Chapter AUDIT & FINANCE COMMITTEE CHARTER

Transcription

1 Chapter AUDIT & FINANCE COMMITTEE CHARTER I. PURPOSE AND OBJECTIVE The purpose of the Audit and Finance Committee will be to review and audit the financial operations of the Home Owners Association of Cottonwood/Palo Verde at Sun Lakes and to perform other tasks as required by the Board of Directors. The Audit committee is an advisory Committee established to assist the Board in its oversight responsibilities with respect to audit, compliance and the implementation of the financial reporting systems. The committee has been developed to provide input/recommendations to the Board and Management but does not have the authority to direct management or the Board. II. ORGANIZATION OF THE COMMITTEE The Audit and Finance Committee (AFC) will be a standing committee. The Committee shall consist of seven (7) members each serving a two year term. The Committee will ensure that the terms of the members be staggered to allow continuity of the Committee. Due to the unique skills and experience required by Committee members of the Audit and Finance Committee, special exemptions for term limits may be requested of the Board of Directors. This exemption must be reviewed by the Committee and resubmitted to the Board of Directors for renewal on an annual basis. The Committee shall annually submit to the Board of Directors (normally after the October monthly meeting), the names of persons being recommended for Board approval. The Committee, in its efforts to maintain high professional standards and realizing the importance of its mission, shall maintain the right to recommend the removal of any member who is either absent for 3 consecutive meetings without Committee approval, or, who by simple Committee vote is deemed not to be contributing to Committee activities. This action will be forwarded to the Board of Directors for action. Such person s term will be completed by committee recommendation subject to Board approval. The Board Treasurer will act as liaison from the Board of Directors. The Controller and the Board Treasurer, or their appointed representatives, will attend the Committee meetings. The Committee will hold meetings at least monthly and as necessary to accomplish its task. A majority of the Committee will constitute a quorum and can act on any appropriate matter - 1 -

2 brought before the Committee. The Committee will elect a Chairperson and Secretary at its regular monthly meeting in November. Under the Chairperson s direction, the Committee members will perform all of the duties listed below. The committee members should become knowledgeable about the rules, policies and procedures governing the operations of the Homeowners Association. The Committee may convene in closed session, without authorization by the Board, for specific purposes of discussing the qualifications of candidates for appointment to the Committee, or any other personnel question directly affecting the committee. Votes taken by the Committee in closed session shall be confirmed by the Committee in open session. Topics discussed in closed session shall be considered confidential, and shall not be disclosed by participants unless or until disclosed in open session. All Committee members are obligated to sign the Non-Disclosure Agreement and shall be bound by the terms discussed within. Properly recorded minutes shall be kept of each Committee meeting, and shall reflect accurately all actions taken by the Committee. The minutes shall include the date, time and location of the meeting, the Committee members present and absent, and all guests in attendance. Copies of all open session minutes shall be provided to the Association s Administration Office for inclusion in Cottonwood/Palo Verde at Sun Lakes Home Owners Association member reading files. Copies of all closed session meeting minutes shall be provided to the Administration Office for distribution to Board members, but shall not be included in the Cottonwood/Palo Verde at Sun lakes Home Owners Association Services files for Homeowner perusal. III. ROLES AND RESPONSIBILITIES The Audit and Finance Committee, in fulfilling its purpose, will perform the following: 1. Internal Control a. Review the implementation of key accounting policies and financial reporting. b. Evaluate the implementation of the internal control systems and the risk management plan. c. Review Monthly and Annual Financial Reports. d. Review and analyze continuing financial considerations of operational activities of the Home Owners Association and report routinely to the Board of Directors the results of such reviews

3 e. A sub-committee will meet with Management and review annual budget consolidation prior to submittal to the Board of Directors and shall supply to the Board any pertinent information or recommendations. f. One Committee member will meet with the Board of Directors and Management to review the quarterly budget performance. Reports back to the Committee shall not include any proprietary or confidential information as dictated by the Non-Disclosure Agreement. g. Act in an internal audit capacity to review the implementation of internal control procedures defined by: manuals, Board Policies, By-Laws, Operational Orders or any other implied or direct Board or Operational management control procedures that have been established. h. A member of the Committee shall attend and report at monthly Agenda Planning and Board Meetings. i. The Committee shall monitor the Capital Reserve and Asset list and annually report to the Board the adequacy and integrity of such. j. Provide a year-end summary of accomplishments to the Board. k. Attempt to perform any other task requested by the Board or Operational Management. 2. Internal Audit a. Consider the scope of work and review and approve the annual audit plan and ensure no unjustified restriction or limitations are placed on the audit team. b. Review, analyze and make recommendations concerning the annual audit report to the Board of Directors and Management. c. Review and report to the Board the activities, resources and organizational structure of Internal Audit procedures. d. Insure that findings and recommendations communicated by Internal Audit and Management s proposed responses are received, discussed and appropriately acted on. Follow-up audits may be considered to insure compliance of specific items. 3. Relationship with the External Auditor a. Work with Management to review the scope of work, audit plan and Terms of Engagement of the external auditor

4 b. Consider the independence of the external auditor and any potential conflicts of interest. c. Review the Report on the annual Audit of the Cottonwood/Palo Verde at Sun Lakes Home Owners Association. Be prepared to present findings of the audit with management to the Board of Directors. d. Working in conjunction with Management, the Committee will: i. Discuss with the external auditors required adjusting entries; suggested improvements to the financial reporting system and any other topics judged material by the external auditors. ii. Discuss with the external auditor any audit problems encountered in the course of audit work, including any restriction on audit scope or access to information. iii. Discuss with the external auditor the appropriateness of the accounting policies applied in the HOA s financial reports. iv. Submit to the Board a report of the above activities. e. Insure that significant findings and recommendations communicated by the external auditor and Management s proposed responses are received, discussed and appropriately acted on. This shall include, but not limited to, any adjusting entries required by external auditors in the operating financial ledgers of the HOA. This should be coordinated with the Controller of the HOA. f. Review the performance of the external auditor and make recommendations to the Board of Directors for the appointment, reappointment or termination of appointment of the external auditor. 4. Committee Record Keeping The Committee shall establish and maintain a permanent working record library for Committee reference. Such library will contain, at a minimum, the following records: a. Any and all Committee meeting Minutes. b. Any and all Committee reports to the Board or any other HOA Committee. c. Any and all work papers associated with any continuing or completed Committee project/report

5 5. Compliance Review the effectiveness of the HOA s system for monitoring compliance with relevant laws and regulations (including internal rules) and the measures taken by Management as a result of its investigation of material incidents of non-compliance. IV. ACCESS TO PERSONNEL/INFORMATION The Audit/Finance Committee shall have access to members of management, staff and any information it needs to carry out its responsibilities working under the auspices and supervision of the Board of Directors. Any activity undertaken, by the Committee, involving the daily operations of the HOA shall be coordinated thru the General Manager of the HOA. The Audit/Finance Committee may request the Board of Directors to initiate an internal audit or an audit by the external auditor on a probable issue falling within its scope of responsibilities