The Audit Committee ("Committee") of the University of Denver/Colorado Seminary ("University") Board of Trustees ("Board") will assist the Board and/or its Executive Committee ("Executive Committee") in fulfilling its oversight responsibilities in the areas of financial reporting and control, independent and internal auditing, compliance, risk assessment, employee and other "hotline" complaints and codes of conduct.
The Committee shall be comprised of no fewer than five (5) nor more than seven (7) members of the Board. Members of the Committee and the Committee chair shall be appointed by the Chair of the Board.
Collectively, members of the Committee will possess a reasonable degree of financial literacy, managerial experience at the senior executive level and/or technical expertise. Members will be free from relationships and conflicts that, in the opinion of the Board, would interfere with the exercise of the member's independent judgment.
Audit Committee Staff
Persons holding the following positions shall, in addition to their University responsibilities, provide regular staff assistance to the Committee as required: internal auditor, university counsel, compliance officer, chief financial officer, controller, risk manager and chief technology officer. In addition, representatives of the independent auditor shall be available and attend audit committee meetings, including executive sessions, as requested by the audit committee chair.s.
Regular meetings of the Committee will be held least four (4) times per year and additional meetings may be scheduled as needed. A schedule of all regular meetings for the year and preliminary agenda for each meeting will be presented to the Committee for approval at final Committee meeting of the year and prior to beginning of the next fiscal year. The schedule may be amended as necessary by the Committee chair or by a majority of Committee members.
Committee meetings and executive sessions may be called by the Committee chair or by a majority of the Committee members. The chairperson of the Committee, in consultation with appropriate members of the staff, will develop the Committee's agenda. Minutes will be taken at all meetings and will reflect the general discussion and votes taken. A quorum for each meeting shall consist of a majority of voting members of the Committee and members may participate in meetings via teleconference.
University of Denver Audit Committee Charter, June 7, 2013
Executive sessions may be held at the beginning of each Committee meeting as well as at the end. At the beginning of each committee meeting there may be an executive session to be attended only by Committee members and invited guests wherein the Chair will brief the Committee on particular issues that deserve their focused attention. As the final matter of business, regular executive sessions will be held, as needed, with such University officials, employees or other individuals as the Committee chair or a majority of Committee members may determine.
In addition to regular executive sessions, the Committee will hold individual meetings no less frequently than annually with the chancellor, provost, internal auditor, independent auditor, chief financial officer, controller, university counsel, risk manager and technology officer. At such meetings only the invited individual, Committee members and, if requested by the Committee, University or other legal counsel, will be in attendance.
Committee staff members or the independent auditor may request executive session agenda items by contacting the Committee chair. The request shall describe the matter to be discussed, the nature of the decision sought, if any, and the supporting materials to be provided.
The Committee will serve as an open avenue of communication between the independent auditor, internal auditor, management and the Board. The Committee will communicate with the Board through regular reports at Executive Committee and Board meetings and through special reports as may be appropriate from time to time.
The responsibilities of the Committee are presented below.
Financial Statements and Internal Controls
The Committee reviews the integrity of financial reporting and the University's system of internal controls. To this end, the Committee will:
- Review the financial reporting system and its ability to meet the requirements of generally accepted accounting principles, applicable laws and regulations.
- Review and, if satisfactory, recommend to the Executive Committee and/or Board acceptance of the audited annual financial statements and other financial documents prior to their release.
- Review the IRS Form 990 prior to public release as required by law.
- Review the system of internal financial controls, the control environment and any significant changes or apparent deficiencies in internal control systems.
- Review with the independent auditor significant accounting, taxation, reporting or standard setting issues, including complex or unusual transactions and highly judgmental areas, recent professional and regulatory pronouncements and the adequacy of internal controls.
- Meet periodically with the Chief Technology Officer to review the University's information system with particular reference to issues of security, control and disaster recovery.
The Committee selects the independent auditor, reviews audit reports and assesses the performance of the auditor. With respect to the independent auditor, the Committee will:
- Review the qualifications and independence of, establish the compensation for and, after consulting with the chancellor, Treasurer and CFO, appoint the independent auditing firm to provide auditing services for the University.
- Meet with the independent auditor prior to the audit to discuss the annual audit plan, including the scope of audit activities and staffing of the audit.
- Review the performance of the independent auditor, providing an opportunity for staff to comment privately on the performance and effectiveness of the firm.
- Receive from the independent auditor regular reports on the status of all open audit recommendations.
- Communicate regularly with the independent auditor in open or executive sessions of the Committee as appropriate.
- Require the periodic rotation of the partner in charge of the independent audit within the auditing firm.
- Review, from time to time, the appropriateness of soliciting bids from other auditing firms to serve as the independent auditor.
The internal auditor (chief audit executive) is a University employee who reports administratively to the Chancellor and functionally to the Committee. Administrative reporting to the Chancellor includes: hiring, performance management and dismissal of the internal auditor, all subject to Committee concurrence. Administrative direction also includes establishing an annual budget for the internal auditor's office, human resource administration, communications with the internal auditor and coordination of the internal audit department's policies and procedures with those of the University. The internal auditor's functional reporting to the Committee is described in this Committee charter.
The internal auditor shall have direct access to the Chancellor and the Committee chair should matters of immediate significance arise that require their attention. If, at any time, the internal auditor's independence is impaired in fact or appearance, the internal auditor shall promptly disclose the details of the impairment to the chancellor and the chair of the Committee.
In carrying out its responsibilities of oversight and functional direction of the internal auditor and the auditor's office, the Committee will exercise the responsibilities described below:
- Review and consent in the appointment, removal and performance reviews by the Chancellor of the internal auditor.
- Review and approve the annual internal audit plan and direct institution of such special audits as the Committee may consider appropriate.
- Assess the adequacy of resources of the internal audit office during the budget cycle and offer recommendations, if any, to the administration.
- Review and approve the charter, mission, responsibilities, independence and performance of the internal audit office. The charter of the internal audit office shall be consistent with the Committee's charter.
- Communicate regularly with the internal auditor in open or executive sessions of the Committee as appropriate.
- Receive from the internal auditor regular reports on the status of all open recommendations, whether from the internal or independent auditor, along with comments from senior management indicating the date by which each recommendation will be completed.
Remediation of Audit Issues
The Committee has the responsibility to monitor the status of unresolved audit findings and make determinations in cases where disagreement exists between the internal auditor and executive management. To effectuate the remediation of audit issues the Committee will:
- Review reports from the internal auditor showing status of all open internal audit recommendations.
- Review reports from the independent auditor and other consultants showing status of all open audit or consultant recommendations.
- Monitor the remediation status of all open audit findings presented to the Committee.
- Consider statements from the internal or independent auditors and management as to the necessity of, or most appropriate means for, remediation of audit or other findings presented to the Committee.
- Adjudicate disagreements between the internal or independent auditors and management and, where necessary, make a determination as to the appropriate action to be taken.
- Periodically provide the Executive Committee and/or the Board with reports on the status of audit findings and remediation.
The Committee receives reports on legal and regulatory compliance matters, monitors remediation of adverse findings, and reports to the Board as appropriate. With respect to regulatory compliance, the Committee will:
- Review the effectiveness of systems for assuring compliance with laws and regulations.
- Assess the adequacy of resources of the compliance office during the budget cycle and offer comments, if any, to the administration.
- Review the findings of any significant examinations by regulatory agencies, the compliance officer, internal auditor or independent auditor.
- Review the results of significant management regulatory investigations and the follow-up on findings or instances of noncompliance.
- Communicate regularly with the appropriate compliance officer in open or executive sessions of the Committee as appropriate.
The Committee receives reports on enterprise-wide risk matters, monitors remediation of adverse findings, and communicates with the Board as appropriate. In regard to risk assessment, the Committee will:
- Review and discuss with management the University's enterprise risk management framework and risk assessment policies.
- Receive reports on areas of significant risk exposure and assess the steps management has taken to monitor and control such exposures.
- Meet periodically with the chancellor, Provost and Chief Financial Officer to understand and discuss key financial risks and other exposures.
- Review with university counsel litigation and related risk exposures that could significantly affect the financial statements or note disclosures.
- Communicate regularly with the chief risk management officer in open or executive sessions of the Committee as appropriate.
The Committee acts as an independent body to review complaints received from employees and others via the University's "hotline" system in areas that fall within the Committee's jurisdiction. The Committee does not handle complaints relating to student academic or student-life matters. Nor does the Committee involve itself with matters involving University employment or supervision unless such matters relate directly to the Committee's responsibilities. Within its areas of responsibility, the Committee will:
- Review procedures established by the University administration for operation of a hotline for reporting complaints and for the assessment and remediation of such complaints.
- Receive a log of all hotline complaints and specific reports on significant and unresolved complaints that fall within the scope of the Committee's responsibilities under this charter.
- Report to the Executive Committee or the Board any items that the Committee believes represent significant systemic problems or matters that require Board policy action.
- Review University policies relating to employee codes of ethics, conduct and conflicts of interest and assess the means for monitoring compliance therewith.
- Review University systems for handling complaints within the Committee's areas of responsibility and processes for remediating such matters.
- Annually review and assess the adequacy of this charter and submit any proposed revisions to the Board for consideration.
- Annually evaluate the Committee's effectiveness and efficiency.
Nature of Committee Responsibilities
With respect to the Committee's responsibilities enumerated in this charter, the Committee has the responsibility to approve the appointment and removal of the internal auditor (chief audit executive) and independent auditors, functional direction of the internal auditor, and overseeing such investigations as the Committee may initiate. With respect to all other matters identified within this charter, the Committee's responsibilities are limited to review, assessment, general oversight and communication to the Executive Committee and the Board.
In fulfilling Committee responsibilities, Committee members may rely on the opinions and expertise of University employees and external consultants including the independent auditor, the chancellor and provost, chief financial officer, chief information officer, legal counsel, controller, compliance officer, risk manager and other staff of the University.
To discharge its responsibilities, the Committee shall have the authority to:
- Review and consent in the Chancellor's appointment, removal, and performance reviews of the internal auditor (chief audit executive).
- Appoint the independent auditing firm employed by the University.
- Conduct such investigations as the Committee deems necessary to fulfill its responsibilities.
- Retain independent counsel, accountants, or others to advise the Committee or assist in the conduct of investigations.
- Meet with University officers, management, employees or other parties, all of whom are directed to cooperate with the Committee's requests.
- Resolve disagreements between management and the internal or independent auditors and report unresolved disagreements to the Board.
- Report on Committee activities or issues to the Board and the Executive Committee in open or executive session on a regular basis.