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 Council expense.
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 four 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 “observer”
status.
5 Roles and Responsibilities
The Committee has no executive powers, except those
expressly delegated to it by the Council.
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 Council’s financial and business
risks, including fraud;
5.1.2. Review whether management, supported by
the Council, has established a culture
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 Council’s
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 management’s
approach to 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. Review
the 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 Council’s 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. Review
the 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 Council’s 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 Council’s 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 management’s 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
management’s 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 Committee’s 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 Chairperson of the
Audit Committee following a reasonable request from a 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 Council’s 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 Council’s
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 Committee’s annual report to the
Council.
