Audit Committee Authority

 

The Bellefonte  School District (TUSD) Governing Board met on June 26, 2007 and voted to establish an Audit Committee for TUSD.

 

Mission

 

The TUSD Audit Committee exists to assist the Board with three overarching goals.  These goals are:

 

1. To assist the Governing Board in complying with its fiduciary oversight obligations and ensure proper financial controls are in place;

2. To assist the Governing Board in supervising the work and workplan for the TUSD Internal Auditor;

3. To provide greater transparency over public funds while improving public trust.

 

Membership

 

The Audit committee consists of five to seven members appointed by the Governing Board.  Each member’s term ends on August 31 of an odd-numbered year designated by the Governing Board at the time of appointment. The maximum length of a term is five years, and the maximum number of consecutive years a member may serve is nine.

 

The members of the Audit Committee must collectively possess knowledge in accounting, auditing, financial reporting, and school district finances.  The following individuals cannot serve on the Audit Committee:

• Anyone who currently (i) is an employee of TUSD or (ii) sells goods or services to TUSD.

• Anyone who owns or has a direct and material interest in a company, or who holds a leadership position in an entity, which provides substantial goods or services to TUSD.

• Anyone who has participated in litigation or other legal matters against TUSD.

• A close or immediate family member of anyone who would be prohibited from serving under (a) – (c).The term “close or immediate family member” includes parent, sibling, nondependent child, spouse, spouse equivalent, or dependent, whether or not related.

 

• An individual who would otherwise be excluded may serve if, after full disclosure to the Governing Board, the potential conflict of interest is not material and does not appear so from the public perspective.

• Any member who develops a conflict of interest while on the Audit Committee must disclose such conflict. The other Committee members shall, by majority vote, make a recommendation to the Governing Board, which will decide whether to remove and replace the affected member.

 

Duties and Responsibilities

 

General

 

The Audit Committee elects a Chair and a Vice Chair who presides in the Chair’s absence. 

 

The Audit Committee meets quarterly, and may add additional meetings, if needed, to fulfill its responsibilities.

 

The Audit Committee complies with the Open Meetings Law and may conduct executive sessions as allowed by that law.

 

The Audit Committee may ask members of management or others to attend its meetings and provide pertinent information as necessary.

 

The Audit Committee, in consultation with the Governing Board, may have access to all information it deems necessary to carry out its duties, consistent with Arizona law.

 

The Audit Committee may request information from TUSD that the Audit Committee deems necessary to carry out its duties and responsibilities.  These Requests for Information will be made only by the Audit Committee Chair.  Any member wishing to request information will do so by submitting the approved committee request form to the Audit Committee Chair for approval.  If the Audit Committee Chair approves the request, then the Audit Committee Chair will send the request to the Superintendent for processing.  If the Audit Committee Chair does not approve the request, two members of the Audit Committee may override the request denial.  In the event of an override, the Audit Committee Chair is required to submit the request to the Superintendent.

 

The presence in person or by electronic means of a majority of the total membership of the committee shall constitute a quorum for holding a meeting of the Audit Committee.

 

Any decision of the Audit Committee requires an affirmative vote of a majority of the members present at the meeting.  Members who are physically absent from a meeting can participate and vote through audio or video connections.  Proxies cannot be granted.

 

The Audit Committee may hire professional consultants with Governing Board approval. 

 

The Audit Committee reports to the Governing Board, at least annually, its activities, findings, and decisions.  Reported findings should include any suspected fraud or abuse or material defects in internal management controls, and any significant failure to comply with laws, district policies or regulations.

 

The Audit Committee agenda is set by the Chair.  Any member wishing to place an item on the agenda will do so in the same manner as a Request for Information.

 

The Audit Committee may dismiss from the Committee any member who has had three consecutive unexcused absences or five absences in any twelve month time period.  Dismissal requires a majority vote of a quorum of the committee. 

 

The Audit Committee shall be provided information regarding applicants to fill vacancies on the Audit Committee when the Board Office receives such applications.  The Audit Committee may meet to provide advice to the Governing Board regarding applicants. The Audit Committee is not required to formally review applications or conduct interviews in order to provide its advice to the Governing Board.  The Governing Board may, in its sole discretion, choose to fill a vacancy without receiving advice from the Audit Committee.

 

External Auditors

 

The Audit Committee oversees TUSD’s engagement of any independent accountants for the purpose of preparing or issuing an independent audit report or performing other independent audit, review, or attest services.  The Governing Board, acting on the recommendations of the Audit Committee, makes all final decisions concerning the appointment, compensation, and retention of such accountants.  All accountants thus engaged report directly to the Audit Committee, which oversees their work and evaluates their performance.

 

The Audit Committee’s oversight responsibility includes:

 

• Periodically rebidding the contract for the provision of the annual audit and reviewing the independence of the audit.

• Meeting with the independent auditors prior to commencement of the annual audit to review the engagement letter.

• Receiving and reviewing the draft annual audit report and draft management letter.

• Reviewing all significant written communications between the independent auditors and management, such as any schedule of unadjusted differences.

• Making a recommendation to the Board concerning acceptance of the annual audit report.

• Reviewing with management and the independent auditors:

 

• TUSD’s annual financial statements, related footnotes, and management’s discussion and analysis.

• The independent auditor’s audit of the financial statements and their report thereon, including any management letter or schedule of unadjusted differences.

• The independent auditor’s judgments about the quality, not just the acceptability, of TUSD’s accounting principles as applied in its financial reporting.

• The independent auditor’s single audit of the federal awards administered by TUSD and their reports thereon.

• Any significant changes required in the independent auditor’s audit plan.

• Restrictions on the auditor’s activities or access to information, and any significant difficulties or disputes with management encountered during the audit.

• Matters required to be discussed by applicable government and professional literature and standards.

• All critical accounting policies and practices used by TUSD, any significant changes in these policies and practices, and the degree of aggressiveness or conservatism in applying these policies and practices.

• Recent and proposed professional and regulatory pronouncements, especially those having a material impact on the financial statements.

• All alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, the ramifications of each alternative, and the treatment preferred by TUSD.

• Any corrective action plans developed by TUSD.

 

The Audit Committee considers, with management, the rationale for employing audit firms other than the principal independent auditors for services that TUSD or the independent auditors determine would not be appropriate for the principal independent auditors to perform.

 

Internal Control

 

The Audit Committee monitors the fiscal health of TUSD and the relationship between its spending and adopted budget.  To carry out this duty, the Audit Committee:

 

• Reviews the effectiveness of TUSD accounting organizational structure, operations, and personnel.

• Oversees TUSD’s internal controls, reviews the adequacy of such controls, and recommends changes to management and the Governing Board.

• Reviews with the Superintendent and other management personnel the adequacy of systems and procedures for protecting information.

• Provides assistance to the Governing Board with oversight and supervision of the Internal Auditor (IA):

  • When the position is open, interviewing potential IA candidates and making a recommendation to the Governing Board in the hiring process.

  • Meeting quarterly with the IA to review their workplan and reports.

  • Providing feedback to the Governing Board regarding effectiveness of the IA

• Inquires of the Superintendent and other management personnel about significant financial risks or exposures facing TUSD; assesses the steps TUSD has taken or proposes to take to minimize such risks to TUSD; and periodically reviews compliance with such steps.

• Reviews with the Superintendent and other management personnel:

  • Significant findings with respect to any management financial review, including that of the Audit Committee, during the year and responses thereto.

  • Any difficulties review teams or personnel encountered in the course of their review, including any restrictions on the scope of their work or access to required information.

  • Any changes required in the scope of the review.

• Reviews with the independent auditors, the superintendent and financial management personnel:

  • The adequacy of TUSD’s internal controls including computerized information system controls and security.

  • Any related significant finding and recommendations of the independent auditors together with management’s responses thereto.

  • The clarity and transparency of financial information and disclosures.

 

The Audit Committee reviews TUSD’s procedures for monitoring compliance with the code of conduct.

 

The Audit Committee establishes procedures for the confidential, anonymous submission to the Audit Committee of concerns about questionable accounting or auditing matters, or suspected fraud.  It reviews any submissions that are received, the current status, and the resolution, if any.

 

Self-Assessment

 

The Audit Committee reviews its charter annually, reassesses the adequacy of the charter, and recommends any proposed changes to the Governing Board.  The Committee considers changes that are necessary as a result of new laws, regulations, or accounting and auditing standards.

 

The Audit Committee conducts an annual self-assessment and describes to the Governing Board, in a written report, how it has discharged its duties.