• Effective Audit Committee Guide

“The independent audit committee fulfills a vital role in… governance. The audit committee can be a critical component ensuring quality reporting and controls, as well as the proper identification and management of risk…Its critical role as guardian of …integrity puts the audit committee at the core of the challenge of governance.”

Report of the NACD

The NACD Blue Ribbon Commission on the Audit Committee recommends the following principles that it believes provide “a foundation for engaged, effective audit committee oversight”:
 
  1. Be proactive in focusing the agenda on what’s important – financial reporting risk – and make the most of audit committee meetings.
  2. Insist on transparency, both external transparency and internal transparency – among the audit committee, management, and the internal and external auditors.
  3. Focus closely on external financial communications – beyond the financial statements.
  4. Question the continuing validity of assumptions that underlie critical accounting judgments and estimates, and be up-to-speed on key financial reporting issues and developments affecting the organization.
  5. Assess the audit committee’s role in the oversight of risk management, with an eye to clarifying the scope.
  6. Set clear expectations for the external and internal auditors.
  7. Make sure the CFO and the entire finance organization, as well as internal audit, have what they need to succeed, and be sensitive to the strains on these organizations.
  8. Assess the tone at the top and throughout the organization, including the effectiveness of compliance and anti-fraud programs.
  9. Help link change and risk management, and monitor critical alignments (controls and risks).
  10. Take a hard look at the audit committee’s effectiveness, including its composition and leadership, and find ways to continuously improve.
Although the commission focused on audit committees from a business context, a well-functioning audit committee is important to every nonprofit organization as well – for the very same reasons noted.
Source: “2010 Report of the NACD Blue Ribbon Commission on The Audit Committee.”

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Andrea Espinola Wilson.
Andrea Wilson Managing Partner; Industry Specialty Services National Co-Leader, Nonprofit & Education Practice 703-752-2784
Adam Cole
Adam Cole Managing Partner 212-885-8327
Laurie De Armond.
Laurie De Armond Assurance Office Managing Partner; Institute for Nonprofit Excellence Executive Director 703-336-1453
Marc Berger
Marc Berger National Director, Nonprofit Tax Services 703-336-1420
Lee Klumpp
Lee Klumpp National Professional Practice Partner – Nonprofit and Government Industries 703-336-1497
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