Financial Accounting Foundation
Board of Trustees
Audit and Compliance Committee
Board of Trustees
Audit and Compliance Committee
|Teri L. List-Stoll, Chair||Charles S. Cox|
|Stephen R. Howe, Jr.||Edward E. Nusbaum|
The Board of Trustees (Board) of the Financial Accounting Foundation (Foundation) has established the Audit and Compliance Committee (Committee) to assist the Board in its oversight of the integrity of the financial statements of the Foundation, the Foundation’s compliance with legal and regulatory requirements, and the independence, qualifications, and performance of the Foundation’s independent auditors (Auditors).
Membership and Structure
The Committee shall be a standing committee of the Board and all Committee members shall be Trustees.
The Committee shall consist of three or more members. The Chair and the other members of the Committee shall be elected by the Board and shall serve until their successors shall be duly elected and qualified or until their earlier resignation or removal.
All Committee members shall be financially literate and have a working familiarity with basic finance and accounting practices. At all times a majority of the members of the Committee shall possess accounting or related financial management expertise, as determined by the Board in its business judgment. This shall be signified by, among other factors, employment experience in the fields of finance or accounting, or other appropriate background or experience which has created financial sophistication on the part of the member.
None of the members of the Committee, or any immediate family member of a Committee member, shall be an employee or officer of the Foundation’s independent auditor, nor shall any member of the Committee have been so employed within the three years preceding appointment to the Committee.
The Committee shall at least annually create an agenda of items to be addressed by the Committee in the ensuing year. As soon as practicable after the beginning of each year, the Chair shall set the times, dates and locations of each meeting of the Committee planned during the year.
The Committee shall be charged with the following responsibilities:
Responsibilities with Respect to Financial Reporting
- The Committee shall meet with Management and the independent Auditors in separate executive sessions at least annually.
- Review the process by which Management develops and summarizes financial information and the extent to which the Auditors review financial information; obtain explanations from Management and Auditors on such material matters as the Committee deems necessary or appropriate.
- Review and discuss with Management and the Auditors the annual audited financial statements and reports including, as the Committee deems appropriate, the results of the annual audit, including any problems, difficulties or significant findings, any restrictions on the scope of the Auditors’ activities or access to requested information, any significant disagreements with Management, and Management’s responses thereto, any management letters provided by the Auditors and Management’s responses thereto and other matters related to the conduct of the audit that are required to be communicated to the Committee in accordance with generally accepted auditing standards. The Committee shall receive the audited financial statements and Management’s discussion and analysis prior to publication in the annual report.
- Review and approve the Foundation’s annual IRS Form 990, Return of Organization Exempt from Income Tax, prior to its filing.
- Review the following with the Foundation’s Management and the Auditors:
- The adequacy of the organization’s internal controls.
- The existence of any significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting.
- The existence of any fraud, whether or not material, that involves Management of the Foundation or other employees who have a significant role in the Foundation’s internal control over financial reporting.
- The scope of the review of the Foundation’s internal controls and reports on significant findings and recommendations, together with Management’s responses.
- The Foundation’s major financial risk exposures and the steps Management has taken to monitor and control such exposures.
- Review and evaluate the performance of the Auditors on annual basis and monitor the rotation of the lead audit partner and the rotation of the audit partner responsible for reviewing the audit.
- Discuss with the Auditors any relationships or services disclosed in their reports that may impact the objectivity or independence of the Auditors.
- Recommend annually the selection and retention of the Auditors for approval by the Board, approve compensation of the Auditors, and consider and recommend to the Board the discharge of the Auditors if necessary.
- Confer on the scope of the Auditors’ examination of the Foundation’s financial statements and discuss and approve the Auditors’ annual engagement letter. Approve, in advance, any work to be performed by the Auditors beyond the scope of the audit engagement letters.
- At least annually, review the Auditors’ audit plan, including proposed scope and approach.
- On a regular basis, meet separately with the Auditors to discuss any matters that the committee or Auditors believe should be discussed privately.
- At least annually, obtain and review a report by the Auditors independent auditor describing its own internal quality-control procedures; any material issues raised by its most recent quality-control review or peer review; and any inquiry or investigation by governmental or professional authorities with respect to respecting any of its audits within the past five years, together with any steps taken to deal with any such issues.
- Adopt, and/or advise other standing committees of the Board on the adoption of, policies regarding compliance matters (including ethics, conflict of interest, and document retention policies) and foster a culture that encourages a commitment to compliance.
- Adopt, and oversee a reporting system for, an ombuds policy that is designed to prevent and detect violations of law.
- Ensure that “non-retaliation” procedures are in place for employees who disclose potential legal and/or ethical violations.
- Liaise with in-house legal counsel on compliance matters as needed.
- Provide oversight of the Foundation’s management of key risks, including strategic and operational risks, as well as the guidelines, policies and processes for monitoring and mitigating such risks.
- Authority to 1) retain independent counsel and 2) retain other professionals as appropriate to assist in the performance of its duties, including assisting in the conduct of or authorization of any investigation that is consistent with the Committee’s scope of responsibilities.
- Authority to require that counsel for the Foundation prepare a report annually detailing the legal and regulatory developments, if any, which may have a material impact on the Foundation’s financial statements and Foundation Management’s compliance plans with such matters.
- Perform such other functions as assigned by law, the Foundation’s charter or by-laws, or the Board.
- Determine the anticipated funding needs of the Committee and notify the Foundation of such requirements.
- Perform periodic self-assessments of the Committee’s roles, functions and performance, which will include a review of the Committee Charter and a recommendation to the Board of any necessary or appropriate amendments.
This charter may be amended only by the affirmative vote of the Board of Trustees.
Approved by the FAF Board of Trustees on May 21, 2014.