting practices.
|Expiration of Term
The board positions are filled, and we are no longer accepting applications. Thank you to all who expressed interest.
Based on guidance provided by the Government Financial Officers Association (GFOA), we make the following recommendations regarding the qualifications of prospective members and their responsibilities:
- The audit committee should be formally established by enabling resolution. The written documentation establishing the audit committee should prescribe the scope of the committee's responsibilities, as well as its structure, processes, and membership requirements. The audit committee should itself periodically review such documentation, no less than once every five years, to assess its continued adequacy;
- All members of the audit committee should possess a background in finance or accounting with preference given to those with experience preparing, auditing, or analyzing governmental financial statements;
- All members of the audit committee should possess or obtain a basic understanding of governmental financial reporting and auditing. Ideally, the audit committee members would include individuals who through both education and experience, and in a manner specifically relevant to the city, possess 1) an understanding of generally accepted accounting principles and financial statements; 2) experience in preparing, auditing or analyzing municipal, fund-based financial statements; 3) experience in applying such principles in connection with the accounting for estimates, accruals, and reserves; 4) experience with internal accounting controls; and 5) an understanding of audit committee functions;
- No one who exercises managerial responsibilities that fall within the scope of the audit should serve as a member of the audit committee;
- Members also should be independent of anyone who exercises managerial responsibilities that fall within the scope of the audit;
- An audit committee should have sufficient members for meaningful discussion and deliberation, but not so many as to impede its efficient operation. As a general rule, the minimum membership of the committee should be no fewer than three;
- Members of the audit committee should be educated regarding both the role of the audit committee and their personal responsibility as members, including their duty to exercise an appropriate degree of professional skepticism;
- It is the responsibility of the audit committee to provide independent review and oversight of a government's financial reporting processes, internal controls and independent auditors;
- The audit committee should present annually to the full governing body a written report of how it has discharged its duties and met its responsibilities. It is further recommended that this report be made public and be accompanied by the audit committee's charter or other establishing documentation;
- In its report to the governing body, the audit committee should specifically state that it has discussed the financial statements with management, with the independent auditors in private, and privately among committee members, and believes that they are fairly presented, to the extent such a determination can be made solely on the basis of such conversations.
- The audit committee should establish procedures for the receipt, retention, and treatment of complaints regarding accounting, internal accounting controls, or auditing matters. Such procedures should specifically provide for the confidential, anonymous submission by employees of the government of concerns regarding questionable accounting or auditing matters. The audit committee also should monitor controls performed directly by senior management, as well as controls designed to prevent or detect senior-management override of other controls;
- The audit committee should be adequately funded and should be authorized to engage the services of financial experts, legal counsel, and other appropriate specialists, as necessary to fulfill its responsibilities;
- Audit committee members will also serve on the Budget Review Committee.