Audit Committee Charter

Last Updated 10 February 2009

 

IEEE AUDIT COMMITTEE CHARTER

 

1.         GENERAL

 

      The Audit Committee is a standing committee of, and reports to, the Board of Directors as set forth in Bylaw I-305.2.

 

2.         POLICY

 

            The Audit Committee shall review policies and procedures which substantially impact the finances and operations of the IEEE, monitor conformance thereto, and recommend such changes as it considers desirable.  While the Audit Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Audit Committee to conduct audits or to determine that the IEEE's financial statements are complete and accurate and are in accordance with generally accepted accounting principles, which is the responsibility of management and the independent auditors.  Nor is it the duty of the Audit  Committee to assure compliance with laws and regulations and the IEEE's corporate policies.

 

3.         FUNCTIONS

 

            To carry out its duties and responsibilities, the Audit Committee shall:

 

A.                 Oversee IEEE accounting and financial reporting policies and

                        practices;

 

B.                 Communicate with and review the activities and effectiveness of the internal auditors;

 

C.                Confirm the independence of the external auditors in compliance with the independence rules of the AICPA and GAO standards via inquiries as to whether any additional relationships with or services provided to IEEE, beyond the annual audit engagement, could have an impact on the auditor’s objectivity and independence.  Monitor such relationships and services to assure independence of the outside auditors.  The Audit Committee should pre-approve all audit and non-audit services performed by the independent auditor.  The Audit Committee may designate its Chair to represent the entire Committee for purposes of approval of non-audit services, subject to review by the full Audit Committee at the next regularly scheduled meeting.

 

Services that may be prohibited from being performed by the independent auditor after considering materiality of the subject matter to the audit and nature of service include:

-         Bookkeeping

-         Financial information systems design, implementation or operation

-         Appraisal or valuation services, fairness opinions or contribution-in-kind reports

-         Actuarial services

-         Internal audit outsourcing services

-         Management functions or human resources

-         Broker or dealer, investment advisor, or investment banking services

-         Legal services and expert services unrelated to the audit

-         Preparing the indirect cost proposal or cost allocation plan

-         Other services that would violate the U.S. General Accounting Office Independence Standard;

 

D.                Review the independent auditors' audit scope and approach;               

 

E.                 Review management’s representations, covering integrity of internal controls and financial reporting systems and conformity of the financial statements with generally accepted accounting principles;

 

F.              Review the financial statements of the IEEE and the results of the independent audit, including the audit of government grants and awards (A-133 audit), underlying accounting judgments and estimates and the auditor's (internal control) recommendations to management and management's response;

 

G.                Review with management, the independent auditors and internal auditors the:

-    communications required by professional standards

-         acceptability, appropriateness and consistency of application of accounting methods

-         unrecorded judgments

-         reasonableness of judgments

-         degree of aggressiveness or conservatism in applying accounting policies

-         completeness and clarity of financial statements and related disclosures

-         and any changes therein;

 

H.        Monitor corrective action plans to assure they satisfy the auditor’s concerns of those recommendations accepted by the Board of Directors, until such recommendations are implemented.

 

 

I.                     Be directly responsible for appointment, compensation, oversight and retention of the independent auditor.  Annually, it shall evaluate the qualifications and performance of the independent auditors.  The independent auditor shall report directly to the Audit Committee;

 

 J.                Review the IEEE’s processes for assessing and addressing risks;

 

K.                Review the IEEE's program to monitor compliance with its corporate code of conduct;

 

L.                  Review Key Business Measures established by the IEEE management to ensure they are representative of the IEEE's progress toward stated goals and objectives;

 

M.                Oversee or conduct special investigations or other functions pursuant to this charter as directed by the Board of Directors;

 

N.                 Report its findings, conclusions and recommendations to the Board of Directors so as to assist the Board in fulfilling its fiduciary and corporate accountability responsibilities and to help maintain a direct line of communication between the Board and the IEEE's internal and independent auditors;

 

O.                Establish procedures for (1) the receipt, retention, and treatment of complaints regarding accounting, internal accounting controls or auditing matters and (2) procedures for the confidential and/or anonymous submission by employees or volunteers of concerns, regarding questionable accounting or auditing matters (See Corporate Integrity Contact Person position description for guidance on handling such matters.);

 

P.                 Monitor conflict of interest policy and related procedures;

Q.                Resolve disagreements, if any, between management and the independent auditors;

 

R.                 Review and assess the adequacy of the charter on an annual basis; 

 

S.                 The appointment of the audit firm and lead audit partner will be considered annually by the Audit Committee.  The Audit Committee shall then advise the Board of Directors of its decision to continue with or terminate the engagement of the external audit firm.  The lead audit partner shall be rotated at least every five years.  The audit firm shall be rotated at least every ten years.  The Audit  Committee's decisions regarding the use of the existing audit firm and lead audit partner versus the selection of a new firm and partner will be summarized in the Audit Committee's meeting minutes

 

T.                 Assure that Audit Committee members do not receive any compensated, advisory contracts from the IEEE.

 

4.                  COMPOSITION

 

            In accordance with Bylaw I-305.2, the Audit Committee shall be comprised as follows:

 

The Audit Committee shall consist of not more than four members.  Members shall be chosen from those who will be serving the first year of a two-year term on the Board of Directors, none of whom shall be a corporate officer. Such members shall be appointed for two-year staggered terms, providing for reasonably balanced representation from MGA and TAB. If there is an insufficient number of qualified candidates for Committee membership available from the first year Board members, the Board of Directors may appoint a second year Board member for a one-year term. 

 

The Board of Directors shall appoint the Chair, normally from those who will be serving the second year of their term on the Committee. 

 

One or more immediate past members of the Audit Committee may be appointed by the Board of Directors to serve one-year terms as consultants. One additional consultant, who qualifies as a financial expert and may be a non-member of IEEE, may be appointed by the Board of Directors on the recommendation of the Audit Committee.

 

            Each of the Audit Committee members and past members of the Committee who serve as consultants shall be “financially literate.”  In addition, IEEE shall endeavor to appoint, to the extent practicable, at least one consultant, who qualifies as a “financial expert” and who may be a non-member of IEEE, to assist the committee.  Financial literacy is defined as being able to read and understand fundamental financial statements.  Financial expert means a person who has the following attributes:

-         An understanding of generally accepted accounting principles and financial statements

-         The ability to assess the general application of such principles in connection with the accounting for estimates, accruals and reserves

-         Experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by IEEE’s financial statements, or experience actively supervising one or more persons engaged in such activities

-         An understanding of internal controls and procedures for financial reporting

-         An understanding of audit committee functions

 

The Audit Committee shall have the authority to retain consultants or experts as it deems necessary or appropriate in order to provide training to its members in order to meet the financial literacy requirements described above.

 

5.   TERM OF OFFICE:

            Audit Committee membership will be appointed by the Board of Directors for two-year staggered terms, (except as noted in paragraph 4. above, wherein the Chair may recommend a second-year Board of Directors member for appointment to a one-year term) providing for reasonably balanced representation from MGA and TAB. The Board of Directors shall appoint the Committee’s Chair normally from those who will be serving the second year of their term on the Committee. 

 

            One or more immediate past members of the Audit Committee may be appointed by the Board of Directors to serve one-year terms as consultants.  The Audit Committee shall select its Secretary.

 

            One consultant, who qualifies as a financial expert and may be a non-member of IEEE, may be appointed by the Board of Directors for an initial one-year term, with the possibility of re-appointment for up to two additional two-year terms, for a maximum of five years of service. The Audit Committee shall submit the names of at least three candidates for consideration by the Board of Directors.

 

6.         MEETINGS

 

The Audit Committee shall meet immediately prior to the regular meetings of the Board of Directors and at such other times as directed by its Chair, upon written notice to the members at least 10 days in advance of such special meetings.  A majority of its members will constitute a quorum.  The Committee shall maintain written minutes that it files with the Secretary of IEEE.  The Committee shall provide opportunities for the independent auditor and the internal auditor to meet privately with the Committee. 

 

7.         PROCEDURE

A.                 The Committee shall meet with representatives of the independent auditors at least annually to review and discuss:

-         The results of the independent audit and underlying accounting judgments and estimates

-         The auditors' comments regarding the adequacy of the IEEE's internal accounting controls

-         External auditors’ relationships with IEEE that may impact objectivity and independence

-         Management’s representations regarding integrity of internal controls and financial reporting systems and conformity of financial statements with generally accepted accounting principles

-         Other relevant matters noted during the auditors' examination, along with management's response regarding such comments

-         Assurance that auditors were not subject to undue influence by management during the course of the audit

-         The scope and objectives of the independent audit for the current fiscal year.

 

B.                 The Committee shall meet with the internal auditors to discuss and determine the scope of the internal audit and to review the results of the internal auditors' examination and management's response regarding the auditors' findings and recommendations. 

 

C.                As necessary or desirable, the Audit Committee is empowered to investigate any matter brought to its attention with full access to books, records, facilities and personnel of the IEEE and may request that representatives of the independent auditors, the internal auditors or legal counsel be present at meetings of the Committee.  In addition, the Committee shall have the authority to retain, at IEEE’s expense, special legal, accounting or other consultants or experts as it determines necessary to carry out its duties.

 

8.         FINANCIAL SUPPORT

 

            Financial support for the Audit Committee shall be provided from the general funds of the IEEE.  IEEE shall at all times make adequate provisions for the payment of all fees and other compensation, approved by the Committee, to any consultants or experts retained by the Committee.

 

9.         CHANGES TO THE CHARTER

 

Changes to this Charter must be approved by the Board of Directors.