[Added 2-9-2016 by Ord. No. 2016-3]
The Mayor, in collaboration with the City Council, hereby sets out to create a Financial Audit Advisory Committee to assist the City in the review of audit and fiscal accountability matters. The Financial Audit Advisory Committee will advise the Auditor, through the Mayor, and has as its purpose to allow and encourage the Auditor to devote more time to fiscal accountability matters, and thereby elevate the importance of fiscal accountability through strong internal controls, budgetary and other legal compliance, accurate and timely financial reporting and a culture of ethical behavior. The Financial Audit Advisory Committee will assist and advise the Mayor and the Auditor in exercising its oversight responsibilities for the financial reporting process to ensure transparency and integrity, effective systems of internal control, auditing, and monitoring of compliance with laws and regulations.
A. 
The Financial Audit Advisory Committee shall consist of five members as follows:
(1) 
Two members of the City Council, to be appointed by the Council President, who shall serve at the pleasure of the Council President.
(2) 
Two citizens of the City with financial expertise appointed by the Mayor. Financial expertise may include the person having completed a program of learning in accounting or auditing; having experience as a principal financial officer, comptroller, public accountant or auditor; having experience overseeing or assessing the performance of companies, nonprofits or municipal organizations or accountants with respect to the preparation of financial statements; or having other relevant experience. For example, the person may have an understanding of generally accepted accounting principles (GAAP) and financial statements; the ability to apply such principles in connection with the accounting for estimates, accruals, and reserves; experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that can reasonably be expected to be raised by the City's financial statements, or experience actively supervising one or more persons engaged in such activities; and an understanding of internal controls and procedures for financial reporting.
(3) 
One School Committee member, appointed by the Mayor upon the recommendation of the School Committee, who shall serve at the pleasure of the Mayor, as Chairperson of the School Committee.
B. 
The Mayor shall be the Chairman of this Audit Committee, ex officio and may, at his pleasure, appoint any other member of the committee to be Chairman. Initial citizen terms shall be staggered as follows: one for a term of one year and one for a term of two years. Thereafter, each citizen appointment shall be for a term of three years. No citizen member shall be eligible to serve as a member for more than two consecutive full terms, not counting any initial one- or two-year term appointment.
The Committee is expected to meet at least four times a year, customarily on the Wednesday following the fourth Monday of the month. The Committee may invite members of the Executive Department, management, auditors, or others to attend meetings and provide pertinent information, as necessary. It may hold meetings with auditors and, when appropriate, with the City Administrator, the Chief Financial Officer, the Auditor, the Corporation Counsel, or others. City employees shall attend such meetings upon request.
A. 
The Financial Audit Advisory Committee will advise and assist the Auditor, acting through the Mayor, by:
(1) 
Recommending to the Mayor appointment of a registered public accounting firm to be employed by the City for auditing and financial review.
(2) 
Assisting in oversight of registered public accounting firms employed by the City for auditing and financial review.
(3) 
Assisting in resolving any disagreements between the City and the Auditor regarding financial reporting.
(4) 
Pre-approving auditing and non-audit services by outside firms.
(5) 
Advising the Auditor as to when and whether it is appropriate to request funding from the Mayor to retain independent counsel, accountants, or others to advise the Financial Audit Advisory Committee.
(6) 
Requesting information from employees or external parties.
(7) 
Meeting with City officials, external auditors, or outside counsel, as necessary.
B. 
The Financial Audit Advisory Committee will report and make recommendations to the Mayor. The Mayor will receive and, if appropriate, act upon recommendations from the Financial Audit Advisory Committee.
C. 
In its advisory function, the Committee will carry out the following responsibilities:
(1) 
Financial statements: obtain from Auditor and/or external auditors information on significant accounting and reporting issues, including complex or unusual transactions and highly judgmental areas, and recent professional and regulatory pronouncements, and understand their impact on the financial statements.
(a) 
Review the external annual financial statements, and consider whether they are complete, consistent with information known to committee members, and reflect appropriate accounting principles.
(b) 
Review with City officials and the external auditors all matters required to be communicated to the committee under generally accepted auditing standards.
(c) 
Review draft external financial reports with appropriate City officials and City management and the external auditors before filing, and consider whether they are complete and consistent with the information known to committee members.
(2) 
Internal control: consider the effectiveness of the City's internal control systems, including information technology security and control.
(a) 
Evaluate areas of significant risk or exposure facing the City; assess the steps City officials have taken or propose to take to minimize such risks; and periodically review compliance with such steps.
(b) 
Understand the scope of external auditors' review of internal control over financial reporting, and obtain reports on significant findings and recommendations, together with City's management responses.
(c) 
Review with the Executive and School Departments the policies and procedures with respect to use of appropriated monies and funds within its control.
(3) 
External audit: review the external auditors' proposed audit scope, approach, and fees, including coordination of audit effort with internal employees.
(a) 
Review the performance of the external auditors, and make recommendations as to the appointment, replacement, reassignment, or dismissal of the external auditors.
(b) 
Review and confirm the independence of the external auditors by obtaining statements from the auditors on relationships between the auditors and the City, including non-audit services, and discussing the relationships with the auditors.
(c) 
Establish a regular schedule for periodically discussing whether to rebid the audit contract with an outside CPA firm.
(d) 
Review with City officials and the external auditors the results of the audit, including any difficulties encountered.
(e) 
Review the City's responses to the audit.
(f) 
Review with the independent auditor all critical accounting policies and practices used and alternative treatments of financial information within generally accepted accounting principles.
(g) 
On a regular basis, meet with the external auditors to discuss any matters that the committee or auditors believe should be discussed.
(4) 
Compliance: review the effectiveness of the system for monitoring compliance with laws and regulations and the results of City management's investigation and follow-up (including disciplinary action) of any instances of noncompliance.
(a) 
Review the findings of any examinations by regulatory agencies, and any auditor observations.
(b) 
Review the procedures for the receipt, retention, and treatment of complaints (including confidential or anonymous ones) received by the City regarding accounting, internal accounting controls, auditing matters, or suspected fraud that may be submitted by internal or external parties; as well as assisting any City official with review of any complaints that have been received, current status, and resolution.
(5) 
Reporting responsibilities: report regularly to the Mayor and City Council Finance Committee about committee activities, issues, and related recommendations; provide an open avenue of communication between the Auditor, the external auditors, the Executive Branch, the City Council, and the School Committee on financial and audit matters.
(6) 
Other responsibilities: perform other activities related to this division as requested by the Mayor.
(a) 
Assist in any special investigations relating to the Financial Audit Advisory Committee's scope of responsibilities, as requested.
(b) 
Review and assess the adequacy of these Financial Audit Advisory Committee purposes and duties annually, requesting Mayor's approval for proposed changes, and appropriate disclosure as may be required by law or regulation.
(c) 
Report annually confirming that the responsibilities outlined in these purposes and duties have been carried out.