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

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. 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
No later than January 31, 2011
First meeting no later than March 31, 2011
Provisions where boards are created after regulation is enacted
Composition of audit committee
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. 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
To identify external members
Composed of Director of Education, Senior Business Official and Chair of the Board or member designated by the Chair
Selection committee
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
Chair of the audit committee

5. Understand the Highlights of Regulation 361/10
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
Term of appointment
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. 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. 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
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
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

8. Declaration of conflicts
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
1st 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
2nd 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
Reporting

9. Why Evaluation is Important
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

10. Why Evaluation is Important
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
Source: Deloitte: Audit Committee Resource Guide

11. How Does Self Evaluation Work
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

12. How Does Self Evaluation Work
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

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.