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Charity Audit Committee performance evaluation

Self-assessment checklist

An Audit Committee’s role is to help the Board of Trustees meet their responsibilities by providing independent oversight of a charity’s systems of internal control, risk management and financial reporting, and through supervision of the quality, independence and effectiveness of both the internal and external auditors.

With increasing responsibilities and complexities, being a member of the Audit Committee has never been more challenging for Trustees.To help respond to this, and to facilitate the evaluation process,we have developed a document which provides audit committee members with a comprehensive checklist of what is required of them. Although this checklist is not mandatory under charity legislation, it is a best practice benchmark for charities and we believe this checklist will help audit committees to assess their own performance and identify areas for further development. Whilst we believe this to be a comprehensive checklist, each charity Audit Committee should update/amend the checklist to suit their particular requirements. 

The Charity Commission sees an Audit Committee’s role being “to help the trustees meet their responsibilities for risk management, internal controls and the efficient and effective use of funds. An audit committee is therefore part of the financial governance arrangements of a charity which acts on the authority delegated to it by the trustees and should therefore have appropriate terms of reference and a clear reporting line to the trustee body.”
Source: CC8 Internal financial controls for charities

An Audit Committee (“Committee”) can achieve this by a combination of the following:

  • Examining the manner in which management ensures and monitors the adequacy of the nature, extent and effectiveness of accounting and internal control systems;
  • Reviewing arrangements established by management for compliance with regulatory and financial reporting requirements;
  • Performing, monitoring and reviewing the application of policy relating to the external audit of the charity;
  • Monitoring and reviewing external audit findings and management’s response thereto;
  • Reviewing the statutory annual accounts and financial reports; and
  • Monitoring the effectiveness of the charity’s systems of internal control, risk, governance inspection and reporting, including;
    1. arrangements to safeguard the charity’s assets;
    2. arrangements to prevent fraud or error; and
    3. Arrangements to promote value for money in the conduct of the charity’s operations such as the processes in place to support the Board in strategic planning.
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