The following responsibilities supplement the Audit Committee's charge contained in the USNH Bylaws.
In fulfilling its responsibilities, the Committee shall take appropriate actions to set an overall tone for quality financial reporting, sound business practices, and ethical behavior.
1. Ensure the Integrity of Financial Reporting:
(a) Review and approve the annual financial statements of USNH and receive and review the audit reports thereon, including those pertinent to Federal awards received by USNH as required by the U.S. Office of Management and Budget.
(b) Review the judgments of USNH management and auditors about the quality and consistency of the USNH's application of accounting principles; the reasonableness of significant judgments; and the clarity and completeness of the financial statements and related disclosure.
(c) Confirm with management and the external auditor that the annual financial statements disclose all material off-balance sheet transactions, arrangements, obligations, and relationships of USNH with unconsolidated entities or persons that may have a material current or future effect on financial condition, liquidity, or components of revenues or expenses.
(d) Review new and significant accounting pronouncements with the external auditor and understand their impact on the USNH financial statements.
(e) Obtain a report from the external auditor annually regarding required communications under the American Institute of Certified Public Accountants' standards.
2. Oversee the External Audit Process:
(a) Recommend to the Board the appointment or retention of the external auditor for USNH, and be responsible for the compensation and oversight of the external auditor. In accordance with the Board of Trustees' External Audit Policy, the external auditor shall be engaged from among the major national public accounting firms, subject to the Board’s continuing satisfaction with the firm’s services and with re-proposals to be reviewed after each five to seven year period.
(b) Ensure rotation of the lead audit partner on the audit engagement at least every seven years, independent of the timing of the external audit firm's initial or subsequent engagements.
(c) Pre-approve all audit and non-audit services provided by the external auditors in excess of $30,000 and ensure such services do not include management functions, internal audit services, or other services prohibited by independence standards for the auditing profession, including those standards established by the U.S. Government Accountability Office. External auditor services approved by the Chairperson between Committee meetings shall be reported to the entire Committee at its next scheduled meeting.
(d) Assess the independence of the external auditor on an annual basis by reviewing the written communication from the external auditor required by professional auditing standards and discussing any relationships disclosed that may impact auditor objectivity and independence.
(e) Resolve disagreements between management and the external auditor regarding financial reporting.
3. Oversee the Internal Audit Process:
(a) Review and appraise the organizational structure, qualifications, independence, budget, and activities of the USNH internal audit department.
(b) Review and approve the annual internal audit plan and receive interim progress reports on the plan.
(c) Review and concur with the appointment, reassignment, or termination of the Director of Internal Audit.
(d) Periodically review USNH's Internal Audit Charter for necessary changes.
(e) Receive reports of completed internal audits prior to each meeting, and at least annually receive updates on the status of management's actions in response to significant findings from prior reports.
4. Oversee Risk Management Processes:
(a) Inquire of management, the internal auditor, and the external auditor about significant financial and compliance risks or exposures to USNH, and assess the steps management has taken to mitigate such risks or exposures.
(b) Review and accept the USNH Environmental Health and Safety Council's annual report on behalf of the Board.
(c) Review areas of risk assigned to the Audit Committee by the Executive Committee for further review or other follow-up based on annual enterprise risk reports from the System’s chief executive officers.
(d) Monitor adherence to USNH conflict of interest policies and related procedures.
(a) Provide for the confidential, anonymous submission by employees and other USNH constituents of concerns related to questionable accounting, auditing, or business practices.
(b) Obtain reports concerning any financial fraud resulting in losses in excess of $10,000 or involving a member of senior management.
(c) Maintain open lines of communication between the Committee and the USNH external auditor, internal auditor, and management.
(d) Review and assess the adequacy of this Charter on an annual basis and recommend any changes to the Board.