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HomeMy WebLinkAboutCouncil Policy No. 300-01 Audit Committee CITY OF LAKE ELSINORE, CALIFORNIA COUNCIL POLICY MANUAL SUBJECT: Budget and Audit Committee Policy No. 300-1 Effective Date 3/22/2011 Page No. 1 of 4 PURPOSE The primary role of the Budget and Audit Committee (“Committee”) is to instill confidence that the funds entrusted to the City of Lake Elsinore and its Redevelopment Agency are used in a manner consistent with good financial practice and assist the City Council in fulfilling its responsibilities as to accounting policies and reporting practices of the City. The Committee shall work cooperatively with the City Manager, Administrative Services Director, employees and the independent auditor in making recommendation to the City Council to insure prudent financial oversight of the City’s municipal finances. The Committee shall oversee and advise the City Council and management on the selection of independent auditors. The Committee shall strive to strengthen the stewardship reporting function of the City Council and improve communication between the independent auditor and management. The Committee shall be the City Council’s principal agent in ensuring the independence of the City’s independent auditors, the integrity of management, and the adequacy of disclosures to the public. MEMBERSHIP The Budget and Audit Committee shall consist of the following five (5) [three (3)] members: 1. Chairperson 2. Vice-Chairperson 3. City Treasurer The Chairperson and Vice-Chairperson shall be appointed by the Mayor and shall be members of the City Council. The Mayor may elect to appoint himself or herself as Chairperson. The Chairperson and Vice-Chairperson shall serve for a term of one year concurrent with the term of the Mayor and no member of the City Council shall serve on the Committee for more than two consecutive years. CITY OF LAKE ELSINORE, CALIFORNIA COUNCIL POLICY MANUAL SUBJECT: Budget and Audit Committee Policy No. 300-1 Page No. 2 of 4 The Chairperson shall preside at all meetings. The Vice-Chairperson shall preside at all meetings in which the Chairperson is absent. The Committee shall meet as needed as determined by the Chairperson, but no less than four times a year. STAFF The City Manager and the Director of Administrative Services shall serve as principal staff to the Budget and Audit Committee and shall attend all Committee meetings. DUTIES WITH RESPECT TO THE INDEPENDENT AUDITOR 1. Oversee and participate in the selection process of the independent auditor. The Committee Members shall meet with each candidate seeking to serve as independent auditor prior to making a recommendation to the City Council. 2. Recommend to the City Council the selection or retention of the independent auditor. The firm selected as independent auditor shall not serve the City for more than five consecutive years or such lesser period as provided by State law. 3. Conduct a meeting by the Committee Members and the independent auditor to review the scope and general extent of the independent auditor’s planned examination. The meeting should entail an understanding from the independent auditor of the factors considered by the auditor in determining the audit scope. 4. Review with management the auditor’s fees on an annual basis. 5. Review with management and the independent auditor, upon completion of its audit, draft financial results for the year. The Committee’s review is to encompass the City’s annual financial report, including the financial statements and footnote disclosures and supplemental disclosures required by generally accepted accounting principles. 6. Evaluate the cooperation received by the independent auditor during its audit, including its access to all requested records, data, and information. Solicit the comments of management regarding the responsiveness of the independent auditor to the City’s needs. CITY OF LAKE ELSINORE, CALIFORNIA COUNCIL POLICY MANUAL SUBJECT: Budget and Audit Committee Policy No. 300-1 Page No. 3 of 4 7. Inquire of the independent auditor whether there have been any disagreements with management that, if not satisfactorily resolved, would have caused the independent auditor to issue a nonstandard report on the City’s financial statements. 8. Review with management and the independent auditor the City’s policies and procedures to reasonably ensure the adequacy of internal controls over accounting, administration, compliance with laws and regulations, and financial reporting. 9. Conduct an “exit meeting” with the independent auditor regarding the auditor “letter of comments and recommendations,” the quality of the City’s financial and accounting process and any recommendations that the independent auditor may have. Topics to be considered during this discussion include improving internal financial controls, controls over compliance with laws and regulations, the selection of accounting principles, and management reporting systems. 10. Review written responses of management to “letter of comments and recommendations” from the independent auditor and discuss with management the status of implementation of prior-period recommendations and corrective action plans. 11. Ensure that the “letter of comments and recommendations” from the independent auditor and the management response is available for review on the City’s website. DUTIES WITH RESPECT TO FINANCIAL REPORTING AND BUDGETS 1. Have familiarity, through the individual efforts of its members, with the accounting and reporting principles and practices applied by the City in preparing its financial statements. Further, the Committee is to make, or cause to be made, all necessary inquiries of management and the independent auditor concerning established standards of conduct and performance, and deviations therefrom. 2. Review, quarterly, the City’s financial statements. 3. Work with City staff to establish a process for developing the annual budget and long-term financial plan. CITY OF LAKE ELSINORE, CALIFORNIA COUNCIL POLICY MANUAL SUBJECT: Budget and Audit Committee Policy No. 300-1 Page No. 4 of 4 4. Review the draft City Comprehensive Annual Financial Report (CAFR) or other annual financial statements. DUTIES WITH RESPECT TO THE CITY’S INVESTMENT POLICY 1. Annually review the City’s Investment Policy and recommend any changes to the City Council. 2. Review, quarterly, compliance with the City’s Investment Policy. OTHER DUTIES 1. Recommend to the City Council any appropriate extensions or changes in the duties of the Committee. 2. Work on special projects, as directed by the City Council. 3. Apprise the City Council, through agenda transmittals and special presentations as necessary, of significant developments in the course of performing the above duties. HISTORY Adopted by Resolution No. 2011-020 3/22/2011