HomeMy Public PortalAbout2018-01-25_Audit Committee Policy P-88Municipality of the District of Chester
Audit Committee
Policy P-088
Approval Date: January 25, 2018
Effective Date: January 25, 2018
Sponsor: Director of Finance
Audit Committee Policy P-088 (continued) Page 2 of 8
MUNICIPALITY OF THE DISTRICT OF CHESTER
POLICY P-088
AUDIT COMMITTEE POLICY
TABLE OF CONTENTS
PURPOSE...............................................................................................................................................................3
POLICYSTATEMENTS.......................................................................................................................................3
GUIDINGPRINCIPLES AND VALUES...........................................................................................................4
PROCEDURES AND PRACTICE GUIDELINES..............................................................................................4
REFERENCES.........................................................................................................................................................5
RELATEDDOCUMENTS....................................................................................................................................6
APPENDICES........................................................................................................................................................6
Notice of Intention to Adopt — Committee of the Whole — January 4, 2018 (2018-007)
First Notice — Council — January 11, 2018 (2018-013)
Second Notice — Council — January 25, 2018 (2018-032)
Effective Date -- January 25, 2018
Audit Committee Policy P-088 (continued) Page 3 of 8
PURPOSE
1. The Municipal Government Act (MGA) requires Council to appoint an audit committee.
This policy provides direction on the number and composition of the committee
members, clarity on roles and responsibilities of the committee and the frequency of
committee meetings.
POLICY STATEMENTS
2. The committee shall consist of all members of Council and two citizen (see definitions)
appointments as voting members.
3. Non-voting members of the committee shall be the CAO and the Director of
Finance/Treasurer.
4. The audit committee shall meet at least twice per year. First, to review and approve the
audit plan of the external auditors and second to review the audit results with the
external auditors and recommend to Council the approval of the audited financial
statements. Other meetings to be held as necessary to oversee its core responsibilities.
5. Where an audit committee has a citizen appointment vacancy it will continue to meet
and perform its duties and exercise its powers.
6. A quorum consists of a majority of the voting members of the Committee. Each voting
Committee member is entitled to one (1) vote and decisions shall be by a majority vote
of those present.
7. In addition to the requirements of Policy P-08 (Committees of Council and their Duties)
for selecting and nominating members of the public at large, where there is a vacancy in
the citizen appointment members, the municipality shall advertise to recruit a person at
least once every six months until the requirement to fill the vacancy is met.
8. Notwithstanding the requirements of Policy P-08, the citizen appointments to the audit
committee will serve two-year terms, except for the initial appointments where one will
serve a one-year term so that the two citizen appointments rotate off in opposite years
to maintain the knowledge base.
9. The Nominating Committee shall nominate citizens to be members of the audit
committee based upon their applications and applying criteria outlined in the below
guidelines to select members who are independent and who have the expertise and skills
to make them effective in carrying out the audit committee core responsibilities.
10. The audit committees core responsibilities include oversight of financial activities, audit
services and risk management, including internal controls. Details of the audit
Notice of Intention to Adopt — Committee of the Whole — January 4, 2018 (2018-007)
First Notice — Council — January 11, 2018 (2018-013)
Second Notice — Council — January 25, 2018 (2018-032)
Effective Date — January 25, 2018
Audit Committee Policy P-088 (continued) Page 4 of 8
committee's core responsibilities (terms of reference) are include in the below guidelines.
These should be reviewed on an annual basis by the audit committee.
11. New committee members shall receive orientation training from the Director of
Finance/Treasurer (or some other appropriate source identified by the Director of
Finance) within two months of being appointed.
GUIDING PRINCIPLES AND VALUES
12. Audit committees play a significant role in improving and providing transparency around
governance, risk management, and internal control practices of the Municipality. The
audit committee should play an independent oversight role and advisory role to Council
and management, with responsibility for operational decision-making resting with
management, and policy decision making resting with Council. If the audit committee is
involved in making decisions, its objectivity may be impaired, which, in turn, may
negatively impact its ability to remain independent.
PROCEDURES AND PRACTICE GUIDELINES
13. Citizens appointments — selection criteria to consider
13.1. May not be a member of council nor an employee of the municipality
13.2. An understanding of financial statements and generally accepted accounting
principles.
13.3. Experience in preparing, auditing, analyzing, or evaluating financial statements
13.4. An understanding of internal controls
13.5. An understanding of risk management
13.6. An understanding of the law and financial regulatory compliance
13.7. An understanding of information technology and information security
13.8. Personal attributes of inquisitiveness, outspokenness, objectivity and integrity.
13.9. The two citizen appointments shall be from different districts unless applications
are only received from one district or the Nominating Committee considers that
the only qualified applicants are from the same district.
14. Core Responsibilities of the audit committee
14.1. Financial reporting
14.1.1. Oversight of the selection of accounting policies.
14.1.2. Review of any new accounting and reporting standards.
14.1.3. Obtain Management's confirmation that statutory and regulatory
report filings and requirements have been met.
Notice of Intention to Adopt — Committee of the Whole — January 4, 2018 (2018-007)
First Notice — Council—January 11, 2018 (2018-013)
Second Notice — Council — January 25, 2018 (2018-032)
Effective Date — January 25, 2018
Audit Committee Policy P-088 (continued) _ _ Page 5 of 8
14.2. Audit Activities
14.2.1. Recommend to Council the approval of the audited financial
statements.
14.2.2. Pre -approval of all audit services and the annual engagement letter.
14.2.3. Review of reports from the external auditor concerning their
independence, including review of any non -audit services provided.
14.2.4. Review of the scope of the external audit including areas of identified
risk.
14.2.5. Review annual financial statements and notes with the external
auditors.
14.2.6. Review the results of the audit with the external auditors.
14.2.7. Review any identified internal control weaknesses with the external
auditors.
14.2.8.
Recommend to Council re -appointment or replacement of external
auditors and their fee.
14.3. Risk management and internal controls:
14.3.1.
Reviewing and assessing the Municipality's risk management policies
and processes.
14.3.2.
Having a clear understanding of the Municipality risks of fraud and
error and the processes in place to mitigate them (internal controls).
14.3.3.
Oversight of the Municipality's potential risk of management's
override of internal controls
14.4. Other:
14.4.1.
Review of its core responsibilities (terms of reference) on a regular
basis.
14.4.2.
Conduct or authorize investigations into matters within the
Committees scope of responsibilities.
14.4.3.
Conduct or authorize investigations into matters within the
Committees scope of responsibilities.
14.4.4.
Establish procedures for confidential submissions of concerns.
14.4.5.
After each meeting report on oversight activities to Council at
Council's next available meeting.
REFERENCES
15. Legislative Acts/References:
Notice of Intention to Adopt — Committee of the Whole — January 4, 2018 (2018-007)
First Notice — Council — January 11, 2018 (2018-013)
Second Notice — Council — January 25, 2018 (2018-032)
Effective Date — January 25, 2018
Audit Committee Policy P-088 (continued) Page 6 of 8
15.1. Municipal Government Act (sections 23, 24 and 44)
RELATED DOCUMENTS
16. Policies/By-Laws
16.1. Municipal Policy P-8 — Committees of Council and their Duties
16.2. Municipal Policy P-58 — Remuneration of Committee Members
APPENDICES
17. Appendix A - Definitions
Notice of Intention to Adopt — Committee of the Whole — January 4, 2018 (2018-007)
First Notice — Council — January 11, 2018 (2018-013)
Second Notice — Council — January 25, 2018 (2018-032)
Effective Date — January 25, 2018
Audit Committee Policy P-088 (continued) Page 7 of 8
Appendix A
Definitions
Municipality — means the Municipality of the District of Chester
CAO— means the Chief Administrative Officer for the Municipality.
Director of Finance/Treasurer - means the Director of Finance/Treasurer for the Municipality
as designated by the CAO.
Council — means the elected Council of the Municipality
Nominating Committee — means the committee of Council with the task to nominate all
members of standing committees.
Independence — the freedom from conditions that threaten the ability to carry out
responsibilities in an unbiased manner.
Citizens — members of the public who are primary beneficiaries of the goods and services
provided by the Municipality and are residents of the Municipality
Notice of Intention to Adopt — Committee of the Whole — January 4, 2018 (2018-007)
First Notice — Council —January 11, 2018 (2018-013)
Second Notice — Council — January 25, 2018 (2018-032)
Effective Date — January 25, 2018
Audit Committee Policy P-088 (continued) Page 8 of 8
Municipality of the District of Chester Policies Being Replaced
None
Version History
Major Revisions I Minor Revisions
2018 - AdoDtion
Annotation for Official Policy Book
Notice of Intention to Adopt/Amend
Committee of the Whole
January 4, 2018 (2018-007)
Date of First Notice at Council
January 11, 2018 (2018-013)
Date of Second Notice at Council
January 25, 2018 (2018-032)
Effective Date
January 25, 2018
1 certify that this Policy was adopted by Council as indicated above.
Pamela M. Myra, Mu. icipal Clerk
January 31, 2018
Date
Notice of Intention to Adopt — Committee of the Whole — January 4, 2018 (2018-007)
First Notice — Council —January 11, 2018 (2018-013)
Second Notice — Council — January 25, 2018 (2018-032)
Effective Date — January 25, 2018