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Establish an Audit Committee

RESOLUTION TO ESTABLISH AN AUDIT COMMITTEE FOR _______ COUNTY

WHEREAS, Tennessee Code Annotated (T.C.A.) Section 9-3-405, encourages county governments to establish an independent Audit Committee, and provides that the Tennessee Comptroller of the Treasury (Comptroller) may require an Audit Committee in counties that (1) are in noncompliance with the accounting and financial reporting standards required by the Governmental Accounting Standards Board or (2) have recurring findings from the annual audit for three or more consecutive years that are determined by the Comptroller’s office to be a material weakness in internal control or material noncompliance with government auditing standards; and

WHEREAS, the Comptroller and the Government Finance Officers Association of the United States and Canada recommends that all county governments establish an Audit Committee as a best practice and to assist the County Commission in the oversight of the public funds and financial reporting process; and

WHEREAS, the _______ County Commission realizes the need, especially in today’s current environment of fewer available resources, for increased transparency and accountability of public funds, and that the County Commission is ultimately responsible for ensuring that management is meeting its internal control and financial reporting responsibilities; and

WHEREAS, the County Commission finds it to be in the best interests of _______ County to establish an Audit Committee;

NOW THERFORE BE IT RESOLVED by the County Commission of _______ County, meeting this _____ day of _______________, 20___, that:

SECTION 1. Pursuant to the provisions of T.C.A. § 9-3-405, the County Commission of _______ County does hereby establish an Audit Committee to provide independent review and oversight of the county’s financial reporting processes and the county’s internal controls, a review of the external auditor’s report and follow up on management’s corrective action, and compliance with laws, regulations, and ethics.

SECTION 2. The Audit Committee will consist of ____ (__) members [no fewer than three members], to be comprised of members of the County Commission, citizens of _______ County, or a combination of both. To insure the committee’s independence and effectiveness, no Audit Committee member will be an elected official (with the exception of elected County Commissioners), employee, spouse of an official/employee, or person that comingles assets with an official/employee of _______ County. While committee members need not be accountants, they should possess sufficient knowledge and experience in finance, business, and accounting to discharge the committee’s duties. The members of the Audit Committee shall be appointed by the County Commission to staggered ____(__) year terms. To establish staggered terms, the initial members of the

committee shall be appointed so that half of the members serve ___ year terms and half serve ___ year terms. Thereafter all members shall be appointed to serve ____ year terms.

SECTION 3. Meetings of the Audit Committee shall be held in accordance with the provisions of T.C.A. § 9-3-405. Meetings shall be subject to the open meetings provisions of T.C.A. Title 8, Chapter 44, except that upon a majority vote of those members in attendance for the public portion of a meeting, the Audit Committee may hold confidential, nonpublic executive sessions to discuss the following items as authorized in T.C.A. § 9-3-405:

(1) Items deemed not subject to public inspection under T.C.A. §§ 10-7-503 and 10- 7-504, and all other matters designated as confidential or privileged;

(2) Current or pending litigation and pending legal controversies;

(3) Pending or ongoing audits or audit related investigations;

(4) Information protected by federal law; and

(5) Matters involving the reporting of illegal, improper, wasteful, or fraudulent activity under T.C.A. § 9-3-406, where the informant has requested anonymity.

The Audit Committee will follow Roberts Rules of Order. Each year at its first meeting, the committee will elect a chairman, vice-chairman, and secretary. Meeting agendas will be prepared by the chairman and provided in advance to members along with appropriate briefing materials. Minutes of the Audit Committee meetings will be filed in the Office of County Clerk.

SECTION 4. The committee shall have access to the services of a financial expert, either through a committee member or an outside party engaged by the committee for this purpose. Such financial expert should, through both education and experience, and in a manner specifically relevant to the county government sector, possess (1) an understanding of generally accepted accounting principles and financial statements; (2) experience in preparing or auditing financial statements of comparable entities; (3) experience in applying such principles in connection with the accounting for estimates, accruals, and reserves; (4) experience with internal accounting controls; and (5) an understanding of Audit Committee functions.

SECTION 5. The duties and responsibilities of the Audit Committee are:

(a) To carefully review, upon completion of the county’s annual audit, all audit findings in audit report and consult with the external auditors regarding any irregularities and deficiencies disclosed in the annual audit. The Audit Committee is empowered to meet with management to discuss audit findings and/or disagreements with the external auditors. The committee should satisfy itself that appropriate and timely corrective action

has been taken by management to remedy any identified weaknesses. The committee should determine what corrective action, if any, should be recommended to the County Commission.

(b) To consider the effectiveness of the internal control system, including information technology security and control, review the effectiveness of the system for monitoring compliance with laws and regulations, and review the process for communicating the county’s ethics policies to county personnel and monitoring compliance therewith.

(c) To establish a process by which employees, taxpayers, or other citizens may confidentially report suspected illegal, improper, wasteful or fraudulent activity under provisions of T.C.A. § 9-3-406.

(d) To annually present a written committee report detailing how it discharged its duties and any committee recommendations to the full County Commission.

SECTION 6. The Audit Committee will be adequately funded to carry out the duties and responsibilities as set out in this Resolution and under applicable law.

SECTION 7. This resolution creating the duties and responsibilities of the Audit Committee has been submitted to the Comptroller prior to approval by this legislative body, and this resolution conforms with the report issued by the Comptroller.

Adopted this ____ day of __________, 20___.

APPROVED:

__________________________ County Mayor

A TTEST

_________________________ County Clerk