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HomeMy WebLinkAboutResolution - 2003-R0220 - Resolution Creating Audit Committee Of The City Of Lubbock - 06_12_2003Resolution No. 2003—RO220 June 12, 2003 Item No. 31 RESOLUTION WHEREAS, it is the opinion of the City Council that the best interests of the citizens of the City of Lubbock would be served by establishing an Audit Committee of the City of Lubbock; and WHEREAS, the City Council desires to have said Committee advise the City Council in fulfilling its oversight responsibilities by reviewing and making recommendations regarding the City's financial and performance audits; NOW THEREFORE: BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: SECTION 1. THAT an Audit Committee is hereby created by the City Council of the City of Lubbock to advise the City Council in fulfilling its oversight responsibilities by assessing and making recommendations regarding the City's financial and performance audits, including the systems of internal control and the audit processes, findings, and recommendations, including but not limited to the responsibilities set forth in Section 3, and otherwise assessing City wide financial and performance activities brought to the attention of the Audit Committee. In performing its work, the Audit Committee shall maintain an open avenue of communication between the City Council, City Manager, internal auditor and independent external auditor, thereby helping to maintain public trust that the City of Lubbock has fulfilled its fiduciary responsibility to its Citizens. SECTION 2. The Audit Committee shall consist of five (5) members, who shall be appointed to two (2) year staggered terms by the City Council. Three of the initial terms shall be for two (2) years and two initial terms shall be for one (1) year as determined by the casting of lots. The chairperson shall be appointed by the Mayor. Each member of the Audit Committee shall meet the Independence Standards in the Government Auditing Standards set forth by the U.S. Comptroller General, who heads the U.S. General Accounting Office. At least two (2) members of the Audit Committee shall have a background in financial reporting, accounting, or auditing, and at least one (1) member shall be a certified public accountant. However, the lack of any such specific member shall not invalidate or otherwise affect the actions taken by the Audit Committee. The Audit Committee shall report directly to the City Council and no member shall be a City official, employee or former City official or employee. SECTION 3. The Audit Committee shall have the following general duties and responsibilities: 1. Have the power to authorize investigations into any matters within the Audit Committee's scope of responsibilities. The Audit Committee shall have unrestricted access to members of management (which shall be any person employed by the City in a supervisory capacity), City employees and relevant information as solely determined by the Audit Committee. 2. Meet four times per year, or more frequently as circumstances require as determined by the chairperson. The chairperson shall schedule all meetings and provide the members with a written agenda. A simple majority shall be a quorum and an affirmative vote of three members shall be required for any action to be taken by the Audit Committee. The Audit Committee shall adopt such rules and procedures as it deems appropriate. 3. Meet at least annually with the independent external auditor, the internal auditors, and management to discuss any matters that the Audit Committee believes should be discussed with the Audit Committee. As an advisory committee, the Audit Committee is not subject to the Open Meetings Act and it shall be exempt from the City policy requiring advisory boards to comply with the Open Meetings Act. 4. Provide an annual report to the City Council stating, among other things, whether the Audit Committee has: a) Analyzed and discussed the audited financial statements with management. b) Received representations from the independent external auditors regarding the auditors' independence and compliance with audit standards of the American Institute of Certified Public Accountants (AICPA), the U.S. General Accounting Office, and the single audit standards of the U.S. Office of Management and Budget. c) Discussed with the independent external auditors the matters required to be discussed by AICPA Statements on Auditing Standards on Communication with the Audit Committee. d) Considered whether the terms of engagement with the independent external auditor are appropriate or should be changed. e) Review and evaluate the City's internal audit function. SECTION 4. The Audit Committee shall review and evaluate internal controls and risk assessment as follows: 1. Review and evaluate the effectiveness of the City's process for assessing significant risks or exposures and the steps management has taken to monitor and control such risks to the City. 2. Consider and review with management the internal audit staff and the independent auditor with regard to: a) The effectiveness of or weaknesses in the City's internal controls including the status and adequacy of information systems and security. b) Any related significant findings and recommendations of the independent external auditor and the internal auditors, together with management's responses, including the timetable for implementation of recommendations to correct weaknesses in the internal controls. 3. Instruct the independent external auditor to communicate directly to the Audit Committee any serious difficulties or disputes with management. The independent external auditor is ultimately responsible to the City Council through the Audit Committee. SECTION 5. The Audit Committee shall have the following responsibilities with regard to review of internal audit activities. 1. Evaluate the internal audit process for establishing the annual internal audit plan and the focus on risk. 2. Evaluate the audit scope and role of internal audit. 3. Consider and review with management: a) Significant findings and management's response, including the timetable for implementation to correct weaknesses. b) Any difficulties encountered in the course of their audits, such as restrictions on the scope of their work or access to information. c) Any changes required in the planned scope of their audit plans. d) The internal audit budget. SECTION 6. The Audit Committee shall have the following responsibilities with regard to financial reporting. 1. Review with management and the internal auditor the City's interim financial statements and budget comparisons. 2. Advise management and the City Council if anything has come to the Audit Committee's attention that causes it to believe that the audited financial statements included in the City's financial statements of management's discussion analysis contain any untrue statement of material fact or omit to state a necessary material fact. 3. Review with management and the independent external auditor at the completion of the annual examination: a) The City's annual financial statements and related notes. b) The independent external auditor's audit of the annual financial statements and the auditor's report. c) Any significant changes required in the independent external auditor's audit plan. d) Any difficulties or disputes with Management during the audit. e) The City's accounting procedures. f) Other matters related to conduct, which should be communicated to the Audit Committee under generally accepted auditing standards. SECTION 7. The Audit Committee shall have the following responsibilities with regard to the independent external auditor. 1. Advise the City Council on the qualifications for selection of the independent external auditor, and, if requested by the City Council, assistance in the selection of the independent external auditor. 2. Review the scope and approach of the annual audit with the independent external auditor. 3. Assess the independent external auditor's process for identifying and responding to key audit and internal control risks. SECTION 8. The Audit Committee shall not plan or conduct audits or determine that the City's financial statements are complete and accurate and are in accordance with generally accepted accounting principles as those activities are the sole responsibility of management and the independent external auditor. Nor shall the Audit Committee conduct investigations to resolve disagreements between management and the independent external auditor or assure compliance with laws and regulations. The Audit Committee is merely an advisory committee and has no power to decide policy or to take governmental action. 4 SECTION 9. The Audit Committee shall review this Resolution annually and suggest any needed changes to the City Council. Passed by the City Council this 12th day of ATTEST: Becky Garza, City Secretary APPROVED AS TO CONTENT: 0-m Tommy Goilzalez, Interim Vity Manager APPROVED AS TO FORM: Donald G. Vandiver, First Assistant City Attorney ddres/AuditCornRes June 4, 2003