Regents Policy 1400: Charter of the Committee on Compliance and Audit
Approved January 2007
Amended March 2008 and January 21, 2010
Purpose: The Charter of the Committee on Compliance and Audit (the "Committee"), which is issued as a Regents’ Policy, is designed to provide a detailed description of the Committee’s responsibilities as outlined in Bylaw 12.1. It confirms the Committee’s duties for its members and for the Board of Regents as a whole, guides the annual agenda, permits tracking of tasks that discharge the Committee's responsibilities and provides, in part, for orientation of new Committee members.
I. Committee Membership
- With the exception of the Governor, who is an ex officio member of the Committee, all members of the Committee shall meet the standards of The Regents’ Guideline for Determination of Board Member Independence (March, 2005) in order to serve.
- Committee members will be appointed for staggered two year terms. The Chair of the Committee will be expected to serve for two years where possible and should be succeeded by a Vice Chair who has served a one-year term where possible.
- The Committee may appoint a Compliance Advisor and/or a Financial Advisor to advise the members. See Policy on Appointment of Expert Advisors to the Committee on Compliance and Audit.
- The Committee will meet as needed to address matters on its agenda, but not less frequently than four times each year. The Committee may ask members of management or others to attend a meeting and provide pertinent information as necessary.
- As permitted by the California Open Meeting Act, the Committee will conduct closed sessions with the outside auditors, Chief Financial Officer, Vice President–Financial Management, Controller, Senior Vice President–Chief Compliance and Audit Officer, General Counsel, other counsel to the Committee, or others when needed.
III. Oversight Responsibilities
- Monitor development and implementation of a systemwide compliance program via periodic reports from the Senior Vice President–Chief Compliance and Audit Officer and location representatives.
- Monitor specific programs designed to achieve compliance objectives.
- Oversee development of a culture attentive to the University’s commitment to ethics and compliance.
- Review with the Senior Vice President–Chief Compliance and Audit Officer monitoring of compliance with the Statement of Ethical Values and Standards of Ethical Conduct, with particular attention to compliance with University policies and applicable laws and regulations.
- Periodically review the University's Statement of Ethical Values and Standards of Ethical Conduct to assure that they are adequate and up-to-date.
- Review University procedures for receipt, retention, and treatment of whistleblower and other complaints submitted by any party, internal or external to the organization, other than litigation. Review the topics, current status, and resolution of such complaints.
- Receive and review the annual report on the University's risk management program.
- Oversee the functional reporting relationship of the Senior Vice President - Chief Compliance and Audit Officer with the Committee, including review of the position’s appointment, replacement, reassignment, or dismissal.
- Significant findings on internal audits during the year and progress regarding management corrective actions.
- Whether Internal Audit encountered any difficulties in the course of its audits, such as restrictions on the scope of its work or access to required information.
- Any changes required in the scope of the internal audit mission and responsibilities.
- The Internal Audit department resources, i.e., budget and staffing.
- The Internal Audit charter.
- Internal Audit compliance with the Institute of Internal Auditors’ (IIA’s) Standards for the Professional Practice of Internal Auditing (Standards).
- Review with management any interim financial reports issued since the last meeting.
- Review with the independent auditors, Chief Financial Officer, Controller, and Senior Vice President–Chief Compliance and Audit Officer the audit scope and plan of the internal auditors and the independent auditors. Address the coordination of audit efforts to assure completeness of coverage, reduction of redundant efforts, and effective use of University resources in the audits.
- Review adequacy of internal controls, including computerized information system controls and security with the independent auditors and the Senior Vice President–Chief Compliance and Audit Officer.
- Review with management and the independent auditors:
- The effect of regulatory and accounting initiatives, as well as other unique transactions and financial relationships.
- Significant findings and recommendations of the independent auditors as well as management corrective actions.
- Critical accounting policies and practices used by the University.
- All alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, the ramifications of each alternative, and the treatment preferred by the University.
- Review with the independent auditors matters required
to be discussed by Statement on Auditing Standards (SAS)
No. 61, Communication With Audit Committees (AICPA,
Professional Standards, vol. 1, AU sec. 380), as amended,
related to the conduct of the audit. This will include:
- All material written communications between the independent auditors and management, such as any management letter or schedule of unadjusted differences.
- The independent auditors’ audit of the financial statements and related footnotes and their report thereon.
- The independent auditors’ judgment about the quality, not just acceptability, of the University’s accounting principles and practices as applied in its financial reporting.
- Any significant changes required in the independent auditors’ audit plan.
- Any serious difficulties or disputes with management encountered during the audit.
- Review with the General Counsel, other counsel to the Committee and the Chief Financial Officer, Vice President–Financial Management, Controller, and the Senior Vice President–Chief Compliance and Audit Officer legal and regulatory matters that, in the opinion of management, may have a material impact on the financial statements, related organization compliance policies, and programs and reports received from regulators.
- Perform such other functions as assigned by the Bylaws, the Charter, or The Regents.
IV. Reporting Responsibilities
- At the earliest opportunity, the Committee will report to the Board as a whole any action taken or significant discussions held.
- The Committee will receive and review annual reports for functional areas within the scope of its responsibilities and will advise the Board as a whole regarding its review.
V. Authority to Retain and Oversee Non-University Experts
- The Committee will recommend appointment of and oversee the independent auditors to be engaged by the Board of Regents, establish the fees of the independent auditors, and approve any nonaudit services to be provided, including unusual tax services, before the services are rendered.
- The Committee is authorized to engage additional independent auditors, counsel, or other consultants as necessary to discharge its duties.
- Review the Committee’s charter periodically, reassess its adequacy and recommend proposed changes to the Board.
- Review the effectiveness of the Committee periodically, including review of its annual agenda.