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HomeMy WebLinkAbout134-00 RESOLUTION• • RESOLUTION NO. 134-00 MICROFILMED A RESOLUTION ESTABLISHING AN ADVISORY COMMITTEE, TO BE KNOWN AS THE AUDIT COMMITTEE, WITH REGARDS TO COMPLIANCE AND OTHER AUDIT REPORTING, CONTROLS OR ACCOUNTING ISSUES, SETTING FORTH THE SELECTION PROCESS AND THE RESPONSIBILITIES OF THE AUDIT COMMITTEE, AS RECOMMENDED BY ARTHUR ANDERSON & CO. (THE CITY'S AUDITORS) AND G.A.S.B. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1. That the City Council hereby establishes an advisory committee, to be known as the Audit Committee, and shall be as follows: I. Purpose. The Audit Committee of the City of Fayetteville serves in an advisory capacity between the City Council, the independent auditor, internal auditor and management, as their duties relate to financial accounting and reporting, audit functions, internal controls and compliance. It is to be the City Council's principal agent in assuring the independence of the independent auditor, the integrity of management, and the adequacy of disclosures to the public. In carrying out its advisory function, the Committee shall review the financial reports and information prepared by the City's Accounting Division, the City's system of internal controls regarding fmance, accounting, compliance with laws and regulations and with policies the management and the City Council have established. The Audit Committee primarily will fulfill these responsibilities by carrying out the activities enumerated in Section IV. II Composition. The Audit Committee shall be comprised of four individuals, each of whom shall be free from any relationship that, in the opinion of the City Council, would interfere with the exercise of his or her independent judgment as a member of the Committee and the City Council shall appoint: a. One member of the Committee shall be a member of the City Council; b. Three members shall be private citizens of Fayetteville selected by the City Council; and One member shall be a Certified Public Accountant. • • • Page 2 Resolution No. 134-00 All members of the committee shall be able to read and understand fundamental financial statements, including a balance sheet, statement of revenues, expenditures/expenses and changes in fund balances and cash flow statements, or will become able to do so within a reasonable period of time after his or her appointment to the Audit Committee. Initially, the pnvate citizen members of the committee shall serve a one, two or three year term as designated by the City Council. Successors members shall serve three year terms. The City Council member shall serve for the length of his or her elected office term or three years, whichever is shorter. The members of the committee shall designate a chairperson by majority vote of the full committee membership. III Meetings. The committee shall meet at least three times annually, or more frequently as circumstances dictate. As part of its job to foster open communication, the committee should meet at least annually with members of management, the intemal auditor and a representative of the independent auditors in separate executive sessions to discuss any matters that the committee or each of these groups believes should be discussed privately Members of the committee are to be present at all meetings. Minutes of each meeting are to be prepared and approved by the committee members and provided to the City Council. IV. Responsibilities and Duties. To fulfill its responsibilities and duties the Audit Committee shall: a. Review the Charter periodically and update as conditions dictate; Serve on the review committee to select the independent auditors. On an annual basis, the committee should review and discuss with the auditors all significant relationships the auditors have with the city to determine the auditor's independence. The annual independence review should include a review of all non -audit related consulting fees for nature of services and effect on independence; a review of any and all relationships between members of the audit firm and employees of the City; the obtaining of a formal written statement from the auditors as to their compliance with professional guidelines relating to independence, and discussion with the auditors regarding the firm's own internal controls over monitoring independence; Page 3 Resolution No. 134-00 • • Review the City's annual financial statements and related financial information, including any certification, report, opinion, or review rendered by the independent auditors and any changes in accounting pnnciples or the application thereof; d. Review the performance of the independent auditors. Annually, clarify with the independent auditors that the auditors are ultimately accountable to the City Council and that the City Council has ultimate power in the appointment or removal of the independent auditors; e. Penodically consult with the independent auditors, outside the presence of management, regarding internal controls and the completeness and accuracy of the organization's financial statements and related disclosures; Review with financial and accounting personnel and the internal auditor the adequacy and effectiveness of the accounting and financial controls of the City, including controls over data processing activities and functions. Make any recommendations for the improvement of such internal control procedures; Establish regular reporting to the Audit Committee by management, the internal auditor and the independent auditors regarding any significant judgments made in financial management's preparation of the financial statements and the view of each to the appropriateness of such judgments; and h. Following completion of the annual audit, review with management and the independent auditors financial results for the year, prior to their release to the public. This review is to encompass: 1. The City's Comprehensive Annual Financial Report, including the financial statements and supplemental disclosures required by generally accepted accounting principles; Page 4 Resolution No. 134-00 J• • • 2. Significant transactions not a normal part of the City's operations; 3. Selection of, and changes, if any, during the year in the City's accounting principles or their application; 4. Significant adjustments proposed by the independent auditor's conclusions regarding the reasonableness of those estimates; 5. Any disagreements between the independent auditor and management about matters that could be significant to the City's financial statements or the auditor's report; 6. Difficulties encountered in performance of the audit; 7. Evaluate the cooperation received by the independent auditor during its audit including its access to all requested records, data and information. Also, elicit the comments of management regarding the responsiveness of the independent auditor to the City's needs. Inquire as to 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. Advise the City Council on any issues reported by the intemal auditor and recommendations to improve or correct any situations brought to the Committee's attention by the intemal auditor; Perform any other activities consistent with the City's governing law, as the City Council deems necessary or appropriate. Section 2. The City Council hereby sets forth the selection process for the Audit Committee members in the following manner. Appointment of private citizens to the Audit Committee shall be as follows: • • Page 5 Resolution No. 134-00 Private citizen positions on the Audit Committee shall be appointed by the City Council. City staff and City Council members will recommend individuals who reside within the city limits of Fayetteville and have the financial expertise as outlined in the Charter. Names of individuals nominated will be furnished to the Nominating Committee of the City Council. The Nominating Committee will review the all recommendations and choose the most qualified candidates to serve on the Audit Committee. The Nominating Committee will submit the number required to the City Council for approval. The individuals chosen by the City Council must agree to serve and abide by the guidelines as set forth in the Charter. Appointment of a City Council member to the Audit Committee shall be as follows: The Mayor will appoint a City Council member to serve on the Audit Committee. The appointment will be based on the City Council member's ability to understand financial information and follow the guidelines as set forth in the Charter. The City Council member will serve for the length of his or her elected term or three years, whichever is shorter. At the expiration of his or her elected term or if for any reason he or she cannot continue to serve, the mayor will appoint another City Council member to serve on the Audit Committee. PtrMFtD AND APPROVED this 3rd day of October , 2000. 1 t A. 41,•\ss <.. ss` ‘44-••• t' i .s ATTEth'.r f0 By: l &S �C eather Woodruff, City rk APPROVED: By: Fred Hanna, Mayor NAME OF FILE: e 441/77- • /g1 60 CROSS REFERENCE: Date Contents of File 1 Initials /a-3-oo 7413-0a Sisr„,,4./3 ao � �S/ zit., A6. t-.4 • • I. PURPOSE CITY OF FAYETTEVILLE AUDIT COMMITTEE The Audit Committee of the City of Fayetteville serves in an advisory capacity between the City Council, the independent auditor, internal auditor and management, as their duties relate to financial accounting and reporting, audit functions, internal controls and compliance. It is to be the City Council's principal agent in assuring the independence of the independent auditor, the integrity of management, and the adequacy of disclosures to the public. In carrying out its advisory function, the Committee shall review the financial reports and information prepared by the City's Accounting Division, the City's system of internal controls regarding finance, accounting, compliance with laws and regulations and with policies that management and the City Council have established. The Audit Committee primarily will fulfill these responsibilites by carrying out the activities enumerated in Section IV. II COMPOSITION The Audit Committee shall be comprised of four individuals, each of whom shall be free from any relationship that, in the opinion of the City Council, would interfere with the exercise of his or her independent judgment as a member of the Committee. One member of the Committee shall be a member of the City Council and three members of the Committee shall be private citizens of Fayetteville selected by the City Council All members of the Committee shall be able to read and understand fundamental financial statements, including a balance sheet, statement of revenues, expenditures/expenses and changes in fund balances and cash flow statements, or will become able to do so within a reasonable period of time after his or her appointment to the Audit Committe. Additionally, at least one member of the Committee shall be a Certified Public Accountant. Initially, the private citizen members of the Committee shall serve a one, two or three year term as designated by the City Council. Successor members shall serve three year terms. The City Council member shall serve for the length of his or her elected office term or three years, whichever is shorter. The members of the Committee shall designate a chairperson by majority vote of the full Committee membership. III MEETINGS The Committee shall meet at least three times annually, or more frequently as circumstances dictate. As part of its job to foster open communication, the Committee should meet at least annually with members of management, the internal auditor and a representative of the independent auditors in separate executive sessions to discuss any matters that the Committee or i • • • each of these groups believes should be discussed privately. Members of the Committee are to be present at all meetings. Minutes of each meeting are to be prepared and approved by the Committee members and provided to the City Council. IV. RESPONSIBILITIES AND DUTIES To fulfill its responsibilities and duties the Audit Committee shall: 1. Review the Charter periodically and update as conditions dictate. 2. Serve on the review committee to select the independent auditors. On an annual basis, the Committee should review and discuss with the auditors all significant relationships the auditors have with the City to determine the auditor's independence. The annual independence review should include a review of all non -audit related consulting fees for nature of services and effect on independence; a review of any and all relationships between members of the audit firm and employees of the City; the obtaining of a formal written statement from the auditors as to their compliance with professional guidelines relating to independence; and discussion with the auditors regarding the firm's own internal controls over monitoring independence. 3. Review the City's annual financial statements and related financial information, including any certification, report, opinion, or review rendered by the independent auditors and any changes in accounting priniciples or the application thereof. 4. Review the performance of the independent auditors. Annually, clarify with the independent auditors that the auditors are ultimately accountable to the City Council and that the City Council has ultimate power in the appointment or removal of the independent auditors. 5. Periodically consult with the independent auditors, outside the presence of management, regarding internal controls and the completeness and accuracy of the organization's financial statements and related disclosures. 6. Review with financial and accounting personnel and the internal auditor the adequacy and effectiveness of the accounting and financial controls of the City, including controls over data processing activities and functions. Make any recommendations for the improvement of such internal control procedures. 7. Establish regular reporting to the Audit Committee by management, the intemal auditor and the independent auditors regarding any significant judgments made in financial management's preparation of the financial statements and the view of each as to the appropriateness of such judgments. 8. Following completion of the annual audit, review with managment and the independent auditors financial results for the year, prior to their release to the public. This review is to encompass: • 1 • • • • r • The City's Comprehensive Annual Financial Report, including the financial statements and supplemental disclosures required by generally accepted accounting principles • Significant transactions not a normal part of the City's operations • Selection of, and changes, if any, during the year in the City's accounting principles or their application • Significant adjustments proposed by the independent auditor's conclusions regarding the reasonableness of those estimates • Any disagreements between the independent auditor and management about matters that could be significant to the City's financial statements or the auditor's report • Difficulties encountered in performance of the audit • Evaluate the cooperation received by the independent auditor during its audit including its access to all requested records, data and information. Also, elicit the comments of management regarding the responsiveness of the independent auditor to the City's needs. Inquire as to 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. 9. Advise the City Council on any issues reported by the internal auditor and recommendations to improve or correct any situations brought to the Committee's attention by the internal auditor. 10. Perform any other activities consistent with the City's governing law, as the City Council deems necessary or appropriate. • • • SELECTION PROCESS FOR AUDIT COMMITTEE MEMBERS Appointment of private citizens to the Audit Committee shall be as follows: Private citizen positions on the Audit Committee shall be appointed by the City Council. City staff and City Council members will recommend individuals who reside within the city limits of Fayetteville and have the financial expertise as outlined in the Charter. Names of individuals nominated will be furnished to the Nominating Committee of the City Council. The Nominating Committee will review all recommendations and choose the most qualified candidates to serve on the Audit Committee. The Nominating Committee will submit the number required to the City Council for approval. The individuals chosen by the City Council must agree to serve and abide by the guidelines as set forth in the Charter. Appointment of a City Council member to the Audit Committee shall be as follows: The Mayor will appoint a City Council member to serve on the Audit Committee. The appointment will be based on the City Council member's ability to understand financial information and follow the guidelines as set forth in the Charter. The City Council member will serve for the length of his or her elected term or three years, whichever is shorter. At the expiration of his or her elected term or if for any reason he or she cannot continue to serve, the Mayor will appoint another City Council member to serve on the Audit Committee. 1 • Tn. 4 rc AGENDA REQUEST CONTRACT REVIEW GRANT REVIEW • STAFF REVIEW FORM • -For the Fayetteville City Council meeting of October 3, 2000 FROM: John Maguire Administration Name Division Department ACTION REQUIRED: Resolution to the City Council establishing an Audit Committee as an advisor, regarding compliance and other audit reporting, controls or accounting issues. The attached charter sets forth the selection process and the responsibilities of the Audit Committee. The Audit Committee is recommended by our outside auditors. Arthur Anderson & Co. and G.A.S.B.. COST TO CITY: Cost of this Request Account Number Project Number Category/Project Budget Category/Project Name Funds Used To Date Program Name Remaining Balance Fund BUDGET REVIEW: )110C- Budget um B Budget Coordinator t Budgeted Item Budget Adjustment Attached Administrative Services Director CONTRACT/GRANT/LEASE REVIEW: ,t4 -fl v' Accour(tiri.•/ ger 41_ City •tto fey v Purchasing Officer STAFF RECOMMENDATION: 9-e20 00 Date Date 0t40-00 Date GRANTING AGENCY: ADA Coordinator Internal uditor Grant Officer Date c I / Lala Date Date Division Head Department Director Admin. Svcs Director Mayor Date Date Date Date Cross Reference New Item: Yes No Prev Ord/Res #: • Sat TP,f i&ORs Orig Contract Date: f), STAFF REVIEW FORM • Page 2 Description Meeting Date Comments: Budget Coordinator Reference Comments: Accounting Manager Reference Comments: City Attorney Reference Comments: Purchasing Officer Reference Comments: ADA Coordinator Reference Comments: Internal Auditor Reference Comments: Grants Offcier Reference Comments: FAYETTEVII.LE THE CITY OF FAYETTEVILLE, ARKANSAS DEPARTMENTAL CORRESPONDENCE To: John Maguire, Administrative Services Director From: Heather Woodruff, City Clerk Date: November 2, 2000 Attached is a copy of Resolution 134-00 establishing an advisory committee, to be known as the Audit Committee. The original will be microfilmed and filed with the City Clerk An ad will be placed in the newspaper in November. In December they will be appointed by the City Council and in January they will take office. cc: Nancy Smith, Internal Auditor • • RESOLUTION NO. 134-00 A RESOLUTION ESTABLISHING AN ADVISORY COMMITTEE, TO,BE KN,OWN,AS THE AUDIT COMMITTEE, WITH REGARDS' TO COMPLIANCE AND OTHER AUDIT REPORTING;; CONTROLS. OR ACCOUNTING ISSUES, SETTING FORTH THE SELECTION PROCESS AND THE RESPONSIBILITIES. OF. THE:, AUDIT? COMMITTEE, AS RECOMMENDEti BY ARTHUR ANDERSON & CO. (THE CITY'S AUDITORS) AND GASB BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS - Section I. That the City Council hereby establishes an advisory committee, to be known as the Audit Committee, and shall be as follows: I. Purpose. The Audit Committee of the City of Fayetteville serves in an advisory capacity between the City Council, the independent auditor, internal auditor and management, as their duties relate to financial accounting and reporting, audit functions, intemal controls and compliance. It is to be the City Council's principal agent in assuring the independence of the independent auditor, the integrity of management, and the adequacy of disclosures to the public. In carrying out its advisory function, the Committee shall review the financial reports and information prepared by the City's Accounting Division, the City's system of internal controls regarding finance, accounting, compliance with laws and regulations and with policies the management and the City Council have established. The Audit Committee primarily will fulfill these responsibilities by carrying out the activities enumerated in Section IV. 11 Composition. The Audit Committee shall be comprised of four individuals, each of whom shall be free from any relationship that, in the opinion of the City Council, would interfere with the exercise of his or her independent judgment as a member of the Committee and the City Council shall appoint: a. One member of the Committee shall be a member of the City Council; b. Three members shall be private citizens of Fayetteville selected by the City Council; and c. One member shall be a Certified Public Accountant. /