BC.0.6 Finance and Audit Committee Charter
- Scott Barge (Deactivated)
Eastern Mennonite University
Board of Trustees
Finance and Audit Committee Charter
Purpose
The Finance and Audit Committee is appointed by the Board to assist in safeguarding and monitoring the University's financial stability and long term economic health. The Committee serves as the Board's principal forum for the consideration of matters relating to the University's business operations, administration, budgeting, financing, and financial reporting. The Committee assists in monitoring the independent registered public accounting firm's qualifications and independence, the performance of the annual audit, and compliance by the University with regulatory and legal requirements. On a regular basis the Committee provides the Board with complete financial overviews of the University and recommends policies and procedures governing the funding of yearly operational plans and the financing of long-term capital needs. The committee is also responsible for supervising planning for University facilities and making recommendations to the Board on matters related to (a) the long-term physical development of the University; (b) the design, construction, and renovation of new of existing facilities; and (c) the budgeting and cost control for construction and renovation projects. It shall also review policies and make recommendations with respect to the maintenance and operation of buildings and the care of the grounds.
The committee may, at its discretion, contract with attorneys, accountants, consultants, and other experts from time to time to assist in its oversight role.
Committee Membership
The Board will annually appoint at least three individuals to serve on the committee and will select one of these members to serve as committee chair. Each committee member must be independent of management of the institution and free of any relationship that would impair such independence. Members may not receive consulting, advising, or other fees from the institution or any affiliated foundation or entity related to the institution.
The majority of the committee members should have working knowledge of basic financial statements, and if practicable, at least one member should be a financial expert. A financial expert is someone who has an understanding of generally accepted accounting principles (GAAP) and financial statements and experience with internal control and procedures for financial reporting.
The University's chief financial officer serves as staff and primary liaison to the committee. The director of finance or a designee serves as recording secretary for the committee.
The President of the University and the Chair of the Board are entitled to attend meetings of the Committee and to participate in all Committee discussions.
Meetings
The Finance and Audit Committee shall meet as often as it determines. The audit committee shall meet at least annually with the independent registered public accounting firm to review the audited financial statements and will meet in executive session with the auditors to discuss pertinent matters. The audit committee may request any officer of the University or the Universities' outside counsel, independent registered public accounting firm, or consultant to attend any meeting of the committee.
Committee Responsibilities
Financial Operations/Budget: The committee is responsible for keeping informed on, considering proposals for, and making recommendations with respect to the general business affairs and financial organization of the University, including the internal and external debt structure of the University. The Committee tracks University revenues and expenditures and ensures that they meet financial expectations. The Committee reviews and makes recommendations to the Board on the University's annual budget process. The Committee reviews and makes recommendations to the Board on fiscal policy, spending, and revenue sources of the University, with a view to ensuring the University's effective operation and long-term financial health.
Each fiscal year the Committee reviews and makes recommendations to the Board on the annual operating budget of the University, including associated tuition and fee scheduled, to ensure that funds are administered in accordance with the policies of the University and the Board. It is the Committee's obligation to evaluate the assumptions upon which the University's proposed budget rests, including assumptions about tuition rates, compensation and benefit increases, and other variables. In performing its duties, the Committee maintains effective working relationships with the President and members of the President's Cabinet responsible for the preparation of the proposed annual budget and with other Board committees with responsibilities that impact the University's financial condition and budget. \
Audit: The Committee shall have the sole authority to appoint or replace the independent registered public accounting firm. The Committee shall be responsible for the oversight of the annual financial audit and shall review the institution's accounting and financial reporting controls with senior management and outside auditors. The Committee shall receive and review the institution's annual financial reports and forward them with recommendations to the full Board. The Committee shall also review with senior management and the auditor's the management letter and any recommendations or corrective actions necessary as a result of the audit. The annual audit includes an opinion related to the University compliance with federal funds regulations. The Committee will review any findings or management letter comments related to compliance with these programs. The Committee shall also review the IRS Form 990 and all of its disclosures. The Committee shall review and discuss with management and the auditors the effect of any significant regulatory or accounting principles, practices, and procedures applied by the institution in preparing its financial statements, or any changes expected thereto.
Investment/Endowment Management: The committee has the responsibility to monitor and make recommendations to the full board concerning the management and oversight of investments by a third-party investment pool or manager. The committee monitors the overall investment performance, asset allocation, and expenses.
Risk Management: The committee monitors formal risk-management programs for finance, compliance, and reputational risks including reports on major financial risks and the institution's risk management activities, a summary of conflict of interest reports, and an annual report of significant outstanding and resolved litigation. The Committee will review annually the Conflict of Interest Policy and review with the full board to ensure compliance with the policy.
Capital Projects/Debt: The Committee reviews and makes recommendations to the Board on the University's plans for capital projects, construction, maintenance, expansion, renovations, leasing, repairs or development of the University's land, infrastructure, or physical facilities. The Committee reviews and makes recommendations to the Board on the University's plans for incurring debt. The Committee reviews and makes recommendations to the Board on the University's annual capital budget and the University's capital plan. The Committee shall review, offer advice upon, and recommend actions concerning plans, programs, and construction operations of the University's campus, including all buildings, landscape development, and new construction. The Committee shall review plans and provide advice on the acquisition of real estate within the boundaries established from time to time by the Board of Trustees.
Communication to the Board: One of the Committee's principal responsibilities is to keep the Board fully informed on the University's financial condition. The Committee takes appropriate steps to ensure that all Board members understand the significance of all financial statements and reports as well as underlying assumptions. Committee members have an obligation to become knowledgeable about general higher education financial accounting practices and to be sure that policy discussions conducted at the Board level are informed and transparent.
Limitation of Committee's Role: While the Finance and Audit Committee has the responsibility and power set forth in this charter, it is not the duty of the Committee to plan or conduct audits or determine that the Company's financial statements and disclosures are complete and accurate and are in accordance with generally accepted accounting principles and applicable rules and regulations. These are the responsibilities of management and the independent registered public accounting firm.
Review of Charter
This charter shall be reviewed and reassessed periodically by the Finance Committee, and any proposed changes shall be submitted to the Board of Trustees for approval.
Approved and Adopted: June 2015