Audit Committee Charter
I. Purpose of Committee
The Audit Committee (the “Committee”) is established to support the Society’s Board of Directors (the “Board”) in fulfilling its oversight responsibilities for the monitoring of the Society’s accounting; financial reporting; internal control processes and related policies and procedures; process for identifying and managing risks; and audits of its financial statements.
II. Committee Membership
The Committee is chaired by a Board member appointed by the Chair of the Board, but may not be the Secretary/Treasurer. In addition to the chair, the Committee, including the Secretary/Treasurer, is composed of four “independent voting members” of the Board as defined on Exhibit A attached hereto and incorporated by this reference. The Committee may also include up to three non-voting resource members. The Chair of the Board is an ex-officio member of the Committee. Committee membership is appointed by the Chair of the Board and approved by the Board. Other than the Committee Chair and Secretary/Treasurer, there should not be overlapping membership between this Committee and the Finance Committee. The Board will use its best efforts to maintain a “financial expert” on the Committee as defined on Exhibit A. Committee members serve one-year terms beginning January 1st and ending December 31st of that same year or until the new Committee is appointed by the Chair of the Board. Any disputed question regarding a voting member’s independence should be reviewed by the Board for final resolution.
III. Committee Authority and Responsibilities
The Committee will:
Recommend appointment, retention and termination of the independent auditor to the Board. On behalf of the Board, the Committee shall oversee the Society’s independent auditor, including the terms of engagement and the resolution of any disagreements between management and the independent auditor regarding financial reporting, and any restrictions on the scope of the auditor’s activities or access to requested information. The independent auditor shall report directly to the Committee;
Prior to commencement of work, review the independent auditor’s compensation, the terms of its engagement, its independence, and the scope of the audit to be conducted. Provide a clear understanding to the independent auditor that the auditor is accountable to the Committee and, ultimately, the Board. Any noteworthy findings or potentially damaging circumstances that may adversely affect the reputation of the Society should be brought to the attention of the Board;
Pre-approve all audit and non-audit services performed by the independent auditor;
Annually, confirm with the independent auditor its independence delineating all its relationships and professional services with the Society (verbal or in writing). In addition, review with the independent auditor the nature and scope of any disclosed relationships or professional services and take appropriate action to ensure the continuing independence of the independent auditor;
Review and discuss with the independent auditor any material risks and weaknesses in internal controls identified by the auditor and the adequacy of the Society’s accounting and financial reporting processes. Solicit recommendations from the independent auditor for the improvement of the Society’s internal control procedures and particular areas where new or more detailed controls or procedures are desirable;
Serve as the direct channel of communication between the independent auditor, the internal auditor (the Internal Audit Services Department (“IAS”)), and the Board;
Oversee the IAS function as provided in the IAS charter approved by the Committee, including oversight of the Chief Financial Officer’s management of the Director of IAS, annual performance evaluation, and whether the current compensation is in the established range for that position;
Review the Society’s external audit reports (including OMB Circular A-133), internal audit reports, and legal and regulatory compliance and monitor compliance with all required tax and information return filings with federal, state and local government agencies. Review should include discussion with management and the independent auditor of significant issues regarding accounting principles, practices and judgments, including certain matters required to be communicated to the Committee in accordance with AICPA professional standards;
Oversee the adoption, implementation of, and compliance with the Society’s Code of Ethics and Conflict of Interest Policy, including the Whistleblower Protection Policy, and recommend revisions to the Board as needed. The Chair of the Audit Committee will be provided with copies of all annual disclosure statements completed by officers and directors, and the full Committee will review disclosed conflicts or potential conflicts in accordance with the Conflict of Interest Policy;
Review the Society’s policies assigned to the Audit Committee and recommend new policies and appropriate revisions to current policies to the Board; also review Society management’s compliance with such Policies and report results to the Board;
On behalf of the Board of Directors, manage the Society’s Enterprise Risk Management (ERM) program which includes, but is not limited to:
- Develop and continuously refine a consistent and broadly understood definition of “Enterprise Risk” to guide volunteers and staff across the organization in identifying potential risks.
- Review and approve the enterprise risk prioritization and assign management of the enterprise risks to the appropriate committee(s).
- Develop guidelines for determining risk appetite (“guard rails”) and review and, if necessary, update the guidelines each year for Board review and approval.
- Review committee risk monitoring reports upon receipt.
- Review and discuss with the Chief Executive Officer, or his/her designee(s), any
- significant enterprise risks or exposures, staff leadership’s risk assessments, steps staff leadership has taken or should consider taking to minimize such risks or exposures, and the Society’s underlying policies with respect to risk assessment and risk management.
- At least once a year, give an ERM report to the Board of Directors.
- Review results of the independent assessment of the ERM process conducted by IAS and implement changes as deemed necessary.
Oversee enterprise risk management related to assigned risk areas;
Review the procedures for the receipt, retention and treatment of complaints received regarding accounting, internal controls or audit matters; and the confidential anonymous submission by staff and volunteers of concerns regarding questionable activity related to financial internal controls, audit, illegal activity, accounting issues and related matters;
Review results provided from the IAS executive regarding annual results of Internal Audit Services department quality assurance and improvement program efforts;
At least annually, report its activities and findings to the Board;
Operate under a charter and review annually for adequacy and recommend any necessary changes to the Governance Committee for approval by the Board; and
Accomplish additional tasks as charged by the Chair of the Board.
In carrying out its responsibilities, the Committee's policies and procedures should remain flexible in order to react to changing conditions and to ensure that the accounting and financial reporting practices of the Society are in accordance with all requirements and are of the highest quality.
IV. Committee Meetings
The Committee will meet at least annually and as often as its chair or a majority of its members deems necessary or appropriate, either in person, telephonically or electronically, and at such times, places and manner as its chair and chair’s staff may determine. Deliverables, budget, and alternative meeting methods should be included in the decision making process. The chair and chair’s staff will develop an agenda in advance of each meeting and communicate meeting details to Committee members in a timely fashion.
As necessary, the Committee will meet in a joint session with other committees regarding items of concern to both committees.
V. Committee Reports
The Committee will produce a written report at the conclusion of each meeting, which will include an attendance record, a copy of the agenda and a full report of Committee discussions with documented recommendations and decisions. These reports will be completed no more than three weeks following the meeting and forwarded to the Committee membership and the Office of Enterprise Governance for proper filing. All Committee reports, to the extent not confidential, will be posted on the ACS, Inc. Board Portal so all Board members have access to the reports.
VI. Committee Evaluation
The Committee will conduct periodic performance evaluations to review the performance of the Committee in relation to the requirements of this Charter and such other matters as the Committee deems appropriate.
VII. Resources and Authority of the Committee
The Committee has the authority to conduct any investigation appropriate to fulfill its responsibilities, and it has direct access to the independent auditor as well as any staff member, Society volunteer or outside vendor of the Society. The Committee will have the resources and authority it deems appropriate to discharge its duties and responsibilities, including the sole authority to select, retain, terminate, and approve the fees and other retention terms of special or independent counsel, accounting experts or other advisors without seeking approval of the Board or management, any such engagement to be reported to the Board. In carrying out its responsibilities, the Committee may rely upon reasoned written opinions of legal counsel and of qualified legal, accounting, compensation, and valuation experts. Legal counsel may be in-house or independent.
Independent Voting Members:
A voting member of the Board of Directors or a committee will be considered “independent” only if he or she satisfies the following criteria:
The member was not compensated as an officer or other employee of the Society or of a related organization1; nor was the member compensated by an unrelated organization or individual for services provided to the Society or to a related organization, if such compensation is required to be reported in Part VII, Section A of the Society’s Form 990.
The member did not receive total compensation or other payments exceeding $10,000 during the Society's tax year from the Society and related organizations as an independent contractor.
Neither the member, nor any family member2 of the member, was involved in a transaction with the Society (whether directly or indirectly through affiliation with another organization) that is required to be reported on Schedule L of the Society’s Form 990.
Neither the member, nor any family member of the member, was involved in a transaction with a taxable or tax-exempt related organization (whether directly or indirectly through affiliation with another organization) of a type and amount that would be reportable on Schedule L of the Form 990 or 990-EZ, if required to be filed by the related organization.
Committee members who are associated with institutions that receive grants pursuant to the Society’s various Independent Peer Review Committees and the Council for Extramural Grants will not be treated as failing to satisfy the above criteria on the basis of their relationship to the recipient institutions.
For purposes of defining a “financial expert,” the Board shall consider whether a person has, through education and experience as a public accountant or auditor “or a principal financial officer” or controller or principal accounting officer, or from a position involving the performance of similar functions, the following:
an understanding of generally accepted accounting principles (GAAP) and financial statements;
the ability to assess the general application of such principles in connection with the accounting for estimates, accruals, and reserves;
experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that can reasonably be expected to be raised by the Society’s financial statements or experience actively supervising one or more persons engaged in such activities;
an understanding of internal controls and procedures for financial reporting; and
an understanding of Audit Committee functions.
 For purposes of these criteria, a “related organization” is an organization (1) that controls or is controlled by the Society; (2) is controlled by the same persons that control the Society (i.e., shared directors and officers); or (3) that qualifies (or claims to qualify) as a “supporting organization” for the Society within meaning of Internal Revenue Code Section 509(a)(3).
 Family members include spouses, ancestors, brothers and sisters (whether whole or half blood), children (whether natural or adopted), grandchildren, great-grandchildren, and spouses of brothers, sisters, children, grandchildren and great-grandchildren.