Audit Committee Preparation Kit

AUDIT COMMITTEE OVERVIEW

Audit Committee Responsibilities

AUDIT COMMITTEE PREPARATION

PURPOSE OF AUDIT COMMITTEE:
☐ Financial oversight and integrity
☐ Internal control effectiveness
☐ External auditor relationship
☐ Risk management oversight
☐ Compliance monitoring

KEY RELATIONSHIPS:
☐ CFO: Primary management interface
☐ Controller: Financial reporting detail
☐ External auditors: Independence and quality
☐ Internal audit (if any): Control testing
☐ Legal: Compliance and risk

COMMITTEE EFFECTIVENESS FACTORS:
☐ Financial expertise on committee
☐ Sufficient meeting time
☐ Adequate information flow
☐ Direct access to auditors
☐ Executive session capability

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QUARTERLY PREPARATION

Quarterly Meeting Materials

QUARTERLY AUDIT COMMITTEE MATERIALS

FINANCIAL PACKAGE (Due 5 days before):

1. Financial Statements
☐ Income statement (vs. plan, vs. prior)
☐ Balance sheet
☐ Cash flow statement
☐ Key financial metrics

2. Management Discussion
☐ Revenue analysis by segment
☐ Expense variance analysis
☐ Key accounting estimates
☐ Significant transactions

3. Business Metrics
☐ Operating metrics dashboard
☐ Key performance indicators
☐ Trend analysis

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CONTROL & COMPLIANCE:

4. Internal Controls
☐ Control environment update
☐ Any control deficiencies
☐ Remediation status (if any)
☐ IT controls summary

5. Compliance Report
☐ Regulatory compliance status
☐ Contract compliance
☐ Tax compliance
☐ Any compliance issues

6. Risk Assessment
☐ Updated risk register
☐ New or elevated risks
☐ Mitigation status
☐ Emerging risks

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ADDITIONAL ITEMS:

7. Related Party Transactions
☐ Any transactions to disclose
☐ Approval status

8. Open Items
☐ Prior meeting action items
☐ Auditor requests
☐ Outstanding issues

MATERIAL PREPARATION CHECKLIST:
☐ CFO reviewed all materials
☐ Numbers reconciled
☐ Narratives complete
☐ Formatting consistent
☐ Distribution on time

Quarterly Meeting Agenda

AUDIT COMMITTEE QUARTERLY AGENDA

PRE-MEETING (30 min before):
☐ Committee executive session
☐ Any concerns to raise

MEETING AGENDA (90 min typical):

1. CALL TO ORDER (5 min)
☐ Attendance/quorum
☐ Prior minutes approval
☐ Agenda review

2. FINANCIAL REVIEW (30 min)
☐ CFO presentation
☐ Q&A on financials
☐ Variance discussion
☐ Key estimates review

3. INTERNAL CONTROLS (15 min)
☐ Control environment update
☐ Any deficiencies
☐ Remediation status

4. RISK & COMPLIANCE (15 min)
☐ Risk assessment update
☐ Compliance status
☐ New issues

5. EXTERNAL AUDITOR (15 min)
☐ Auditor update (if present)
☐ Audit status
☐ Any concerns

6. EXECUTIVE SESSION (10 min)
☐ Without management
☐ Committee discussion
☐ Auditor alone time

7. WRAP-UP (10 min)
☐ Action items
☐ Next meeting
☐ Adjournment

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ANNUAL REQUIREMENTS

Annual Audit Committee Activities

ANNUAL AUDIT COMMITTEE CALENDAR

Q1 (JANUARY-MARCH):
Annual Audit:
☐ Audit completion
☐ Financial statement review
☐ Auditor opinion
☐ Management letter review
☐ Auditor recommendation to board

Annual Activities:
☐ Committee self-assessment
☐ Charter review
☐ Independence certification

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Q2 (APRIL-JUNE):
☐ Q1 quarterly review
☐ Annual report filing support (if public)
☐ Auditor feedback session
☐ Control remediation follow-up

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Q3 (JULY-SEPTEMBER):
☐ Q2 quarterly review
☐ Audit planning for next year
☐ Auditor scope/fee approval
☐ Risk assessment deep dive

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Q4 (OCTOBER-DECEMBER):
☐ Q3 quarterly review
☐ Year-end audit preparation
☐ Preliminary audit discussions
☐ Budget for next year review
☐ Internal control planning

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ANNUAL DELIVERABLES:

Auditor-Related:
☐ Auditor independence assessment
☐ Audit firm evaluation
☐ Fee approval
☐ Engagement letter review

Controls-Related:
☐ Internal control assessment
☐ Material weakness disclosure (if any)
☐ Remediation verification

Risk-Related:
☐ Annual risk assessment
☐ Insurance review
☐ Cybersecurity review (annually)

Governance:
☐ Committee charter review
☐ Self-assessment completion
☐ Board report on activities

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AUDITOR COORDINATION

Working with External Auditors

EXTERNAL AUDITOR COORDINATION

AUDITOR RELATIONSHIP PRINCIPLES:
☐ Direct reporting to audit committee
☐ Independence maintained
☐ Open communication
☐ Professional skepticism valued

AUDIT PLANNING (Q3/Q4):
☐ Receive draft audit plan
☐ Review scope and approach
☐ Discuss key risk areas
☐ Approve fees and timing
☐ Identify potential issues early

DURING AUDIT (Q4/Q1):
☐ Regular status updates
☐ Address auditor requests promptly
☐ Management available for questions
☐ Escalation path clear
☐ No pressure on auditors

AUDIT COMPLETION (Q1):
☐ Review draft financials
☐ Discuss significant findings
☐ Review management letter
☐ Auditor opinion discussion
☐ Private session with auditors

POST-AUDIT:
☐ Remediation plan for findings
☐ Auditor feedback session
☐ Lessons learned
☐ Planning for next year

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AUDITOR EVALUATION CRITERIA:
| Dimension | Rating (1-5) | Notes |
|-----------|--------------|-------|
| Audit quality | | |
| Communication | | |
| Responsiveness | | |
| Industry knowledge | | |
| Value added | | |
| Fee reasonableness | | |
| Overall | | |

AUDITOR INDEPENDENCE CHECKLIST:
☐ No prohibited services provided
☐ Fee independence maintained
☐ Partner rotation (if required)
☐ Independence letter received
☐ Conflicts of interest reviewed

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DOCUMENTATION

Audit Committee Documentation

AUDIT COMMITTEE DOCUMENTATION

MEETING MINUTES:
Required Elements:
☐ Date, time, location
☐ Attendees present
☐ Agenda items discussed
☐ Key discussion points (summary)
☐ Decisions made
☐ Action items assigned
☐ Next meeting scheduled

Best Practices:
☐ Draft within 48 hours
☐ Chair review before distribution
☐ Circulate within 2 weeks
☐ Approve at next meeting
☐ Maintain permanent archive

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ANNUAL DOCUMENTATION:

☐ Committee charter (reviewed annually)
☐ Self-assessment results
☐ Auditor independence certification
☐ Auditor evaluation
☐ Annual report to board

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RETENTION REQUIREMENTS:

Permanent:
☐ Meeting minutes
☐ Committee charters
☐ Auditor engagement letters
☐ Material weakness documentation

7+ Years:
☐ Financial packages
☐ Audit reports
☐ Working papers (auditor)
☐ Control documentation

Audit Committee Effectiveness Scorecard

Dimension	Score (1-10)	Improvement Needed
Financial expertise
Meeting preparation
Discussion quality
Auditor relationship
Risk oversight
Documentation

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