The Audit Committee members shall be appointed by the Board and shall consist of five or more members. Three members of the Committee shall be current Board members and at least two members shall be independent non-Board members who are familiar with the audit process and permanent residents of the state of Idaho. No employee of an institution or agency under the governance of the Board shall serve on the Audit Committee. Each Audit Committee member shall be independent, free from any relationship that would interfere with the exercise of her or his independent judgment. Audit Committee members shall not be compensated for their service on the committee, and shall not have a financial interest in, or any other conflict of interest with, any entity doing business with the Board, or any institution or agency under the governance of the Board. However, Audit Committee members who are Board members may be compensated for Board service. The Audit Committee may appoint a working unit or units, which could include the chief financial officers of the institutions and financial officers of the Board office.
All members shall have an understanding of the Committee and financial affairs and the ability to exercise independent judgment, and at least one member of the Committee shall have current accounting or related financial management expertise in the following areas:
- An understanding of generally accepted accounting principles, experience in preparing, auditing, analyzing, or evaluating complex financial statements, and;
- The ability to assess the general application of such principles in the accounting for estimates, accruals, and reserves, and;
- Experience in preparing or auditing financial statements and;
- An understanding of internal controls.
Members may be reappointed. The Audit Committee chair shall be appointed by the Board President and shall be a Board member.
Responsibilities and Procedures
It is not the Committee’s duty to plan or conduct audits or to determine that the institution’s financial statements are complete, accurate and in accordance with generally accepted accounting principles. Management of the applicable institutions and agencies shall be responsible for the preparation, presentation, and integrity of the financial statements and for the appropriateness of the accounting principles and reporting policies used. The following shall be the principle duties and responsibilities of the Committee:
- Recommend the appointment and compensation to the Board of the independent auditors for Board action. Evaluate and oversee the work of the independent auditors. The Committee must approve any services prior to being provided by the independent auditor. The independent auditing firm shall report directly to the Committee as well as the Board and the auditor’s “engagement letter” shall be addressed to the Committee and the President of each institution. The Committee shall have the authority to engage the Board’s legal counsel and other consultants necessary to carry out its duties;
- Discuss with the independent auditors the audit scope, focusing on areas of concern or interest;
- Review the financial statements, adequacy of internal controls and findings with the independent auditor. The independent auditor’s “management letter” shall include management responses and be addressed to the Audit Committee and President of the institution;
- Ensure the independent auditor presents the financial statements to the Board and provides detail and summary reports as appropriate;
- Oversee standards of conduct (ethical behavior) and conflict of interest policies of the Board and the institutions and agencies under its governance including establishment of confidential complaint mechanisms;
- Monitor the integrity of each organization’s financial accounting process and systems of internal controls regarding finance, accounting and stewardship of assets;
- Monitor the independence and performance of each organization’s independent auditors and internal auditing departments;
- Provide general guidance for developing risk assessment models for all institutions;
- Provide an avenue of communication among the independent auditors, management, the internal audit staff and the Board;
- Maintain audit review responsibilities of institutional affiliates to include but not limited to foundations and booster organizations.