Finance and Audit Committee Charter
The Finance and Audit Committee (“the Committee”) advises the board on investment policy, fund management, budget, financial management, management of reserves, liquidity, cash, and long-term financial sustainability for PEAK Grantmaking and assists the board in fulfilling its oversight responsibilities with respect to the audit of the organization’s books and records; and the system of internal controls that the organization has established.
The Committee should have a clear understanding with the outside auditors that they must maintain an open and transparent relationship with the Committee and that the ultimate accountability of the outside auditors is to the board and Committee.
Responsibilities
The Committee’s responsibilities include, but are not limited to, the following:
- Monitoring the organization’s financial management and controls
- Supporting the development of the longer-term capitalization strategy as well as the current financial plan
- Reviewing and recommending to the board the annual operating budget for PEAK Grantmaking
- Determining the key performance indicators that the board should use to monitor PEAK Grantmaking’s financial health
- Monitoring spending against the budget and monthly cash flow, reviewing quarterly balance sheets with consolidated accounting of all assets and current liabilities and monthly finance reports that show comparative figures against the prior year’s period, so that the Committee is able to explain the overall financial health of the organization to the full board according to generally accepted accounting principles
- Supporting and ensuring the development of policies and procedures for key business practices on an as needed basis and regarding investments, working capital, months of cash, and future budget projections, conferring with investment professionals to assess the investment strategy and adjust as appropriate
- Monitoring the broader response to financial risks (e.g., liquidity, reserves, fraud risk, and related mitigation strategies)
- Ensuring PEAK Grantmaking meets all financial filing requirements, including reviewing Form 990 before it is submitted to the full board
- Recommending to the board the selection, retention, or termination of the outside auditor
- Conducting periodically, and at least every five years, a documented evaluation process of the outside auditors’ performance to determine whether to continue engagement with the firm, or to conduct a request-for-proposal process to identify and recommend a new provider
- Reviewing the scope, fee, and general extent of the outside auditors’ annual audit
- The Committee’s review should include an explanation from the outside auditors of the factors considered by the accountants in determining the audit scope, including the major risk factors.
- The outside auditors should confirm with the Committee that no limitations have been placed on the scope or nature of their audit procedures.
- Reviewing with staff leadership and external auditors accounting and reporting controls and the principles, practices, and procedures applied by the organization in preparing its financial statements
- Conducting an executive session with the external auditors, without management present
- Annually obtaining written letters from outside auditors regarding the adequacy of the organization’s accounting and financial reporting controls
- Discussing with the outside auditors their judgments about the quality—not just the acceptability—of the organization’s accounting principles used in financial reporting
- Inquiring as to the independence of the outside auditors and, at least on an annual basis, obtain from the outside auditors formal written statements delineating all relationships between the outside auditors and PEAK Grantmaking, including other consulting work being performed by the outside auditors for the organization
- Coordinating with staff in conducting an annual review of conflict of interest statements
At the completion of the annual audit, review the following items with staff leadership and the outside auditors:
- results of the audit of the financial statements and the related report therein and, if applicable, a report on changes during the year in accounting principles and their application;
- significant changes to the audit plan, if any, and serious disputes or difficulties staff leadership encountered during the audit;
- whether the outside auditors received cooperation during their audit, including access to all requested records, data, and information;
- whether the outside auditors had any disagreements with the staff leadership that, if left unresolved, could have caused them to issue a nonstandard report on the organization’s financial statements;
- other communications as required to be conveyed by the outside auditors by current Accounting Standards relating to the conduct of the audit;
- the management letter and any “material” or “serious” recommendations that the outside auditors may have; and
- staff leadership’s response to the letter and decide if any additional follow-up is needed.
Structure
The Finance and Audit Committee is a standing committee of the PEAK Grantmaking Board. The Committee may form subcommittees to work on specific tasks (e.g., investment policy updates), but all decisions or recommendations by subcommittees shall be presented to the full Committee before being put before the board.
Composition
The PEAK Grantmaking treasurer serves as a cochair of the Committee. A second board member serves as cochair and is selected by the Governance Committee. Committee members are appointed by the Governance Committee and may be board and non-board members. Board members on the committee serve a three-year term, coinciding with their board term. Non-board members serve a one-year, renewable term. The Committee does not have a set number of members required, however it is desirable to have at least five members.
Meetings
The Committee will meet at least three times per year to fulfill its duties and when necessary, at the discretion of the chair.
Staff Liaison
The managing director will serve as the staff liaison to this team to facilitate its work.