1.12 Audit Committee Charter
This Audit Committee Charter has been adopted by the Board of Trustees of the Illinois Municipal Retirement Fund. The Audit Committee of the Board shall review and reassess this charter annually and recommend any proposed changes to the Board for approval.
Purpose
To assist the Board of Trustees in fulfilling its oversight responsibilities for the financial reporting process, the system of internal control over financial reporting, the internal and external audit process, and the Fund's process for monitoring compliance with laws and regulations and the Board’s Ethics Code and Travel Policy. Other duties may be assigned to it by the Board.
Authority
The audit committee has authority to conduct or authorize investigations into any matters within its scope of responsibility. It is empowered to: Retain outside counsel, accountants, or others to advise the committee or assist in the conduct of an investigation. Seek any information it requires from employees--all of whom are directed to cooperate with the committee's requests--or external parties. Meet with Fund directors, internal auditors, external auditors, or outside counsel, as necessary.
Composition
The audit committee will consist of at least three members of the Board of Trustees. The president of the Board will appoint and the full Board will approve committee members, the committee chair, and vice-chair for one-year terms. The members of the audit committee collectively shall possess the expertise and experience in accounting, auditing, and financial reporting needed to understand and resolve issues raised by the internal and external auditors. Each committee member will be both independent and financially literate, as determined by the Board of Trustees.
Meetings
The committee will meet at least twice a year, with authority to convene additional meetings, as circumstances require. Meetings are subject to the Open Meetings Act. All committee members are expected to attend each meeting, in person or via teleconference or videoconference. The committee will invite members of management, auditors or others to attend meetings and provide pertinent information, as necessary. It may hold private meetings with auditors and executive sessions. Meeting agendas will be prepared and provided in advance to members, along with appropriate briefing materials. Minutes will be prepared. The internal auditor or the external auditor may request to meet privately with the committee if there are significant matters involving the office of the executive director or any other part of the organization or if the executive director has failed to respond to recommendations of either the internal or external auditors.
Responsibilities
The committee will carry out the following responsibilities:
Financial Statements
- Review significant accounting and reporting issues, including complex or unusual transactions and highly judgmental areas, and recent professional and regulatory pronouncements, and understand their impact on the financial statements.
- Review with management and the external auditors the results of the financial statement audit, including any difficulties encountered.
- Review the annual financial statements, and consider whether they are complete, consistent with information known to committee members, and reflect appropriate accounting principles.
- Review other sections of the annual report before release and consider the accuracy and completeness of the information.
- Review with management and the external auditors all matters required to be communicated to the committee under generally accepted auditing standards.
- Review with management and the external auditors any reports on any additional work for which the external auditors have been engaged.
Internal Control
- Consider the effectiveness of the Fund’s internal control over annual and interim financial reporting, including information technology security and control.
- Understand the scope of internal and external auditors' review of internal control over financial reporting, and obtain reports on significant findings and recommendations, together with management's responses.
- Inquire of management, the internal and external auditors about significant risks or exposures and assess steps management has taken to minimize such risk to the Fund.
Internal Audit
- Review with management and the internal auditor the charter, the annual internal audit plan, activities, staffing, and organizational structure of the internal audit function.
- Ensure there are no unjustified restrictions or limitations, and review and concur in the appointment, replacement, or dismissal of the internal auditor.
- Review the effectiveness of the internal audit function, including compliance with professional standards for the practice of internal auditing.
- Review with management and the internal auditor significant findings during the year and management’s responses.
- On a regular basis, meet separately with the director of internal audit to discuss any matters that the committee or internal audit believes should be discussed without management present.
External Audit
- Review the external auditors' proposed audit scope and approach, including coordination of audit effort with internal audit.
- Review the performance of the external auditors, and exercise final approval on the appointment or discharge of the auditors.
- Review and confirm the independence of the external auditors by obtaining statements from the auditors on relationships between the auditors and the company, including non-audit services, and discussing the relationships with the auditors.
- On a regular basis, meet separately with the external auditors to discuss any matters that the committee or auditors believe should be discussed without management present.
Compliance
- 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) of any instances of noncompliance.
- Review the findings of any examinations by regulatory agencies, and any auditor observations.
- Review the process for communicating the Ethics Code and Travel Policy to Fund personnel, and for monitoring compliance therewith.
- Obtain regular updates from management and Fund legal counsel regarding compliance matters.
Reporting Responsibilities
- Regularly report to the Board of Trustees about committee activities, issues, and related recommendations.
- Provide an open avenue of communication between internal audit, the external auditors, and the Board of Trustees.
- Review any other reports the Fund issues that relate to committee responsibilities.
Other Responsibilities
- Perform other activities related to this charter as requested by the Board of Trustees.
- Institute and oversee special investigations as needed.
- Confirm annually that all responsibilities outlined in this charter have been carried out.
- Evaluate the committee's and individual members' performance on a regular basis.