[HISTORY: Adopted by the Town Council of the Town of New Canaan 5-21-2014. Amendments noted where applicable.]
As used in this chapter, the following terms shall have the meanings indicated:
- FINANCIAL EXPERT
- An individual who has substantial audit experience in the corporate or government sectors and who possesses or obtains a basic understanding of governmental financial reporting and auditing.
- Any Town officer or employee of the Town or Board of Education.[Added 2-10-2016]
- TOWN BODIES
- Collectively, the Town Council, the Board of Selectmen, the Board of Finance and the Board of Education.
There shall be an Audit Committee of three regular members, and two alternate members, who shall be electors of the Town and who shall each be a financial expert. The members shall serve without compensation and shall hold no other office of trust or emolument in the Town government or serve on any other committees of the Town government. No member may accept any consulting, advisory or other compensatory fee from the Town, nor shall a member have had any material financial relationship (i.e., any transaction involving $5,000 or more in any year) with the Town in the three years prior to appointment to the Committee.
Within 30 days after this chapter shall become effective, the Board of Selectmen shall appoint members of the Committee as follows:
Except for the initial appointments as hereinbefore stated, all subsequent appointments of members and alternate members by the Board of Selectmen shall be made for a term of three years to begin on December 1 each year. Members may serve for no more than three successive three-year terms or part thereof.
Each member, after qualification, shall hold office from their initial appointment and until a successor has been appointed and shall have qualified. In the event of a vacancy due to death, resignation or removal, within 60 days of such vacancy the Selectmen will appoint a successor member of the Committee. There shall be minority representation on the Committee in accordance with § 9-167a of the General Statutes. No appointment to the Committee, for a full term or to fill a vacancy, shall be effective unless confirmed by an affirmative vote of seven members of the Town Council.
On or promptly after the first day of December in each year the Audit Committee shall meet at the call of the First Selectman to choose one of its members to be Chairman and one of its members to be Secretary. The Chairman shall, when present, preside at all meetings of the Committee and shall have a vote as a member thereof. In the absence of the Chairman or Secretary, as the case may be, the Committee shall choose one of its members Chairman pro tempore or one of its members Secretary pro tempore. Two members shall be a quorum for the transaction of business at any meeting. Alternate members, when seated as provided herein, shall have all the powers and duties of regular members of the Committee. Alternate members shall have no vote, and shall not count towards a quorum or for other purposes, unless seated for a regular member. In the event of the absence of a regular member from a meeting of the Committee, or if a regular member is disqualified, such absent or disqualified member shall designate an alternate to act in his or her place. In the absence of such designation, the Committee, by majority vote of those members present and voting, shall designate and seat an alternate or alternates.
The Secretary shall file in the office of the Town Clerk agendas and minutes of all meetings of the Committee, including the votes of each member on all actions taken.
The Committee shall prepare and send an annual report of its activities to the Town Bodies within 60 days after filing of the financial statements with the State Office of Policy and Management.
The Committee shall have full authority:
To investigate any matters directly related to the purposes of the Committee, on its own motion or brought to its attention with full access to all books, records (except such records that are confidential under state or federal law), facilities and personnel of the Town and Board of Education; and
To request any officer or employee of the Town and Board of Education, the Town's and Board of Education's legal counsel, internal auditor, independent auditors or other consultants to attend a meeting of the Committee or to meet with any members of, or consultants to, the Committee.
The purpose of the Audit Committee is to assist the Town Bodies in fulfilling their oversight responsibilities relating to: 1) the integrity of the Town's financial statements, financial reporting processes and systems of internal accounting and controls; 2) the annual independent audit of the Town's financial statements, the engagement of the independent auditors and the evaluation of the independent auditors' qualifications, independence and performance; 3) compliance with legal and regulatory requirements that could materially impact the Town's financial statements; 4) the evaluation of enterprise risk issues; and 5) overseeing the Town's plan for corrective action which should include appropriate and timely follow-up measures. In performing the Committee's duties, members may reasonably rely upon management to prepare financial statements in accordance with applicable standards and to maintain an effective system of internal controls that provide reasonable assurances regarding the reliability of financial reporting.
Acting as an ad hoc committee with the First Selectman and the Chairman of the Town Council, the members of the Committee shall recommend to the Town Council annually one or more independent accounting firms qualified to perform the annual audit of the Town (See Town Charter § C5-27, System of Accounting). The ad hoc committee shall review and recommend to the Town Council the fees to be paid to the independent auditors, including in connection with any non-audit services. The ad hoc committee shall oversee, evaluate and, where appropriate, recommend to the Town Council the replacement of the independent auditors.
The Committee shall receive reports, from time to time, from the independent auditors regarding their independence, and shall discuss such reports with the auditors, if necessary, to satisfy itself of the independence of the auditors.
The Committee shall meet with the independent auditors during the annual audit period to discuss the overall scope of the audit plan, including the adequacy of staffing and other factors that may affect the effectiveness and timeliness of the audit. The Committee shall also discuss with management and the independent auditors the Town's risk exposures (whether financial, operating or other), the adequacy and effectiveness of the accounting and financial controls, and the steps management has taken to monitor and control such exposures and manage legal compliance programs, among other relevant considerations.
The Committee shall review with management and the independent auditors the annual financial statements of the Town, including their judgment about the reasonableness of significant judgments, the clarity of the disclosures in the financial statements and the adequacy of internal controls. Based on such review and discussion, the Committee shall make a determination whether to recommend to the Town Council the acceptance of the audited financial statements. In addition, the Committee may make recommendations, if any, to the Town Bodies regarding the following: i) Annual audited financial statements; ii) Management letter submitted by the independent auditor; iii) Response to the management letter submitted by Town CFO/BoE Finance Director; and iv) Financial management policies. The Committee shall review periodically with management and the independent auditors the effect of new or proposed regulatory and accounting initiatives on the Town's financial statements.
The Committee shall meet with the independent auditors to discuss any problems or difficulties the auditors may have encountered in connection with the annual audit or otherwise and any management letter provided by the auditors and the Town's response to that letter. Such meeting shall address any difficulties encountered in the course of the audit work, including any restrictions on the scope of activities or access to required information, any disagreements with management regarding generally accepted accounting principles and other matters, material adjustments to the financial statements recommended by the independent auditors and adjustments that were proposed but passed regardless of materiality.