United FCS, ACA Audit Committee Charter
Audit Committee is established by and reports to the United FCS, ACA board of directors. The primary function of the Committee is to assist the board of directors in fulfilling its oversight responsibilities in relation to the quality of financial reporting and internal controls.
The purpose of the Committee is to:
- Assist the board of directors in fulfilling its fiduciary responsibilities relating to accounting and reporting practices of the Association;
- Oversee and appraise the quality of the audit effort of the Association’s internal review function and its independent auditor;
- Maintain, by scheduling regular meetings, open lines of communication among the board, its internal review function, and its independent auditor to exchange views and information as well as confirm their respective authority and responsibilities;
- Serve as an independent and objective party to review the financial information presented by management to shareholders, regulators, and the general public.
The Committee shall consist of no less than three and no more than five members from the Association board of directors, each of whom shall be free from any relationship that, in the opinion of the board, would interfere with the exercise of his or her independent judgment as a member of the Committee. Members of the Committee should be knowledgeable in one or more of the following: public and corporate finance, financial reporting and disclosure, and accounting procedures. Training opportunities will be sponsored by the board to assist in enhancing Audit Committee member knowledge in key qualification areas to better allow them to fulfill their stated responsibilities. At least one member of the Committee will be designated as the Associations financial expert and should have accounting and financial management expertise consistent with the breadth and complexity of accounting and financial reporting issues that can reasonable be expected to be raised by the institutions financial statements. The Association’s board of directors will annually appoint the members of the Committee which needs to include the Associations designated financial expert.
The Committee shall meet at least four times annually, or more frequently as circumstances dictate. Meetings may be called by the chairman of the Committee or by the chairman of the Association Board. Minutes of the meetings shall be prepared and distributed to the Committee and the Association board. Minutes of the meetings shall be retained for minimum of three years. Minutes shall reflect the Audit Committees agreement or disagreement with all reviewed policies, procedures, and reports. Reports of meetings shall be made by the Committee chairman or his/her delegate to the board of directors at its next regularly scheduled meeting following the Committee meeting. In addition, the Committee chairman and other members of the committee shall be available to answer any questions the individual Association board members may have regarding the matters considered and actions taken by the Committee.
- Responsible for the appointment, compensation, retention, and oversight of the work of the independent auditor, who shall report directly to the Committee, (including resolution of disagreements between Association management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or performing other audit, review or attest services of the Association.
- Review the independent auditor’s annual engagement letter with the Chief Financial Officer.
- Consult with Association's legal counsel as the Committee may deem appropriate, in order to discharge its responsibilities and authorities. The Committee shall have the authority to engage independent counsel and other advisors as the Committee deems necessary to carry out its duties, with funding provided by the Association, as determined by the Committee, for (a) compensating any accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Association, (b) compensating independent counsel and other advisors engaged by the Committee, and (c) paying ordinary administrative expenses the Committee incurs in carrying out its duties. A two-thirds majority vote of the full board of directors is required to deny and/or override Audit Committee resource usage.
For the purpose of achieving the Committee’s objectives, the Committee shall have the following responsibilities. Unless otherwise authorized by an amendment to this Charter, the Committee shall not delegate any of its authority to any subcommittee.
- Financial Statement & Financial Reports:
- Evaluate the adequacy of Association administrative, operating and accounting policies through active communications with management, internal review, and the independent auditor.
- Review current regulatory, accounting or reporting developments, and any significant accounting changes with management and the independent auditor.
- Review, prior to issuance, quarterly and annual press releases of financial results as well as any interim press releases where financial results are discussed.
- Review and insure compliance with annual and quarterly regulatory certification to FCA and compliance with disclosure programs. Includes disclosure of any significant deficiencies or material weaknesses in the design or operation of internal financial reporting controls that may adversely affect the Associations ability to accurately record and report financial information; and disclosure of any fraudulent activity of management and other employees that have significant internal control responsibility.
- Receive from the independent auditors, a report of Association’s annual audited financial statement prior to distribution. The report should include discussions on all critical accounting principles and practices used by the institution, all material alternative accounting treatments of financial information and other material written communications between the independent auditor and management, such as management letters, schedule of unadjusted differences, reports on observations and recommendations on internal controls, a listing of adjustments and reclassifications, and the independent auditor’s independence letter.
- Review with management and the independent auditors the effect of off-balance sheet arrangements that could have current or future effect on financial conditions, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources, and earnings press releases and other reports or written or electronic materials, including material posted on websites of the Association disclosing “pro-forma” or “adjusted non-GAAP information.”
- Review each quarterly or annual report of the Association prior to its dissemination to the public. Committee minutes will reflect agreement or disagreement with the financial reports.
- Independent Auditor
- Periodically review and discuss with management of the Association and the independent auditor the Association’s disclosure controls and procedures.
- Meet periodically with (or receive communications from) the independent auditors to review their annual audit plans and receive reports based on their audit activity.
- Pre-approve allowable non-audit services to be provided by the independent auditor to the Association, and receive written certification on an annual basis that they are not providing any prohibited non-audit services to the association.
- Review and determine there are no restrictions or limitations being placed on the independent auditors by management.
- Internal Reviewer
- Review and approve the annual audit plans developed and recommended by the internal review function.
- Ensure the internal reviewer has a direct reporting relationship to the audit committee of Association board of directors.
- Approve the performance standards, performance evaluation, and compensation of the internal reviewer. Consult with the board of directors on appointment, replacement, or dismissal of the internal reviewer.
- Review and approve the budget, staffing, and organizational structure of the internal review function.
- Review and determine there are no restrictions or limitations being placed on the internal reviewer by management.
- Internal Controls
- Evaluate the adequacy of the Association’s internal accounting control by review of written reports from the internal and independent auditors. Review all reports and findings resulting from the internal review function’s independent evaluation of the systems of internal control and continuing operations. Monitor management’s response and actions to correct any noted deficiencies.
- Review, along with the Association board, all examination reports of the association issued by the Farm Credit Administration and monitor management’s response to the reports.
- Oversee the Association's system of internal controls, including those controls relating to the Association’s compliance with applicable laws and regulations or relating to the preparation of each quarterly or annual report.
- Establish and maintain procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters and for the confidential, anonymous submission of concerns regarding questionable individual Association accounting or auditing matters.
- Review the process for communicating the standards of conduct to each individual Association personnel and for monitoring compliance therewith.
- Review, on at least an annual basis, with management and the independent and internal auditors, compliance with the Association’s code of ethics.
- Call for executive sessions with the Association’s internal and independent auditors regularly.
- Perform an annual self-evaluation of the Committee’s performance and annually reassess the adequacy of and, if appropriate, propose to the board of directors, any desired changes in, the Committee’s Charter.
- Prepare annually a report for the Association board of directors that summarizes the work performed by the Committee to discharge its responsibilities and authorities.
The Committee shall have access to all books, records, facilities, and personnel of the Association.