While the Committee has the responsibilities and powers set
forth in this Charter, it is not the Committee's duty to plan or conduct
audits or to determine that the University's financial statements are
complete, accurate, and in accordance with generally accepted accounting
principles. Management is responsible for the preparation, presentation, and
integrity of the University's financial statements and for the
appropriateness of the accounting principles and reporting policies used by
the University. The independent auditors are responsible for auditing the
University's financial statements.
The following shall be the principal duties and
responsibilities of the Committee. These are set forth as a guide with the
understanding that the Committee may modify or supplement them as
• Be directly responsible for the appointment,
compensation, and retention of the University's independent auditor. Evaluate
annually the qualifications and performance of the independent auditors.
Ensure that the independent auditor assigns the appropriate industry experts
to the audit engagement. The independent auditor shall have direct access to
• Review with management, the independent auditors,
and the internal auditors their judgments about: the quality -- not just the
acceptability -- of the University's accounting principles, the consistency
in the application of accounting policies, the reasonableness of significant
judgments, the degree of aggressiveness or conservatism in applying the
accounting principles, and the clarity and completeness of the financial
statements and related disclosures.
• Confirm with management and the independent auditor
that the annual financial statements disclose all material off-balance sheet
transactions, arrangements, obligations, and other relationships of the
University with unconsolidated entities or other persons that may have a
material current or future effect on: financial condition, changes in
financial condition, results of operations, liquidity, capital expenditures,
capital resources, or significant components of revenues or expenses.
• Review and approve the annual financial statements
of the University and the audit report on Federal Awards received by the
University as required by OMB Circular A-133.
• On an annual basis, assess the independence of the
independent auditor by reviewing a letter issued by the independent auditor
under Independence Standards Board Standard No. 1 and discuss any
relationships disclosed that may impact auditor objectivity and independence.
• On an annual basis, obtain a report from the
independent auditor regarding required communications under Statement of
Auditing Standards No. 61, as amended. Review with the independent auditor:
• Any significant difficulties encountered during the
course of the audit, any restrictions on the scope of work or access to
required information, and any significant disagreements among management and
the independent auditor in connection with the preparation of the financial
• Any formal communications between the audit team and
the auditor's national office regarding auditing or accounting issues.
• Any letters issued addressing internal controls,
business process improvements, or other recommendations, and the schedule of
unadjusted differences (if any) prepared by the auditor.
• Important accounting policies and practices used by
the University, all alternative treatments of financial information within
generally accepted accounting principles, the ramifications of the use of such
alternative disclosures and treatments, and the treatment preferred by the
• Developments and emerging issues in the higher
education industry including ways to improve operations or business
• The Committee or its Chair shall pre-approve all
audit and non-audit services provided by the independent auditors. The
independent auditor is prohibited from performing the following non-audit
• Financial information systems design,
implementation, or operation
• Appraisal or valuation services, fairness opinions,
or contribution-in-kind reports
• Actuarial Services
• Internal audit outsourcing services
• Management functions or human resources
• Broker or dealer, investment advisor, or investment
• Legal services and expert services unrelated to the
• Preparing the indirect cost proposal or cost
• Other services that would violate the U.S. General
Accounting Office Independence Standard.
Services approved by the Chair should be reported to the
entire Committee at its next scheduled meeting.
• The Committee shall ensure proper rotation of the
lead and concurring audit partners on the University's engagement. (As
recommended by the Sarbanes-Oxley Act, the SEC now requires public companies
to rotate the lead and concurring audit partners every 5 years.)
• Review new and significant accounting
pronouncements, and understand their impact on the University's financial
• Review compliance with governmental laws and
• Obtain and review the annual internal control
certification letter signed by appropriate management personnel.
• Review and appraise the organizational structure,
adequacy of resources, qualifications, independence, and activities of the
University's internal audit department.
• Review and approve the three-year internal audit
• Review and concur with the appointment,
reassignment, or termination of the Director of Internal Audit.
• Periodically review the University's Internal Audit
charter for necessary changes.
• Receive a summary of findings from completed
internal audits and the status of implementing related recommendations.
• Receive a progress report on the internal audit plan
with explanations for any deviations from the original plan.
• Approve procedures for the receipt, retention, and
treatment of complaints received by the University regarding accounting,
internal accounting controls or auditing matters -- including procedures for
the confidential, anonymous submission by employees of concerns regarding
questionable accounting or auditing matters.
• Review exceptions on University policies and
procedures regarding executive expense accounts and procurement cards and
consider the results of any work in these areas by the internal or independent
• Inquire of management, the internal auditor, and the
independent auditor about significant financial, operational, compliance, and
reputational risks facing the University. These risks are defined as follows:
Loss of assets or resources. Also includes the reliability of the
University's internal and external reporting.
Effectiveness and efficiency of the University's operations and use of
Compliance with laws and regulations as well as compliance with
University policies and procedures.
Risks that affect the University's reputation or brand. Public relation
Assess the steps management has taken to mitigate such risks
• Obtain reports concerning any financial fraud
resulting in losses in excess of $10,000 or involving University Officers,
Deans, or Vice Presidents.
• Provide oversight regarding the University's
conflict of interest and code of conduct policies and related procedures.
• Review and assess the adequacy of this Charter on a
three-year basis or more frequently if deemed necessary.
The Committee is empowered to investigate any matter brought
to its attention with full access to all books, records, facilities, and
personnel of the University and with the authority to engage independent
counsel and other advisors if deemed necessary to carry out its duties at
A majority of the members of the Committee will constitute a
quorum for the transaction of business. The Committee shall maintain written
minutes of its meetings, which will be filed with the Secretary of the
Corporation. Reports of all meetings will be made to the Board of Trustees.
The Committee may request any trustee, officer, employee,
outside counsel, or independent auditor to attend a meeting of the Committee
or to meet with any members of, or consultants to, the Committee.
As part of its responsibility to foster open communication,
the Committee shall provide sufficient opportunity for the internal and
independent auditors to meet privately with the Committee. At least annually,
the Committee shall meet separately with the independent auditor, the
internal auditor and management.
The Audit Committee of the Board of Trustees adopted this
charter on May 13, 2005.