Audit Committee

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Chair: Councillor Les Andrews
Secretary: Rachel Fulford, Finance Assistant
Staff Rep.: David Baxter, Director of Finance
Council Rep.: Councillor Robert Polutnik

Terms of Reference

Objective

The Audit Committee, as a committee of Council, will be responsible for overseeing the administrative systems regarding financial accounting, reporting, internal controls, safeguarding of corporate assets, compliance with legal, ethical and regulatory requirements and the effective and efficient use of resources.

The Audit Committee provides a focal point for communication between Council, the external auditor and management and facilitates an impartial, objective and independent review of management practices.

The Audit Committee shall meet at least four times per year, with additional meetings at the call of the Chairperson in order to properly discharge its responsibilities as set out in the Establishing by-law.

Responsibilities

Management is directly responsible for the Municipality's financial reporting, internal controls and compliance with laws and regulations. The Audit Committee is responsible to oversee and monitor how management carries out these functions. The Audit Committee must also satisfy itself that the responsibilities of the external auditor are effectively discharged. The Audit Committee will advise and make recommendations, where necessary, to Council on the following:

4.1 The External Audit Function

Oversight of the independent audit process

4.1.1. Recommend appointment of the external auditor to Council for approval;
4.1.2. Review the terms of engagement, fees and scope of the external audit and any non-audit services provided;
4.1.3. Review any reports and correspondence from the external auditor relating to the Municipality, including the annual communication from the external auditor on independence matters;
4.1.4. Review the external auditor's findings including evaluation of accounting principles applied, significant accounting estimates, significant audit misstatements, the effectiveness of, or weaknesses in, internal controls, significant related party transactions and any difficulties encountered during completion of the audit; 
4.1.5. Receive reports from management summarizing progress made in resolving issues raised by the external auditors; 
4.1.6. Meet privately with the external auditors to discuss any matters that the Audit Committee or the external auditors believe should be discussed. 

4.2 Financial and Other Reporting

Oversight of the financial reporting process to ensure the integrity and transparency of financial reports

4.2.1 Review the annual financial statements of the Municipality and its local boards and recommend approval of these financial statements to Council;
4.2.2 Review financial and fiscal policies, practices and procedures (eg. accrual policies, investment policies, policies for establishing reserves, reserve funds, etc,);
4.2.3 Review significant accounting and reporting developments, including recent and contemplated professional and regulatory requirements and understand their impact on financial reports;
4.2.4 Review information used for decision making (including management reports, affirmations, etc.), as to integrity, timeliness and comprehensiveness.

4.3 Internal Control Systems

Oversight of the effectiveness of the internal control environment

4.3.1 Review and understand the effectiveness of the internal control systems pertaining to the safeguarding of assets and the authorization and recording of transactions; 
4.3.2 Review and understand the adequacy of internal controls over data processing operations and computer-accessible data;
4.3.3 Be satisfied that appropriate monitoring devices are in place to detect dysfunctions, including fraudulent activities;
4.3.4 Review the effectiveness of corporate reporting systems regarding administrative and program performance (for example, budget monitoring systems);

4.4 Compliance and Business Risk Management

Oversight of the Municipality's compliance with legal, statutory and regulatory requirements and oversight of the Municipality's risk management environment

4.4.1 Review and understand how compliance with laws and regulations is achieved and the adequacy of the systems established to ensure compliance; 
4.4.2 Review with management all legal claims and other contingencies that could have an effect on the financial position of the Municipality and the adequacy of related insurance coverages;
4.4.3 Review with management any significant financial risk exposures and processes in place to identify, monitor and manage these risks, including potential risks such as loss of key staff, loss of revenue sources, erroneous financial reporting, regulatory noncompliance, conflicts of interest, fraudulent activities resulting from weaknesses in internal controls. 
4.4.4 Review by-laws and policies specifically regulating the conduct of members of council, staff, and suppliers (for example, fraud and theft policies, conflict of interest policy, purchasing by-law, budget control by-law, expense claims policies, etc.);
4.4.5 Review and understand procedures that are in place for communication and follow up of complaints regarding ethics, integrity, internal controls and accounting or auditing matters.

4.5 Other

4.5.1 Review and approve the scope, terms of reference and fees of professional services retained for purposes related to the Audit Committee's responsibilities;
4.5.2 Provide opportunities for private discussion of sensitive matters raised by the external auditor, management relating to personnel, legal, or other matters which could be prejudicial to the corporate interest if discussed in open committee;
4.5.3 Ensure that Audit Committee members receive appropriate orientation regarding the work of the Committee and that training to enhance financial literacy is made available;
4.5.4 Complete periodic self-assessments of the effectiveness of the Audit Committee against its mandate;
4.5.5 Review the Audit Committee Mandate periodically and recommend modifications to Council, as necessary;
4.5.6 The Chair or designate shall submit an annual report outlining the committee activities both past and current and proposed work plan for the upcoming year, to be submitted at the end of each year to Council through the Municipal Clerk or designate.