Loading...
HomeMy WebLinkAboutR2006-026FILEREFERENCEFORM R2006-026 X AdditionalFile Exists AdditionalFile Contains RecordsNot Public, Accordingtothe Public Records Act Other FILES Date Initials RescindedbyResolutionNo. R2009-015 06/16/09k S:\Our Documents\Reso1ution06\Audit Finance Committee.doc RESOLUTION NO.0 o A RESOLUTION OF THE CITY OF DENTON, TEXAS, AMENDING RESOLUTION NO. R2006-013 BY CHANGING THE NAME FROM AUDIT COMMITTEE TO AUDIT/FINANCE COMMITTEE; APPROVING A COUNCIL AUDIT/FINANCE COMMITTEE DIRECTIVE, BYLAWS OF THE AUDIT/FINANCE COMMITTEE, AND INTERNAL AUDIT CHARGE; AND PROVIDING AN EFFECTIVE DATE. WHEREAS, on April 18, 2006 the City Council approved Resolution No. R2006-013 establishing the Audit Committee to help insure independence in internal audit matters; and WHEREAS, it has been decided that the name of the Audit Committee be changed to Audit/Finance Committee; and WHEREAS, the City Council is of the opinion and hereby finds the establishment of the Audit/Finance Committee is in the public interest; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY RESOLVES: SECTION 1. The findings set forth in the preamble of this Resolution are incorporated by reference into the body of this Resolution as if fully set forth herein. SECTION 2. The City Council hereby amends Resolution No. R2006-013 and renames the Audit Committee to Audit/Finance Committee. The Committee will consist of the Mayor and two City Council members appointed by the City Council. The Audit/Finance Committee shall conduct its activities in accordance with Council Audit/Finance Committee Directive, Bylaws of the Audit/Finance Committee, and Internal Audit Charge, attached hereto and made a part hereof as Exhibits A, B, and C, respectively. SECTION 3. This Resolution shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of 2006. c PERRY McNEILL, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY BY: S:\Our Documents\Resolution06\AudilFinance Commiltee.doe APPROVED AS TO LEGAL FORM:EDWIN M. SNYDER, CITY TTORNEY BY: Page 2 of 2 City of Denton Aadit/nnance Committee Directive 1 ESTABLISHMENT The Audit/Finance Committee (Committee) is established in accordance to resolution number This Committee is a standing committee of the City Council (Council). This Directive establishes the responsibilities and explains the role of the Committee. 2 OBJECTIVE The primary objective of the Committee is to assist Council in fulfilling its organizational governance and oversight responsibilities relating to the audit function, and both financial and operational information and reporting practices. More specifically the Committee will: Assess financial data and basis of information for objectivity, consistency and reliability Enhance the independence and effectiveness of the Internal Audit Department (Internal Audit); Oversee the application of appropriate accounting and disclosure policies and procedures; Monitor existing organizational policies and recommend new policies to prohibit unethical, questionable or illegal activities; Provide a communication link between Management, internal auditors/extemal auditors and Council; Promote the need for public accountability of managers to Council, the tax and ratepayers and other interested parties; and Support measures to improve operational performance and internal controls. 3 RESPONSIBILITIES The Committee will work closely with Management and internal and external auditors to carry out its responsibilities. While Management has the primary responsibility for financial reporting, application and maintenance of internal controls, compliance with laws and regulations, and setting of ethical standards, the Committee will exercise an independent monitoring and reviewing role. The Committee will have unrestricted access to all information, including documents and personnel, and have adequate resources including the right to seek independent professional advice in order to fulfil its oversight responsibilities. 1 City of Denton Audit/Finance Committee Directive The responsibilities of the Committee include: 3.1 Internal Audit Activities Subsections 2.08(q)(r) and Section 2.13 of the City of Denton Charter the "Charter") authorize the Council to provide for the auditing and investigation of the municipal affairs of the City. To that end it is important that the City's internal audit function be independent and free from improper influence or coercion. The internal audit function is not an administrative function of the City contemplated by Section 5.03 of the Charter. Therefore, the prohibitions contained in Section 2.10 of the Charter are not applicable to the internal audit function. The Committee will establish, maintain and oversee Internal Audit and ascertain that the activities undertaken by Internal Audit are in accordance with the Internal Audit Charge. The Committee will review and approve the Annual Internal Audit Plan and monitor the planning and scope of Internal Audit activities, assessing findings, recommendations, and results of those activities. The Committee will review and concur in the appointment; replacement or dismissal of the Internal Auditor to ensure independence of the function is maintained. The Committee will monitor whether Internal Audit is receiving the cooperation of all levels of Management; and in light of its purpose and activities, is viewed as a governance function for Council. The Committee will assess whether all significant recommendations resulting from internal audits performed, have been properly implemented by Management. The Committee will review, monitor and assist in the minimization of operational risk by assessing the effectiveness of the control environment established by Management. 3.2 Financial and Operational Oversight It is understood that Management retains the authority and responsibility to direct and formulate data and information regarding financial information, including data, reports and forecasts. The Committee will provide financial oversight by reviewing financial reports or data that is being put before Council for decision-making purposes to ensure its integrity and completeness. Further, the Committee will review significant accounting, operational and reporting issues and assess their impact on the financial and operating results, and will assess the overall affect on the system of internal controls. 2 City of Denton AuditTinance Committee Directive The Committee will provide oversight of the audit activities performed by the external auditors by reviewing the effectiveness of the annual audit, to ascertain whether emphasis is being placed on areas where the Committee, Management or the auditors believe special attention is necessary. Further, the Committee will review Management responses to external audit reports and the extent to which audit recommendations concerning internal accounting controls, and other matters, are implemented. 3.3 Reporting and Other Matters The Committee will assess whether Council is receiving reliable and timely Management information. This assessment will include detailed reviews of the proposed Annual Program of Services to ensure decisions and Management propositions are prudent and meet the overall organizational objectives. The Committee will periodically review the Ethics Policy for Elected and Appointed Officials and any other organizational policies related to ethics, code of conduct, conflict of interest, fraud and other sensitive issues that relate to setting the control climate within the organization. 4 MEMBERSHIP The Committee will consist of the Mayor and two additional Council members. The City Manager and Internal Auditor shall be non-voting ex officio members of the Committee. Other ex officio non-voting Committee members may be added by a majority vote of the full Committee. The Internal Auditor will be the staff liaison and provide assistance and guidance to the Committee. Council members on the Committee will be appointed based on their experience and ability to effectively guide the City in avoiding both financial and operational risk. 5 MEETINGS, RECORDS AND REPORTING STRUCTURE 5.1 The Committee shall meet at least quarterly. The Chair, with the assistance of Internal Audit, will set the date, time and place for the meetings. In addition, the Chair will call a meeting if requested to do so by any Committee member, the City Manager, or the Internal Auditor. 5.2 A quorum shall consist of two members. 5.3 Committee meetings will be posted in accordance with the Open Meetings Act, being Chapter 551 of the Government Code. 3 City of Denton Audit/Finance Committee Bylaws EXHIBIT B BYLAWS OF THE CITY OF DENTON AUDIT/FINANCE COMNUTTEE ARTICLE I: INTRODUCTION These Bylaws shall govern the actions of the City of Denton Audit/Finance Committee Committee), established by Resolution number and the Council Audit/Finance Committee Directive (Council Directive) of the City of Denton, in the regulation and management of its affairs. ARTICLE II: OBJECTIVES & RESPONSIBILITIES The objective and broad responsibilities of the Committee are stated in the Council Directive as: The primary objective of the Committee is to assist Council in fulfilling its organizational governance and oversight responsibilities relating to the audit function, and both financial and operational information and reporting practices. The Committee will work closely with Management and internal and external auditors to carry out its responsibilities. While Management has the primary responsibility for financial reporting, application and maintenance of internal controls, compliance with laws and regulations, and setting of ethical standards, the Committee will exercise an independent monitoring and reviewing role. The Committee will have unrestricted access to all information, including documents and personnel, and have adequate resources including the right to seek independent professional advice in order to fulfill its oversight responsibilities. 1 City of Denton Audit/Finance Committee Bylaws The Committee shall have the purposes stated in the Resolution and the Council Directive and shall exercise the following powers: 1 Internal Audit Activities According to the Council Directive, "Subsections 2.08(q)(r) and Section 2.13 of the City of Denton Charter (the "Charter") authorize the Council to provide for the auditing and investigation of the municipal affairs of the City. To that end it is important that the City's internal audit function be independent and free from improper influence or coercion. The internal audit function is not an administrative function of the City contemplated by Section 5.03 of the Charter. Therefore, the prohibitions contained in Section 2.10 of the Charter are not applicable to the internal audit function. The Committee will establish, maintain and oversee Internal Audit and ascertain that the activities undertaken by Internal Audit are in accordance with the Internal Audit Charge" The Committee may delegate any other powers to Internal Audit to assist in fulfilling the governance role. The Committee's oversight functions will be performed to assist Council, boards and commissions, and Management of the City of Denton, in providing efficient and effective services to the tax and ratepayers of the City. The Committee shall: 1.1 Monitor whether Internal Audit is receiving the cooperation of all levels of management and in light of its purpose and activities, is viewed as a governance function for Council. Ensure there are no unjustified restrictions or limitations put forth on the Internal Auditor in the performance of audits or reviews. 1.2 Review, monitor and assist in the minimization of operational risk. 1.3 Ensure appropriate systems of internal controls are established by City Management, including computerized information system controls and security, to detect and minimize financial and operational risks. This will allow the City to achieve its objectives within an acceptable level of risk. 1.4 Ensure that adequate procedures are in place to address any fraudulent or corrupt activities that may affect the City. 1.5 Approve the appointment, replacement or dismissal of the Internal Auditor as provided in the Internal Audit Charge (5.2). 2 City of Denton Audit/Finance Committee Bylaws 1.6 Approve job classifications, descriptions and pay ranges for the Internal Auditor, and any necessary staff or external assistance, for Internal Audit for submission to Council. 1.7 Ascertain that the activities undertaken by Internal Audit are in accordance with the Internal Audit Charge. 1.8 Review and approve the Annual Internal Audit Plan (Audit Plan), which shall be drafted by the Internal Auditor, and submitted to the Committee for approval annually in February, following the completion of the external audit. Assess whether resources available to Internal Audit are adequate to implement the Audit Plan. 1.9 Review the planning and scope of Internal Audit activities and assess the results, recommendations and findings of those activities. 1.10 Review and approve all financial, performance and self-assessment reports performed by Internal Audit. 1.11 Review responses and action plans submitted by audited City Management. 1.12 Assess whether all significant recommendations provided by Internal Audit have been properly implemented by Management. Any reservations the Internal Auditor may have about control risk, accounting and disclosure practices should be discussed by the Committee. 1.13 Review and approve the Internal Audit budget on an annual basis for submission to Council. 2 Financial and Operational Oversight The Council Directive provides that "It is understood that Management retains the authority and responsibility to direct and formulate data and information regarding financial information, including data, reports and forecasts. The Committee will provide financial oversight by reviewing financial reports or data that is being put before Council for decision- making purposes to ensure its integrity and completeness. Further, the Committee will review significant accounting, operational and reporting issues and assess their impact on the financial and operating results, as will assess the overall affect on the system of internal controls." 3 Ci1y of Denton Audit/Finance Committee Bylaws The Committee shall: 2.1 Confer with external auditors, and any other federal, state, or independent accountants/auditors/consultants retained by the City and discuss their timetable, audit plan and any issues noted regarding accounting policies or errors, control weaknesses, process efficiencies or issues arising with City personnel. 2.2 Review and confer with the external auditors to ensure financial compliance with accounting policies and procedures, and governing laws, rules and regulations. 2.3 Review the scope of the total audit activities with the external auditors, accountants or consultants. 2.4 Review and confer with the external auditors concerning the final financial statements prior to the approval by Council, taking to the Council any external audit comments or other Committee concerns. In particular the review should focus on: significant changes in accounting policies and practices; any major judgmental area; significant audit adjustments; and proposed departures from accounting standards. 2.5 Review the effectiveness of the annual audit, to ascertain whether emphasis is being placed on areas where the Committee, Management or the auditors believe special attention is necessary. 2.6 Review Management responses to external audit reports and the extent to which audit recommendations concerning internal accounting controls and other matters are implemented. 2.7 Review significant accounting, operational and reporting issues and understand their impact on the organization's financial and operational status. 2.8 Review, recommend and approve any significant accounting policy changes. 2.9 Review other financial reports or data that is being put before the Council for decision-making purposes to ensure its integrity and completeness. 4 City of Denton Audit/Finance Committee Bylaws 3 Reporting and Other Matters Perform other duties as stated in the Council Directive or otherwise delegated by Council which consist of the following: 3.1 Review the proposed Annual Program of Services (organizational budget) in detail to ensure decisions and Management propositions meet the overall organizational objectives and that information presented is based on objective, sound and reliable data. 3.2 Periodically review the Ethics Policy for Elected and Appointed Officials and any other organizational policies related to ethics, code of conduct, conflict of interest, fraud and other sensitive issues that relate to setting the control climate within the organization. 3.3 Determine whether Council is receiving reliable and timely Management information. 3.4 Report any matter to the Council and/or City Manager that the Committee considers appropriate. 3.5 Submit an annual report to the Council and City Manager, which shall include any recommendation for change to its responsibilities as written in these bylaws. ARTICLE III: MEMBERSHIP AND OFFICERS 4 Membership The Council Directive states: "The Committee will consist of the Mayor and two additional Council members. The City Manager and Internal Auditor shall be non-voting ex officio members of the Committee. Other ex officio non-voting Committee members may be added by a majority vote of the full Committee. The Internal Auditor will be the staff liaison and provide assistance and guidance to the Committee. Council members on the Committee will be appointed based on their experience and ability to effectively guide the City in avoiding both financial and operational risk." In order to assist it in its investigatory and auditing function, the Committee may solicit advise from persons internal or external to the organization with expertise in auditing and financial practices, or in a profession for which advice is being sought. 5 City of Denton Audit/Finance Committee Bylaws 5 Officers The officers of the Committee shall consist of a Chair and a Vice Chair as elected by the Committee. The officers shall be elected annually by the Committee at the first meeting following formal appointment of Committee members by Council. 6 Chair The Chair will be determined by the voting members of the Committee at the first meeting following official appointment by Council. The Chair shall be the principle executive officer and shall exercise general supervision and control over the affairs of the Committee. In addition, the Chair shall have such powers and duties as the Council may from time to time assign. The Chair has the power to sign correspondence and resolutions for the Committee. The Chair is also authorized to meet separately with the Internal Auditor and/or City Manager to discuss sensitive audits and investigations. 7 Vice Chair The Vice Chair shall be determined by the Committee at the first meeting following official appointment of Committee members by Council. The Vice Chair shall have the powers and shall perform the duties that the Committee and/or the Chair prescribe. If the Chair is absent or unable to fulfill their duties, the Vice Chair shall perform all duties and exercise all the powers of the Chair. ARTICLE IV: AUDIT/FINANCE COMMITTEE ADMINISTRATION 8 Meetings The Council Directive states, "The Committee shall meet at least quarterly. The Chair, with the assistance of Internal Audit, will set the date, time and place for the meetings. In addition, the Chair will call a meeting if requested to do so by any Committee member, the City Manager, or the Internal Auditor." A quorum shall exist when a majority of the voting members are present. The Committee may set meeting dates to accommodate special circumstances. No business, other than that on the agenda may be conducted at a meeting. 6 Ci1y of Denton Audit/Finance Committee Bylaws 9 Notification of Meetings Committee meetings will be posted in accordance with the Open Meetings Act, being Chapter 551 of the Government Code. 10 Voting Each member of the Committee shall have one vote. Members must be present at the time of the vote. Except as otherwise provided in the Council Directive and these bylaws, the act of the majority of the members present at a meeting, at which a quorum is present, is the act of the Committee. A quorum shall consist of two members. 11 Protocol To the extent not contrary to these bylaws, and the Council Directive, Roberts Rules of Order pertaining to small assemblies may be consulted regarding the conduct of Committee meetings. The Committee may convene into closed session when authorized by the Open Meetings Act. ARTICLE V: BOOKS AND RECORDS 12 Records Required The Committee shall keep correct and complete minutes of the open proceedings of all meetings. ARTICLE VI : AMENDMENT These bylaws may be repealed or amended, and additional bylaws may be adopted, by the recommendation of a majority vote of the full Committee and approval by Council. ARTICLE VII: SIGNATURE I HEREBY CERTIFY that the foregoing is a true, correct and complete copy of the Bylaws of the City of Denton Audit/Finance Committee, as in effect on this day of CHAIR, CITY OF DENTON AUDIT COMMITTTEE 7 City of Denton Internal Audit Charge 1 ESTABLISHMENT The Internal Audit Department (Internal Audit) was established to provide the City of Denton (City) with a comprehensive program of internal auditing as an overall internal control measure and a service to the City. 2 OBJECTIVE The primary objective of Internal Audit is to aid City Council (Council) and City Management (Management) in achieving City goals and objectives while minimizing undue risk. Internal Audit is a control that functions by measuring and evaluating the effectiveness of other City internal controls. Internal Audit shall assist the organization in meeting objectives by performing a variety of independent audit functions including financial, performance and compliance audits; risk assessment; and other evaluations as deemed necessary. 3 INDEPENDENCE 3.1 Internal Audit shall be free from control or undue influence in the selection and application of audit techniques, procedures and programs; the determination of facts revealed by the examination or in the development of recommendations or opinions; and the selection of areas, activities, personal relationships and managerial policies to be examined. 3.2 Internal Audit reports operationally to the Audit/Finance Committee Committee). When matters involving Management arise, or other matters as determined by the Internal Auditor, the Internal Auditor will have the right to call together only those members of the Committee that are not a part of Management. 4 AUTHORITY Internal Audit shall have the following authority: Unrestricted access to all City functions, records, property and personnel. Full and free access to the Committee. When matters arise that involve Management or other sensitive areas, the Internal Auditor may call together only the voting members of the Committee. Ability to allocate resources, set frequencies, select subjects, determine scopes of work and apply the techniques required to accomplish audit objectives. Access to review the findings and recommendations of examinations performed by regulatory agencies or other external entities. 1 City of Denton Internal Audit Charge Ability to perform unplanned internal audit projects/reviews throughout the year when determined necessary by Internal Audit, Management or the Council. However, if a proposed project may substantially change the Annual Internal Audit Plan (Audit Plan), a majority vote must be obtained from the voting members of the Committee to approve the performance of the project and the related change to the Audit Plan. 5 REPORT STRUCTURE 5.1 Administratively, and when independence is not compromised, Internal Audit will report directly to the City Manager. All administrative matters concerning work schedules, time off and performance evaluations will be handled by the City Manager. 5.2 Operationally, Internal Audit will report to the Committee. This will include approval of the appointment, replacement or dismissal of the Internal Auditor, as well as guidance and approval regarding the Audit Plan and audit work performed throughout the year. 6 RESPONSIBILITIES 6.1 Internal Audit is responsible for providing the Committee and Management information about the adequacy and effectiveness of its systems of internal controls and quality of operating performance when compared to established goals or standards. In doing so, Internal Audit will provide audit services and recommendations to assist Management in ensuring: Risks are appropriately identified and managed. Interaction among various departments occurs effectively and efficiently. Significant financial, managerial and operational information is accurate, reliable and timely. Employees' actions are in compliance with policies, standard procedures and applicable laws and regulations. Resources are acquired economically, used efficiently and adequately protected. Programs, plans and objectives are achieved. Quality and continuous improvement are fostered in Management's control processes. Significant legislative or regulatory issues affecting the City are recognized and addressed. 6.2 Internal Audit will be responsible for developing and implementing a flexible annual Audit Plan to include any risks or control concerns identified by Management or the Committee. The Audit Plan is submitted to the Committee for review and approval. 2 City of Denton Iuteraal Audit Charge 6.3 Internal Audit will conduct financial and performance audits in accordance with Government Auditing Standards as promulgated by the United States General Accounting Office. 6.4 A professional audit staff will be maintained with sufficient knowledge, skills, experience and professional certifications to ensure the requirements of this Charge are achieved. 6.5 Follow-up reviews will be performed to monitor and ensure that Management actions have been effectively implemented or that Management has accepted the risk of not taking action. 6.6 The Internal Auditor will provide periodic reports to the Committee summarizing results of audit activities. Further, Internal Audit will ensure significant suspected fraudulent activities within the City are investigated and Management and the Committee are notified of the results. 6.7 Internal Audit will assist the Audit/Finance Committee in their responsibility to hire, direct and provide oversight of the External Audit and related contracts or any other related services. 6.8 It is not the responsibility of Internal Audit, but rather that of Management to resolve issues noted during any Internal Audits performed and implement new procedures and processes necessary to ensure the efficient and effective operation of City functions. Further, it is the responsibility of Management to ensure proper internal controls are implemented and functioning properly throughout City operations. 7 AUDIT RECORDS ACCESSIBIIdTY Only reports and other audit records that are required to be made public under the Public Information Act will be made public, unless public disclosure is authorized by the Council. 3