HomeMy WebLinkAboutTR-91-81 ((3)
Report to the Chairman & Members of the General Purpose and Administration Committee
meeting of November 23, 1981.
Report No. TR-91-81
Subject: Establishment and Function of an Audit Committee
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Recommendation:
It is respectfully recommended that:
1. General Purpose and Administration Committee sit as
aud-i�- committee at least twi'ce a year to discuss with the
external auditors those matters which are of concern to
both parties and how such concerns might be resolved; and
2. The two meetings be convened, if required, as an interim
review after the completion of the interim audit and
as a final review after completion of the year end audit
and filing of the financial statements and reports; and
3. A review be undertaken in a (f,uture)year to determine if
external members would provide for better operation of the
audit committee,
Background:
In response to a comment in the 1981 post audit letter and the concerns
of Council Members , the Staff have researched the establishment and use of an audit
committee and offer the following comments for the consideration of the committee
members.
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Comment:
The main functions of an audit committee are set out below:
(a) Involvement in the selection of the external auditors; and
(b) Involvement in the evaluation of the services which have been provided
by the external auditor and the associated fees on a regular basis; and
(c) Review of the timing and scope of the annual audit; and
(d) Review and discussion of the interim and final post audit letters and
associated financial statements and reports with the view to internal
control system changes etc. ; and
(e) Provide a forum for direct discussion and contact by the external auditors ,
which is separate and apart from the appointed administrative staff,
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TR-91-81
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Comment: cunt"d. . . . ,
These function can be well performed by the committee sitting in special
session. The dialogue which takes place in these sessions is benefical to all parties
concerned.and appraises everyone of the financial health of the Municipality.
Since a municipal corporation's "executive" branch is an elected body, the
committee members ' actions are subject to constant public scruntiny, This is unlike
other corporate bodies which are not so much in the public eye, and therefore may
require an external audit committee to offer that scrutiny of its actions.
The auditors have recommended an external audit committee, as an ideal .
Whether it would be an asset in this particular coporation's setting is a matter
subject to much debate. The audit committee,with corporations of all types, is a
relatively new structure and is still evolving and trying to find its proper place
and functions. The important factor is that an "audit committee" , in some form
exist, and that it provides the necessary forum for discussion.
With the many system changes and updating which is required within the Town's
admi'nistrati've structure, we question the advisability of an external audit committee
at this time, Of the various municipal corporations within the Region of Durham, no
corporation presently has an external audit committee, Rather, the committees which
exist, function much as that which presently exists in the Town of Newcastle, as
a committee comprised of Council Members. The auditors have no difficulty in dealing
with these bodies and recommend it as an initial step in a full audit committee
format. . Therefore, at this time, we have made the recommendations set before you
with regard to the establishment and functions of an audit Committee within the
Town of Newcastle.
Respectfully submitted,
Kathryn Campbe -1 , C.A. , B.Com. ,
IVTreasure
10 11 81
R81-AF-1