Audit Committee Charter

 

As Amended by the Board of Trustees
December 6, 2017

 

Article 1

PURPOSE

The Audit Committee (“Committee”) is a standing committee established by the Board of Trustees to aid it in discharging its responsibilities relating to oversight of the Los Angeles County Bar Association’s (“LACBA”) financial affairs.

 

Article 2

COMMITTEE MEMBERSHIP

The Committee shall consist of no fewer than three Board members, whose appointment shall be made in accordance with LACBA's Bylaws. Appointments will generally be for two year terms except that appointments may be for one year terms in order to be coextensive with a Board member’s term on the Board. A goal, but not a requirement, of appointments made at the commencement of a LACBA bar year, shall be that of constituting a Committee whereby approximately half of the Committee members will have completed a minimum of one year of service on the Committee.  Members of the Finance Committee may serve on the Committee. However, the chair of the Committee may not be a member of the Finance Committee and members of the Finance Committee shall constitute less than one-half of the membership of the Committee. The Committee membership shall include at least one financial expert, who need not be a Board member. Committee members shall not include any member of staff or the President of LACBA.

No member of the Committee shall receive directly or indirectly any compensation from LACBA, nor have a material financial interest in any entity doing material business with LACBA.

A majority of the members shall constitute a quorum.

 

Article 3

COMMITTEE RESPONSIBILITIES

LACBA’s Executive Director and Chief Financial Officer (CFO) bear primary responsibility for LACBA’s finances and for ensuring compliance with laws, regulations and LACBA policies. The Committee’s primary function is to assist the Board of Trustees of LACBA in fulfilling its oversight responsibilities with respect to:

A. The audit of LACBA’s financial statements;

B. LACBA’s system of internal controls;

C. LACBA’s financial reporting processes;

D. The quality and integrity of audited financial statements and reporting;

E. Compliance with tax, legal and regulatory reporting requirements, including without limitation preparation of information tax returns on IRS Form 990; and

F. Overseeing engagement, performance evaluation and independence of the independent auditors.

The Committee shall have a clear understanding with the outside auditors that the auditors must maintain an open and transparent relationship with the Committee and the Executive Director and CFO, and that the ultimate accountability of the outside auditors is to the Board. The Committee shall make at least one annual report to the Board concerning its activities.

It is not the Committee’s responsibility to plan or conduct audits or determine that financial statements and disclosures are accurate or that internal controls over financial reports (ICFR) are effective. It is also not the Committee’s responsibility to determine whether the financial statements comply with and are prepared in accordance with GAAP.

In carrying out its oversight responsibilities, the Committee shall:

A.  Recommend to the Board the selection, retention or termination of LACBA's outside auditors, including a regular assessment of auditor performance and independence.

B.  Review the planned scope and general extent of the outside auditors’ annual audit.

C.  Review ICFR and their effectiveness, including IT security and controls, and evaluate the commitment to strong and effective internal controls emanating from the tone at the top.

D.  Meet with the auditors preferably twice per year but at least annually outside the presence of LACBA staff.

E.  Review management’s written representations letter to the auditor. Confirm that the auditor will issue a management letter in writing. The outside auditors should confirm to the Committee that no limitations have been placed on the scope or nature of their audit procedures.

F.  Review with the Executive Director and CFO and outside auditors, the significant accounting and reporting principles, practices and procedures applied by LACBA in preparing its financial statements. Discuss with the outside auditors their judgments about the quality, not just the acceptability, of LACBA’s accounting principles used in financial reporting.Confirm in consultation with the outside auditors that financial statements are understandable, transparent and reliable.

G.  Review corporate policies related to compliance with laws, ethics and conflicts of interest including procedures for approval of all related party transactions between the Association and any officer or Trustee of LACBA.

H.  Discuss with the Executive Director and CFO, LACBA’s policies and guidelines with respect to risk management and financial risk exposures.

I.  Review the procedures for the treatment of any complaints regarding accounting and financial matters and internal controls.

J.  Establish procedures for accepting confidential and anonymous concerns relative to financial reporting and internal control matters as part of LACBA’s whistle-blower policy to allow individuals to bring questions and issues to light without fear of retribution.

K.  Perform an annual review of the charter and an annual review to confirm that all responsibilities outlined in the charter have been carried out.

L.  Pre-approve any work or special projects to be performed by the audit firm that is outside the scope of the general audit and is the subject of a separate engagement.

M.  At the completion of the annual audit, together with Executive Director, CFO, and the outside auditors, perform the following:

  1. Review results of the audit of the financial statements and the related report thereon and, if applicable, a report on changes during the year in accounting principles and their application. Review the written management letter from the auditor.

  2. Review significant changes to the audit plan, if any, and any serious disputes encountered during the audit. Inquire about the cooperation received by the outside auditors during their audit, including access to all requested records, data and information.

  3. Inquire about relevant significant recommendations that the outside auditors may have, particularly those characterized as material or serious. Typically, such recommendations will be presented by the outside auditors in the form of a Letter of Comments and Recommendations. The Committee should review responses of management to the Letter of Comments and Recommendations from the outside auditors and receive follow-up reports on action taken concerning the aforementioned recommendations.

  4. Obtain from the outside auditors their views as to the adequacy of internal controls.

     

N.  Inquire as to the independence of the outside auditors and obtain from the outside auditors, at least annually, a formal written statement delineating all relationships between the outside auditors and LACBA, including other consulting work being performed by the outside auditors for LACBA.

O.  Review with the Executive Director, CFO and outside auditors LACBA’s accounting controls and financial reporting processes, including the type, frequency and recipients of financial reports.

P.  Discuss with the Executive Director the quality of LACBA’s financial and accounting personnel as revealed by the audit process.

Q.  Elicit the comments of management regarding the responsiveness of the outside auditors to LACBA’s needs.

R.  Annually review its own performance and report its findings to the Board of Trustees; and periodically review and assess the adequacy of this Charter and recommend any proposed changes to the Board of Trustees for its approval.

 

Article 4

AUTHORITY

The Committee is granted the authority to recommend to the Board of Trustees that LACBA investigate any matter or activity involving financial accounting and financial reporting, as well as the internal controls of LACBA.

 

Article 5

MEETINGS

The Committee should meet at least four times annually or such fewer or greater times as the Committee deems necessary. The Committee may, in the discretion of the Committee’s chair, conduct its meetings jointly with meetings held by the Audit Committee of LACBA’s affiliate LACBA Counsel for Justice (“CFJ”). The Committee and, as appropriate, CFJ’s Audit Committee should meet in executive session with the outside auditors at least once each year.