In many instances, there is a single individual, or collection of such committee members with financial expertise serving on the Treasurers’ committee. That can be the Treasurer but doesn’t necessarily need to be the case. Other times, it is only access to appropriate financial expertise, perhaps an agent of management or outside accountant. If the financial expertise does end up being provided by one individual, it is desirable that he or she be a member of the board of directors. One important administrative aspect of the audit committee role is that when no single member of the board has the requisite skills, it is vital to assure other arrangements are made to ensure that the committee has the necessary (mostly financial) expertise to carry out its duties. For those joining a Board, you may be able to ascertain who serves as the requisite financial expert. It is vital for adequate transitions, that an annual evaluation be made and that the results of that evaluation are documented in committee meeting minutes specifically how financial expertise is available to the audit committee.
Housekeeping of the committee’s role as audit committee should include an annual review of the charter to reassess its adequacy and proposed changes to the board of directors. This may include an annual evaluation of the board itself and its ability to accomplish the role of those charged in governance. For many volunteers, the position of board member comes without a clear understanding of their role or any, mentoring for growth and success. Nor is there an evaluation process to identify functioning and non-functioning members. Acceptance of a less than engaged member is surmounting to working harder yourself and establishing the fast track to a loss of your motivation to serve.
Part of the review processes is to consider changes that might be necessary because of new laws or regulations. Assess the appropriateness of each point in the charter considering the previous years’ experience. Build on the success of late, with an achievable level of improvement. Only then, will you completely feel your success and satisfaction abut serving the organization’s purpose. Let’s face it, it’s all about furthering the purpose that brought you here. The committee needs to adequately assess the completeness of the charter considering (hopefully) each year’s new and improved best practices and the changing legal or regulatory environments.
The deliverable is a report to the board on the appropriateness of the audit committee charter and any revisions recommended. Sometimes, though changes are needed during the year, and when it is evident that such are needed, the committee must act.
The continual workings of the audit committee as it meets is to address matters on its agenda. The audit committee may invite members of management or others to attend the meetings and provide pertinent information as necessary. Don’t be shy to ask for help and appropriate support. It is best that in-person meetings occur at least once each year.
Custom agendas for meetings should be prepared and provided to members in advance, along with appropriate briefing materials. Assure that minutes which document decisions made and action steps taken following meetings are reviewed for approval. All members are expected to attend each meeting in person, via telephone conference, or videoconference. The option to hold telephone conference meetings is available. An agenda item to consider new business should be available to all members at all meetings. Meeting minutes should be filed with the board of directors. Minutes should be distributed as soon as possible but no later than before the next meeting. In this day and age of the word processor, they should not simply readdress the items of the month before but be drafted from scratch based upon the custom agenda. Indicate in the audit committee minutes whenever a new member is appointed. Affirm annually or whenever a change in status by any audit committee member occurs.
For those committees who are fully functional of the aspect of monitoring financial reports, dealing with a review of management for areas that effect the audit and have a comprehensive program to annually hire and communicate more than once with eh the outside auditor during the year, the audit committee may consider performing such other functions as assigned by the organization’s charter or bylaws, or the board of directors. This may include monitoring developments in the regulatory and legislative and legal environment and responding to any new requirements as needed.
Those committees wishing to reach best practices status will need to include an annual review of the committee for its effectiveness, efficiency, and consideration of new objectives. By reviewing its accomplishments and making recommendations for improving its effectiveness it strives to be the best it possibly can be. Naturally, discuss recommendations with board of directors, but the importance of an annual review can’t be overstressed.
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