The key audit committee responsibilities
January 29, 2014 The NonProfit Times
Although the very word “committee” can send people running for the exits, they are necessary in many areas of nonprofit operations. One such area is audits.
During the AICPA Not-for-Profit Industry Conference, Frank Kurre, New York office managing partner for Grant Thornton LLP, and Donna O’Brien, president of Community Healthcare Strategies, presented a list of the responsibilities of audit committees.
Those responsibilities cover several areas, including external audit and business risk assessment mitigation.
When it comes to external audit:
- Recommending and appointing an independent audit firm;
- Confirming the propriety of financial statement presentation and the adequacy of footnote disclosures;
- Facilitating clear and appropriate communication of financial information;
- Reviewing the scope of and work plan for the independent audit;
- Receiving and acting upon the results of the external audit;
- Reporting the results of the external audit to the board;
- Reviewing and approving the contract for any non-audit services provided by the external auditors; and,
- Resolving disagreements between the external auditors and management.
Business risk assessment and mitigation covers:
- Overseeing a comprehensive assessment of the business of reputational risks faced by the organization and assessing the internal controls over those risks.
- Holding management — including the CEO — responsible for an effective internal control structure;
- Providing open access to the audit committee by the internal auditor and the external auditor to discuss issues, concerns and the scope of work;
- Approving the annual internal audit plan and reviewing the reports prepared by the internal auditors; and,
- Confirming that employees have a confidential way to report concerns regarding funds.