1. School Board Audit Committee Training Module 7 Evaluation of the Audit Committee 1

2. 2 Session objectives After completing this session you will: Have a refresher on the highlights of the audit committee regulation Understand why evaluation of the audit committee is important Understand how self evaluation works

3. 3 Understand the Highlights of Regulation 361/10 There are 15 main sections of Ontario Regulation 361/10: Interpretation – Who it applies to – Definitions – external auditor, internal auditor, reporting entity, senior business official Establishment of audit committee Composition of audit committee – No later than January 31, 2011 – First meeting no later than March 31, 2011 – Provisions where boards are created after regulation is enacted – Less than 8 board members = 2 trustees, 2 non-trustees – 8 or more, but less than 15 board members = 3 trustees, 2 non-trustees – 15 or more board members = 4 trustees, 3 non-trustees

4. 4 Understand the Highlights of Regulation 361/10 Eligibility for non- trustees – Accounting, financial management or other relevant business experience – Not an employee of the school board at the time of appointment – No conflicts of interest at time of appointment – Identified by selection committee Selection committee Chair of the audit committee – To identify external members – Composed of Director of Education, Senior Business Official and Chair of the Board or member designated by the Chair – Elected chair at the first meeting of the audit committee each year – Members may elect a chair for a meeting where the chair is not present

5. 5 Understand the Highlights of Regulation 361/10 Term of appointment – Trustee  not to exceed 4 years – Non-trustee  not to exceed 3 years – Non-trustees may not be appointed to the audit committee more than twice unless: – The position was advertised for > 30 days; and – After 30 days, the selection committee didn’t identify any potential candidates Vacancies – All committee members if: – Convicted of an indictable offence – Unauthorized absences from 2 consecutive regular meetings – Non-trustees only if: – Becomes an employee of the school board – Discovery of conflict of interest at time of appointment

6. 6 Understand the Highlights of Regulation 361/10 Duties – Financial reporting process – Internal controls – Internal audit – External audit – Compliance and ethics – Risk management Powers – With prior board of trustees approval, retain counsel, accountants or other professionals – Meet with any person necessary to carry out duties – Meet with external and internal audit in private – Require internal and external auditors to provide reports to the committee – Have access to all records of the board reviewed by internal or external audit

7. 7 Understand the Highlights of Regulation 361/10 Meetings – Minimum 3 meetings per year, or more at call of Chair – First meeting must be before March 31, 2011 – In subsequent years, first meeting must be before June 30th Remuneration and compensation – No remuneration for participation on audit committee – Excludes provision for attendance at meetings and reimbursement of out of pocket expenses to attend Code of conduct – Any code of conduct of the school board that applies to trustees, also applies to audit committee members who are not trustees

8. 8 Understand the Highlights of Regulation 361/10 Declaration of conflicts – Written declaration upon appointment and at the first meeting each year – Potential benefits  declare and withdraw from the meeting during the discussion and shall not vote on the matter Reporting – 1 st report (annual report) – Annual and multi-year internal audit plan – Description of changes made to plans – Summary of internal audit work performed – Summary of risks identified and findings of Internal auditor – 2 nd report – Summary of work performed since last report – Assessment of the school board’s progress in addressing audit findings – Summary of matters addressed by the committee – Attendance record of members

9. 9 Audit Committees are accountable for their own governance and, as such, they need mechanisms to assess their performance Audit Committee evaluations help ensure that the governance structure and processes remain strategically aligned with the realities of the School Board The activities of the audit committee should be assessed in relation to its mandate The primary role of the Audit Committee is to assist the Board of Trustees in fulfilling its duties related to governance and oversight Ontario Regulation 361/10 requires the audit committee to report annually on the committee’s performance of its duties Why Evaluation is Important

10. 10 A well crafted performance assessment process can provide a number of benefits to the Audit Committee: Prioritizing the Audit Committee agendas and meeting structure to focus on the most critical issues Shifting compliance oversight into the time between live meetings Revisiting the timing, level of detail, and quality of materials provided by management Identifying topics for continuing education Self evaluation should aid the audit committee in assessing its strengths and weaknesses and lay a foundation for future improvement An evaluation performed in a routine manner, without a plan to act upon the results, does not lead to continuous improvement Why Evaluation is Important Source: Deloitte: Audit Committee Resource Guide

11. 11 The Ministry has provided an Audit Committee Self-Assessment questionnaire on its website. (See also copy in toolkit) The audit committee self-assessment covers the following topics: −Composition and quality −Understanding the business, including risks −Policies and procedures −Oversight of the financial reporting process −Oversight of the audit function −Ethics and compliance −Monitoring activities How Does Self Evaluation Work

12. 12 Each Audit Committee member to complete a self assessment questionnaire When completing the evaluation, consider the following process: −Select a coordinator (i.e. Chair of the audit committee) −Establish a timeline for the process −Consider asking the Regional Internal Audit Manager, Chair of the Board of Trustees, Director of Education, Superintendent of Business, etc. to also provide feedback −Consolidate the results into a summarized document for discussion and review by the committee, and ultimately report to the Board of Trustees How Does Self Evaluation Work

13. 13 Exercise Refer to the sample audit committee self-assessment in your toolkit, and perform a self assessment of your current audit committee. Discuss the areas of strength and areas for improvement amongst your table group.