Item 11.4 - Attachment 2

Audit Committee Charter (Version 4)

 

 

PARRAMATTA CITY COUNCIL

AUDIT COMMITTEE CHARTER

(Version 4)

 

CONTENTS

Introduction

2

Objective

2

Authority

2

Composition of the Council Audit Committee

2

Roles and Responsibilities

3

5.1.Effective Management of Operational and Financial Risks

3

5.2.Appropriate Corporate Governance Framework

3

5.3.Control Framework

4

5.4Reliable Management Plan Reporting

4

5.5.Reliable Management and Financial Reporting

4

5.6.Compliance with Laws and Regulations

4

5.7.Internal Audit

5

5.8.External Audit

5

6.Reporting

6

7.Administration

6

8.Professional Development

7

9.Termination of Membership

7

10.Assessment Arrangements

7

11.Review of the Audit Committee Terms of Reference

7

 

 


Item 11.4 - Attachment 2

Audit Committee Charter (Version 4)

 

 

1††††††† Introduction

 

Parramatta City Council has established the Audit Committee (the Committee) under Section 355 of the local Government Act 1993.This Charter outlines the objectives, authority, composition, roles and responsibilities, reporting and administrative arrangements of the Audit Committee.

 

2††††††† Objective

 

The primary objective of the Committee is to provide independent assurance and assistance to the Council on the risk, control and compliance framework.††

 

3††††††† Authority

 

The Council authorises the Committee, within the scope of its role and responsibilities, to:

 

3.1. obtain any information it needs from any employee and/external party (subject to their legal obligation to protect information);

 

3.2. discuss any matters with the external auditor, or other external parties (subject to confidentiality considerations);

 

3.2. request the attendance of an employee, including Council members, at committee meetings; and

 

3.4.††† obtain external legal or other professional advice, as considered necessary to meet its responsibilities at the Councilexpense.

 

4††††††† Composition of the Council Audit Committee

 

The Audit Committee will comprise such members as are appointed by the Council including three current serving Councillors and two independent community representatives.Independent community representatives will be appointed on a triennial basis following a public self-nomination process.The Chairman of the Committee will be a community representative as elected by the Audit Committee.

 

The Secretary to the Committee shall be such person as nominated by the Council.

 

Members may be appointed for an initial period not exceeding three years after which they will be eligible for extension or re-appointment, after a formal review of their performance. The initial appointment of Councillors to the Audit Committee will be for the balance of their Council term.

 

The Chief Executive Officer and other senior managers as appropriate may be invited to attend meetings as observers, or to provide information, as determined by the Chair.

 

A representative from the external audit service provider and the Internal Auditor may be invited to attend meetings.They will have ďobserverĒ status.

 

 

 

 

 

 

5††††††† Roles and Responsibilities

 

The Committee has no executive powers, except those expressly delegated to it by theCouncil.

 

The Committee is directly responsible and accountable to the Council for the exercise of its responsibilities.

 

The responsibilities of the Committee may be revised or expanded in consultation with, or as requested by, the Council from time to time and include:

 

5.1.Effective Management of Operational and Financial Risks

 

5.1.1.††††††† Review whether management has in place a current and comprehensive risk management framework, and associated procedures for effective identification and management of the Councilís financial and business risks, including fraud;

 

5.1.2.††††††† Review whether management, supported by the Council, has established aculture of managing risk throughout the Council , including setting the right tone from the top, risk management in decision-making and setting parameters on acceptable levels of risk and the associated costs of different course of action.

 

5.1.3.††††††† Review whether a sound and effective approach has been followed in developing strategic risk management plans for major projects;

 

5.1.4.††††††† Review the impact of the Council risk management framework on its control environment and insurance arrangements;

 

5.1.5.††††††† Satisfying itself as regards the integrity and prudence of the Council management control systems, including the review of policies and/or practices;

 

5.1.6.††††††† Reviewing whether a sound and effective approach has been adopted and has been followed in establishing the Council business continuity planning arrangements; and

 

5.1.7.††††††† Review the Council Corruption prevention plan to satisfy itself that there are appropriate processes and systems in place to capture and investigate and corruption.

 

5.2.Appropriate Corporate Governance Framework

 

5.2.1.††††††† Monitoring the application of the Code of Conduct to the activities of the Council.

 

5.2.2.††††††† Review the effectiveness of the Councilís Code of Conduct, including the tone from the top, and the systems for employee protection and responses to ethical issues.

 

5.2.3.††††††† Review whether management has taken steps to embed a culture which is committed to ethical and lawful behaviour.

 

5.2.4.††††††† Monitor the level and issues raised in relation to Protected Disclosures being considered by the Council Management.

 

5.3.Control Framework

 

5.3.1.††††††† Review whether managementís approachto maintaining effective control frameworks, including over external parties such as contractors and advisors, is sound and effective;

 

5.3.2.††††††† Review whether management has in place relevant policies and procedures, and that these are periodically reviewed, updated and compliance is periodically checked;

 

5.3.3.††††††† Review whether appropriate policies and procedures are in place for the management and exercise of delegations; and

 

5.3.4.††††††† Review whether management has taken steps to embed a culture which is committed to ethical and lawful behaviour.

 

5.4.Reliable Management Plan Reporting

 

5.4.1.††††††† Review the Council accounting policies and practices in the light of the legislative provisions applying to Council, NSW Local Government reporting requirements, accounting standards and generally accepted accounting principles;

 

5.4.2.††††††† Reviewthe Draft Management Plans and Quarterly Reports.

 

5.4.3.††††††† Satisfy itself that the Draft Management Plans and Quarterly Reports are supported by appropriate management review and signoff of significant variances;

 

5.4.4.††††††† Ensure that management are prepared for changes to accounting standards

 

5.5.Reliable Financial Management and Financial Reporting

 

5.5.1.††††††† Review the Councilís accounting policies and practices in the light of the legislative provisions applying to Council, NSW Local Government reporting requirements, accounting standards and generally accepted accounting principles;

 

5.5.2.††††††† Reviewthe annual financial statements before submission to the Council;

 

5.5.3.††††††† Satisfy itself that the financial statements are supported by appropriate management signoff on the statements and that appropriate action has been taken on audit recommendations and adjustments;

 

5.5.4.††††††† Ensure that an appropriate external audit of the Council financial statements is conducted on an annual basis.

 

5.5.5.††††††† Ensure that management are prepared for changes to accounting standards

 

 

 

 

5.6.Compliance with Laws and Regulations

 

5.6.1.††††††† Determine whether management has appropriately considered legal and compliance risks as part of the Council risk assessment and management arrangements; and

 

5.6.2.††††††† Review the effectiveness of the system for monitoring the Councilís compliance with relevant laws, regulations and associated government policies.

 

5.6.3.††††††† Monitor any likely or actual litigation and the process for notification to the Council.

 

5.6.4.††††††† Review the Councilís response to compliance failures.

 

5.7.Internal Audit

 

5.7.1.††††††† Act as a forum of communication between the Council, senior management and internal and external audit;

 

5.7.2.††††††† Review the internal audit coverage and draft annual work plan, ensuring that the plan is based on an effective risk management plan, and endorse approval of the plan by the General Manager;

 

5.7.3.††††††† Oversee the co-ordination of audit programs conducted by internal and external audit and ensure that there are no unjustified restrictions or limitations placed on the auditors by management;

 

5.7.4.††††††† Advise the Council on the adequacy of internal audit resources to carry out its responsibilities, including completion of the approved internal audit plan;

 

5.7.5.††††††† Ensure that the scope of audits is adequate and that there is a minimum of duplication between internal and external audit.In so doing ensuring that emphasis is placed on areas where the Committee, management or the auditors believe special attention is necessary;

 

5.7.6.††††††† Review all audit reports and provide advice to the Council on significant issues identified in audit reports and action taken on issues raised;

 

5.7.7.††††††† Monitor managementís implementation of internal audit recommendations;

 

5.7.8.††††††† Review the internal audit charter to ensure appropriate organisational structures, authority, access and reporting arrangements are in place;

 

5.7.9.††††††† Reviewing the performance of the Internal Audit function and consulting with the Chief Executive Officer in the appointment of the Internal Auditor.

 

5.7.10.††† Approve the scope of an external assessment, or equivalent internal assessment, of the internal Audit Function every 5 years.

 

 

 

 

 

 

5.8.External Audit

 

5.8.1.††††††† Act as a forum of communication between the Council, senior management and internal and external audit;

 

5.8.2.††††††† Provide input and feedback on the financial statement and any performance audit coverage proposed by external audit;

 

5.8.3.††††††† Review all reports and monitor managementís implementation of audit recommendations;

 

5.8.4.††††††† Ensure that there are no unjustified restrictions or limitations placed on the auditors by management;and

 

5.8.5.††††††† Provide advice to the Council on action taken on significant issues raised in relevant external audit reports and better practice guides;

 

6††††††† Reporting

 

6.1††††††† Provide Audit Committee minutes and briefings by the Audit Committee Chairperson to the Council at the next available meeting;

 

6.2††††††† Prepare an annual report for the Council which:

 

  summarises the work performed by the Committee to fully discharge its ††duties

  details the number of meetings held during the year and the attendance of each member; and

  includes a summary of the Audit Committeeís annual assessment of its performance.

 

6.3†††††† The Committee may, at any time, report to the Council any matter it deems of sufficient importance to do so. In addition, at any time an individual member may request a meeting with the Lord Mayor.

 

6.4††††††† The Chairperson of the Audit Committee may meet privately with the Internal Auditor and/or the External Auditor at any time.

 

7††††††† Administration

 

7.1†††† The Committee will hold such meetings as the Chairperson shall decide in order to fulfil the Committee's duties, but will meet not less than four times annually.

 

7.2†††† Special meetings may be held to consider the adoption of the draft management plans and draft annual financial statements and the audit report from the auditors.

 

7.3†††† Special meetings of the Audit Committee will be called by the Chairpersonof the Audit Committee following a reasonable request froma member of the Committee, the Chief Executive Officer, or by Resolution of Council.

 

7.4†††† The Secretary of the Committee, in conjunction with the Chairperson, shall be responsible for circulating the meeting agenda and associated documentation, to Committee members five working days prior to each meeting.

 

7.5†††† The Secretary of the Committee will also be responsible for keeping the minutes of meetings of the Committee and circulating them to Committee Members (after Chair approval) within ten working days of the Committee meeting.

 

7.6†††† A quorum shall be a majority of Committee members, one of whom must be a Councillor.

 

7.7†††† With the agreement of the Chair, members may participate in a meeting by telephone, closed circuit television or other appropriate means of communication.

 

7.8†††† The Committee may require staff to attend meetings and assist the Committee as required from time to time.

 

7.9†††† Audit Committee members shall abide by Councilís Code of Conduct and relevant policies at all times.

 

7.10†† Audit Committee members must keep all discussions during meetings in confidence and comply with Councilís policy regarding public comment and talking to the media.

 

7.11†† Audit Committee members must declare conflicts of interest at the start of each meeting.

 

7.12†† Details of any conflicts of interest should be appropriately minuted. Where members have a real or perceived conflict of interest, they will be excused from Committee deliberations on the issue where a conflict of interest arises.

 

8††††††† Professional Development

 

Ensure that Committee members are trained and updated on their responsibilities and knowledge requirements.

 

9††††††† Termination of membership

 

Committee membership can be terminated either by:

 

  The term of the appointment of the member expires; or

  The Member resigns in writing to the Lord mayor; or

  The member is removed by a resolution of Council; or

  The member misses three consecutive meetings without an apology.

 

10††††† Assessment Arrangements

 

The Chair of the Committee, in consultation with the Lord Mayor, will initiate a review of the Committee annually.

 

11††††† Review of the Council Audit Committee Terms of Reference

The Committee will review the continuing relevance of the Charter on an annual basis (generally at its December meeting).Where changes are deemed necessary they will be submitted to the Council for endorsement and will be highlighted in the Committeeís annual report to the Council.