Washington County Health System, Inc.
Audit and Business Integrity Committee Charter
I. Purpose
The Audit and Business Integrity Committee (the “Committee”) of the Washington
County Health System, Inc. (the “Health System”) shall assist the Board of Directors (the
“Board”) in fulfilling its oversight responsibility relating to the Health System’s:
A. quality and integrity of the financial statements,
B. financial reporting process,
C. systems of internal accounting and financial controls,
D. legal and ethical compliance programs,
E. independent auditor’s qualifications and independence, and,
F. performance of the internal audit function and that of the independent auditors
II. Authority
The Committee has authority to conduct or authorize investigations into any matters
within its scope of responsibility. It is empowered to:
A. Appoint and oversee the work of any registered public accounting firm employed
by the organization.
B. Pre-approve all auditing and non-audit services.
C. Investigate any matter brought to its attention with full access to all books,
records, facilities and personnel of the Health System.
D. Retain outside experts to advise the committee or assist in the conduct of an
investigation.
E. Meet with company officers, external auditors, or outside counsel, as necessary.
III. Composition and Qualifications
A. The Committee will be appointed by the Board and will consist of at least three
active directors, each of whom is independent of management and the Health
System.
B. All Committee members will be financially literate, and at least one member of
the Committee will have accounting or financial management expertise. The
members of the Committee will have an understanding of (a) generally accepted
accounting principles and financial statements; (b) the application of such
principles in connection with the accounting for estimates, accruals, and reserves;
(c) and, experience with internal accounting controls; and (d) an understanding of
audit committee functions.
C. Members of the Committee will serve for a term of two years or until their
successors are elected and qualified. The Board will appoint the Chairperson of
the Committee.
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IV. Meetings
A. The Committee will meet at least four times a year, with authority to convene
additional meetings, as circumstances require. The meetings shall be held prior to
the regularly scheduled Health System Board meeting and on the same day as that
meeting is scheduled to be held.
B. The Committee may invite to its meetings any director, any manager of the Health
System, and any other person whom it deems appropriate to consult in order to
carry out its responsibilities.
V. Responsibility and Process
The primary responsibilities of the Committee is to oversee the Health System’s financial
reporting and compliance processes on behalf of the Board and report the results of its
activities to the Board. The Committee’s procedures should remain flexible in order to
best react to changing conditions and circumstances. The following are the principal
recurring processes of the Committee in carrying out its oversight responsibility. These
processes are set forth as a guide with the understanding that the Committee may
supplement them as appropriate.
A. Financial Reporting Process
1) Obtain a clear understanding of the Health System’s financial reporting
process.
2) Review the adequacy and effectiveness of the Health System’s internal
accounting and financial controls with the independent auditors, the internal
auditor, and management, and elicit any recommendations for the
improvement of the system of internal controls or particular areas where new
or more detailed controls or procedures are desirable.
3) Consider and approve, if appropriate, any significant changes to the Health
System’s auditing and accounting principles and practices, as suggested by the
independent auditors, the internal auditor, and management.
4) Insure any compliance, corrective actions and changes or improvements in
financial or accounting practices, as approved by the Committee, have been
implemented.
5) Review and discuss with the independent auditor significant financial
reporting issues and judgments made in connection with the preparation of the
Health System’s financial statements, including any significant changes in
management’s selection or application of accounting principles, any major
issues related to the adequacy of the System’s internal controls and any
special steps adopted in light of material control deficiencies.
6) Discuss with management the Health System’s major financial risk exposures
and the steps management has taken to monitor and control such exposures,
including the Health System’s risk assessment and risk management policies.
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B. Independent Auditors
1) On an annual basis, the Committee will review and recommend to the Board
the selection of the Health System’s independent auditors.
2) The Committee will have the authority and responsibility to evaluate and,
where appropriate, recommend the replacement of the independent auditors.
3) At least annually, the Committee will obtain and review a report by the
independent auditor describing: (a) the independent audit firm’s internal
quality-control procedures; (b) any material issues raised by the most recent
internal quality-control review; and (c) all relationships between the
independent auditor and the Health System.
4) The Committee will discuss with the independent auditors the overall scope of
the proposed audit for the current year and the procedures to be utilized,
including the adequacy of the independent auditor’s compensation.
5) At the conclusion of the audit, the Committee will meet with the independent
auditors, with and without management present, to discuss the results of their
examination, review any significant difficulties encountered during the course
of the audit (including any restrictions on the scope of work or access to
required information), and determine that the independent auditors are
satisfied with the disclosure and content of the financial statements.
6) The Committee will determine with management and the independent auditors
the adequacy and effectiveness of the accounting and financial controls,
including the Health System’s systems to monitor and manage business risk,
and legal and ethical compliance programs.
7) The Committee will review annually with management, the internal audit
function and independent auditors, their plans for the scope of the activities to
be undertaken by the independent auditor, including the performance by the
independent auditor of any non-audit services and the fees anticipated to be
incurred therefore.
8) The Committee will report the results of the annual audit to the Board. The
independent auditors will be invited to attend a Board meeting to assist in
reporting the results of the annual audit or to answer questions.
C. Internal Audit
The Committee shall:
1) See that the Health System maintains an active internal audit function.
2) Review and approve the activities of the internal audit function, their reports
of findings resulting from examination of the records, operations, and systems
of internal account controls, and matters affecting their performance of the
internal audit, including the cooperation received from management during
the course of any audit, and the extent of any restrictions that may have
affected their examination.
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3) Review and approve the Internal Audit Charter.
4) Review and approve the Internal Audit budget and staffing.
5) Review and approve the appointment, performance and, if applicable,
replacement of the director or manager of the internal audit function.
6) Review and approve all material consulting relationships and agreements
relating to internal controls and finance for the Health System.
D. External Reporting
On an annual basis, the Committee will review with management and the
independent auditors the annual financial statements and any other information
publicly disclosed by the Health System under any continuing disclosure
obligation applicable to the Health System.
E. Compliance Programs
The Committee shall:
1) Oversee the Health System’s legal and ethical compliance programs,
including the Health System’s Business Integrity program and its HIPAA
Compliance program.
2) Review and approve the Business Integrity Plan and additions and significant
changes thereto.
3) Review the results of the Department of Business Integrity activities and
related recommendations for improvements to the underlying Health System
compliance structures.
4) Ensure that the Health System’s management gives adequate consideration to
and implements the recommendations made by the Director of Business
Integrity and the Business Integrity Oversight Committee.
5) Review and approve the appointment, performance and, if applicable,
replacement of the Director of Business Integrity.
6) Review reports received from regulatory bodies and other legal and regulatory
matters that may have a significant effect on Health System’s Business
Integrity Program.
7) The Committee periodically will review adherence to the Health System’s
Core Values, Code of Conduct, and Conflict of Interest Policies.
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F. General
The Committee shall:
1) Review with the director of internal audit and the independent auditors, their
annual audit plans, including the degree of coordination required for their
respective plans and the scope of their plans.
2) Establish procedures for:
(a) the receipt, retention, and treatment of complaints received by the
Health System regarding accounting, internal accounting controls, or
auditing matters; and
(b) the confidential, anonymous submission by employees of the Health
System of concerns regarding questionable accounting or auditing
matters.
VI. Separation of Responsibilities
While the Committee has the responsibilities and duties set forth in the Charter, it relies
on the expertise and knowledge of management, the internal auditor, and the independent
accounting firm in carrying out its oversight responsibilities. Management of the
company is responsible for determining the company’s financial statements are complete,
accurate, and in accordance with generally accepted accounting principles. The
independent accounting firm is responsible for auditing the company’s financial
statements. It is not the duty of the Committee to plan or conduct audits or to determine
whether the Health System’s financial statements are complete and accurate and are in
accordance with generally accepted accounting principles, to conduct investigations, to
resolve disputes or disagreements, if any, between management and the independent
auditor, or to assure compliance with laws and regulations and the Health System’s
internal policies, procedures, and controls.
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