Roles and Responsibilities of the Audit Committee Gema Ptasinski CPA, Partner
Meet the Presenter Gema Ptasinski, CPA, joined Vicenti, Lloyd & Stutzman in 1996 and was named Partner in 2005. Gema plans, directs and supervises independent financial audits of Community Colleges, K-12 School Districts and Non-Profit organizations. Gema has extensive experience working with Audit Committees. Gema serves as a member of the Executive Committee and is the Finance Committee Chair for a nonprofit home health and hospice agency.
Overview Audit Committee Membership Key Roles and Responsibilities The Auditor s Report and Auditor Communications
Audit Committee Membership General Guidance on Membership: At least three members At least one should be a financial expert No officer or employee can sit on the committee Audit chair may not be a member of the finance committee Finance committee members must make up less than 50% of the audit committee Meet at least twice a year
Key Roles and Responsibilities Audit committee charter/board policy: Outlines key roles and responsibilities Audit committee should annually perform a selfassessment 5
Key Roles and Responsibilities Key oversight functions: Integrity of the financial statements Internal control Sets expectations regarding integrity and ethical values, transparency and accountability Understand how management is carrying out its internal and external reporting responsibilities and verify that timely corrective actions are taken as necessary. Compliance Adherence to laws and regulations
Key Roles and Responsibilities Key Responsibilities Integrity of the financial statements: Recommends the selection, retention or termination of the external auditor Assessment of Independent auditor: Audit team qualifications Firm Peer Review AICPA Do they participate? Any deficiencies and resolution? Was the audit selected for peer review? Firm internal quality procedures Independence -Non-audit services performed Performance - Timeliness, etc. Fees
Key Roles and Responsibilities Key Responsibilities Integrity of the financial statements: Reviews the scope of the external auditor s annual audit: Audit plan Risk assessment and planned reliance on internal control Status of prior year recommendations and impact to current year audit
Key Roles and Responsibilities Key Responsibilities Integrity of the financial statements and audit: Reviews the results of the audit including: Auditor opinion issued Annual financial statements Management letter of control deficiencies/findings Required Communication Letter Monitors the implementation of any corrective action to remediate internal control deficiencies. 9
Auditor Communications Required Communications Required Communication Letter: Significant Audit Findings : Adoption of new accounting policies and financial reporting standards Significant estimates and disclosures Difficulties encountered in performing the audit Disagreements with management on financial accounting and reporting Corrected and uncorrected misstatements Management representations regarding the fair presentation of the financial statements Management s consultations with other independent accountants Specific issued discussed with management Prior to engagement During the audit
Key Responsibilities - Other: Key Roles and Responsibilities Assessment of the internal audit function s qualifications, independence & performance Review of charter Annual plan and risk assessment process Evaluate chief audit executive Ethics and compliance program Ensure there is a system for compliance with legal and regulatory requirements Ensure a code of conduct is in place and employees educated Review process for reporting/whistleblower hotline
Audit Report and Auditor Communications Questions generally asked of the auditor: Are there any significant risks and exposure to the organization regarding financial condition, controls and reporting? What are the reasons for compliance findings What was the cause of the audit adjustments and unadjusted differences?
Resources www.aicpa.org The AICPA Audit Committee Toolkit Government Entities Community College League of California publishes two resources for trustees https://peerreview.aicpa.org/publicfile/docdefault.aspx - peer review information Thank you..