Audit Committee Charter Policy Example – Corporate Governance Policies

Audit Committee Charter Policy Sample

In this article, we’ll look at the key elements that make up an example Audit Committee Charter Policy. We’ve included some starter/boilerplate information to help you get started writing this policy for your company. If you’re looking for help in setting up your policies & procedures or employee manual/handbook, our team can assist.

Audit Committee Charter Policy Template

The following are the main elements that should be included in your Audit Committee Charter Policy:

1. Title Page

• Policy Title: Audit Committee Charter Policy
• Company Name: The name of the organization implementing the policy.
• Policy Number (if applicable): For easy reference within the company’s policy structure.
• Version Control: Date of creation, last review, and version number.
• Effective Date: The date the policy becomes operational.
• Approval Authority: Name and title of the individual who approved the policy.

2. Purpose/Objective

• A brief statement explaining why the Audit Committee Charter Policy exists. This section outlines the policy’s purpose in relation to the company’s goals, regulatory requirements, or ethical standards.
• Describe what problem or issue the policy addresses.
• Example Purpose/Objective:

The purpose of this policy is to outline the audit committee’s responsibilities in overseeing the integrity of financial reporting and the effectiveness of internal controls. It ensures the committee provides independent oversight, enhances transparency, and maintains accountability within the organization. The policy guides the committee in monitoring compliance with legal and regulatory requirements, evaluating the performance of external auditors, and assessing risk management processes. By clearly defining these roles, the policy supports the organization’s commitment to strong corporate governance and financial integrity

3. Scope

• A description of who the Audit Committee Charter Policy applies to (e.g., employees, contractors, vendors).
• Specify any exceptions to the policy.
• Explain departments or roles affected, if necessary.
• Example Scope:

This policy outlines the audit committee’s responsibilities in overseeing financial reporting and internal controls within the organization. It specifies the committee’s role in ensuring accuracy and integrity in financial statements and compliance with legal and regulatory requirements. The policy also details the committee’s authority to engage external auditors and review their performance. Additionally, it emphasizes the importance of maintaining effective communication between the audit committee, management, and auditors to enhance transparency and accountability. This charter is a key component of the organization’s corporate governance framework

4. Definitions

• Clarify any key terms or jargon used within the Audit Committee Charter Policy to ensure understanding.
• Avoid assumptions about familiarity with industry-specific terminology.
• Example Definitions:

The Audit Committee Charter Policy outlines the audit committee’s role and responsibilities in overseeing financial reporting and internal controls. It ensures the committee monitors the integrity of financial statements, the effectiveness of internal control systems, and the performance of internal and external auditors. The policy also mandates the committee’s involvement in risk management and compliance with legal and regulatory requirements. Additionally, it specifies the committee’s authority to investigate any matters within its scope and to access necessary resources and information. This policy falls under Corporate Governance Policies

5. Policy Statement

• A detailed outline of the Audit Committee Charter Policy itself, including all rules, expectations, and standards.
• It should be direct and clear so that it leaves no ambiguity about the company’s position or requirements.

6. Procedures

• Step-by-step instructions on how to implement or comply with the Audit Committee Charter Policy.
• Include any forms, tools, or systems that employees must use.
• Describe the responsibilities of different roles in ensuring adherence to the policy.
• Example Procedures:

The Audit Committee is responsible for overseeing financial reporting and internal controls. It reviews financial statements, monitors compliance with legal and regulatory requirements, and evaluates the effectiveness of internal controls. The committee also oversees the external auditor’s performance, ensuring their independence and qualifications. It meets regularly to discuss audit findings and risk management strategies. Additionally, the committee is tasked with approving audit and non-audit services provided by the external auditor. It reports its findings and recommendations to the board of directors, ensuring transparency and accountability in financial practices

7. Roles and Responsibilities

• List the roles responsible for enforcing or overseeing the Audit Committee Charter Policy (e.g., managers, HR).
• Define who is accountable for reporting, monitoring, and updating the policy as needed.
• Example Roles and Responsibilities:

The Audit Committee is responsible for overseeing the integrity of financial reporting and the effectiveness of internal controls. It reviews financial statements, monitors compliance with legal and regulatory requirements, and evaluates the performance of internal and external auditors. The committee ensures the independence of auditors and addresses any issues related to financial practices. It also assesses risk management processes and provides recommendations to the board. Regular meetings are held to discuss audit findings and ensure transparency and accountability in financial operations

8. Compliance and Disciplinary Measures

• Outline how compliance will be monitored or enforced.
• Describe any consequences or disciplinary actions for failing to follow the policy, including the escalation process.

9. References and Related Documents

• Include links or references to any laws, regulations, or company guidelines that support the Audit Committee Charter Policy.
• Reference related company policies that connect or overlap with the document.

10. Review and Revision History

• State the review cycle (e.g., annually, biannually) and who is responsible for reviewing the Audit Committee Charter Policy.
• A history section that lists all revisions made to the document, including dates and reasons for changes.

11. Approval Signatures

• Signature lines for key decision-makers who have authorized the policy (CEO, department head, HR manager).

12. Appendices or Attachments (if needed)

• Additional information, FAQs, or case examples to provide more context or clarify how the Audit Committee Charter Policy applies in specific situations.
• Any relevant forms or templates employees need to complete.