The Audit Committee is concerned with University policies and issues related to audits of financial affairs and management operations.
Committee Members, 2018-2019
- Gina A. Adams, Chair
- Peter L. Scher, Vice Chair
- Janice Menke Abraham
- Gary M. Abramson
- Gaurdie Banister
- Jack C. Cassell
- Charles H. Lydecker
- Cabinet Members:
- CFO, Vice President and Treasurer Douglas Kudravetz
- Campus Representatives:
- Faculty Senate
- In odd-numbered academic years, the Student Government President or President-designated Student Government member. In even-numbered academic years, the Graduate Leadership Council.
The Audit Committee is responsible on behalf of American University (University) for assuring that the University's organizational culture, capabilities, systems and processes are appropriate to protect the financial health and the reputation of the University in all of the audit-related areas enumerated below. More particularly, the Audit Committee will review the financial reporting processes, the system of internal controls, the audit process, and the University's process for monitoring and ensuring good compliance with laws and regulations. It will monitor the University's internal and external auditors' findings with regard to the University's capability and performance in all audit areas and will monitor actions to assure that appropriate corrective actions are taken when deficiencies are identified.
The following are excerpts addressing committee organization from the American University By-Laws (Article VII: Standing Committees, as amended May 14, 2004):
Section 1. The Standing Committees shall be as follows: Academic Affairs Committee; Audit Committee; Campus Life Committee: Compensation Committee; Development Committee; Finance and Investment Committee; and Trusteeship Committee.
Section 2. Nominations of Standing Committee officers and members for two-year terms shall be made by the Trusteeship Committee at the Spring Board meeting. The Vice Chair of the Board shall be the Trusteeship Committee Chair, and Trusteeship Committee members shall be appointed by the Board or Executive Committee. Vacancies on Standing Committees shall be nominated by the Trusteeship Committee and approved by the Board or Executive Committee for any unexpired term. Vacancies on the Trusteeship Committee shall be filled by the Board or Executive Committee.
. . .
Section 6. The Audit Committee consists of at least four (4) trustees and is concerned with University policies and issues related to audits of financial affairs and management operations. At the end of each fiscal year, it reviews the annual audit made by a Certified Public Accountant and reports to the Board or Executive Committee.
Roles and Responsibilities
- Assure that management is setting the appropriate tone in communicating the importance of internal control and ensuring that all individuals have an understanding of their roles and responsibilities and also that the systems are in place and being followed to ensure good compliance with internal control procedures;
- Determine whether internal control recommendations made by internal and external auditors have been implemented by management; and
- Ensure that internal and external auditors keep the Audit Committee informed about fraud, illegal acts, deficiencies in internal control, and other audit-related matters.
- Review with management and the external auditor significant accounting and reporting issues, including recent professional and regulatory pronouncements, and understand their impact on the University's financial statements; and
- Review significant risks and exposures and the plans to minimize such risks.
Annual Financial Statements:
- Review the audited financial statements with the external auditor and determine whether they are complete and consistent with the information known to committee members.
- Ensure that the external auditors communicate all matters required by their professional standards to the Audit Committee.
- Review and ensure that American University has the appropriate structure, staffing and capability to effectively carry out the internal audit responsibilities;
- Appoint, replace, or dismiss the internal auditor; and
- Review and confirm the priorities and key action plans of the internal audit function.
- Following appropriate consultation with management, select and retain the University's external auditors, and approve the external auditors' fees;
- Review the performance of the external auditors and recommend the appointment or discharge of the external auditors;
- Review and confirm the external auditors' assertion of their independence in accordance with professional standards; and
- Review and approve any engagement of the external auditors for non-audit related consulting services.
Compliance with Laws and Regulations:
- Review the effectiveness of the system for monitoring compliance with laws and regulations and the results of management's investigation and follow-up (including disciplinary action) on any fraudulent acts or other irregularities;
- Regularly obtain updates from management and General Counsel regarding significant changes in legal and compliance issues;
- Be satisfied that all regulatory compliance matters have been considered in the preparation of the financial statements; and
- Review the findings of any significant examinations by regulatory agencies.
- Meet with the external auditors, internal auditors, and management in separate executive sessions to discuss any matters that the Committee or these groups believe should be discussed privately;
- Meet with the Chief Financial Officer (CFO) in executive session to discuss any matter that the Committee or CFO believe should be discussed privately;
- Ensure that significant findings and recommendations made by the internal and external auditors are received, discussed and acted upon in an appropriate and timely manner;
- Review administration of the Whistleblower Policy and investigate any complaint referred to the Board of Trustees, including any related to the officers of the university;
- Regularly receive from General Counsel a summary of whistleblower complaints and disposition;
- Review, on a quarterly basis, university officers' travel and entertainment expenses;
- Review, with the University's counsel, any legal matters that could have a significant impact on the University's financial statements;
- Perform other oversight functions as requested by the University; and
- Review and update the Audit Committee charter; receive approval of changes from the University.
- Regularly update the full Board about Audit Committee activities and key issues presided over by the Committee.
Updated September 2018