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
• 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
Audit Committee Roles
• Monitoring
– Significant Legal Violations
– Unresolved Audit Findings
– Performance Measurement
Sarbanes Oxley Act
Implications for the
Audit Committee
• Auditor Independence
• Audit Committee Structure &
Responsibilities
• Ethics
Sarbanes Oxley Act
Auditor 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.
Comparison to Policy
Auditor Independence
The Act
MnSCU
• Audit committee
• Current practice, could
selects external
add to policy
auditor
• Auditors should be
• Current practice, could
prohibited from nonadd to policy
audit work unless preapproved by audit
committee
• Contract is re-bid every
• Lead audit partner
three years, could
should be rotated
require rotation as
every seven years
selection criteria
Sarbanes Oxley Act
Corporate 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
Comparison to Policy
Audit Committees
The Act
• Governing boards
shall have an Audit
Committee
• Members must be
independent
• Oversees external
auditors
• Includes at least one
financial expert
MnSCU
• Current Policy
• Current Policy
• Current Policy, but
consider adopting a
Charter
• Consider role of
candidate advisory
council
Comparison to Policy
Ethics
The Act
• Senior managers
should adopt a code
of ethics and
compliance measures
• Confidential
employee complaint
channel should be
created
MnSCU
• 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