Attachment B - DRAFT Council Audit Committee Charter

DRAFT City of Boulder Council Committee Charter Audit Committee Purpose Statement It is the responsibility of the Audit Committee (Committee) to provide independent review and oversight of the City of Boulder’s financial reporting processes, internal controls and the council-appointed independent financial auditors.

Committee Membership There are several existing internal city council committees that help guide policy and decision making in key areas in partnership with city staff. Council members vote among themselves annually to appoint members to council committees. The Audit Committee shall be a minimum of three members, with two members appointed from members of the Council and one member an outside financial expert appointed by the Council. The outside financial expert should, through both education and experience, and in a manner specifically relevant to the government sector, possess: -

an understanding of generally accepted accounting principles and financial statements; experience in preparing or auditing financial statements of comparable entities; experience in applying such principles in connection with the accounting for estimates, accruals, and reserves; experience with internal accounting controls; and an understanding of audit committee functions.

The Committee shall be supported by the Controller and Chief Financial Officer or Deputy Finance Director and a representative of the City Manager’s Office.

Responsibilities The Committee shall provide independent review and oversight of the external financial auditor. Specific Committee responsibilities shall include the following: -

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The Committee shall review the annual comprehensive financial report and independent auditors report and make a presentation to city council regarding outcome of the audit. Specifically, the Committee’s review shall include: o significant transactions, accounting, and reporting issues; o adoption or changes to accounting practices; o significant adjustments proposed by the external auditor; and o any disagreements between the external auditor and city about matters that could be significant to the city and its financial statements or audit report. The Committee is responsible for supporting the oversight of the contract with the independent financial auditor, including: o The independent financial auditor will be selected through a competitive process, as conducted by the Chief Financial Officer. The Committee will receive a report of the procurement process and qualification-based narrowing of the top 2-3 firms from the Chief Financial Officer or designee. The Committee may, if desired, participate in interviews for independent financial auditors. o The Committee is responsible for making the final recommendation to city council for the award of a contract to an independent audit firm for a term not to exceed five years. o Succeeding contracts with the same firm will require a rotation of partners. o Ascertaining that the independent auditors do not perform any non-audit service that is prohibited by generally accepted auditing standards or Government Auditing Standards. The Committee should create an agenda for the ensuing year or review and approve the agenda submitted by the city’s Chief Financial Officer. The Committee shall review its charter every two years, reassess the adequacy of this charter, and recommend any proposed changes to the Council. Consider changes that are necessary as a result of new laws, regulations, or accounting and auditing standards, including Governmental Accounting Standards.

Authority -

At least once each year, the Committee shall discuss the appointment and related audit fees with management and send their report to City Council.

Escalation from Committee to Full Council The Committee shall make an annual presentation to city council summarizing its review of the audited financial statements, including: -

A report to City Council regarding how the Committee has discharged its duties and met its responsibilities. In its report to the governing body, the Committee should specifically state that it has discussed the financial statements with management, with the independent auditors, and among committee members, and believes that they are fairly presented, to the extent such a determination can be made solely on the basis of such conversations.

Out of Scope The Committee serves in an advisory capacity only and shall not make decisions related to the city’s financial reporting or audit processes or exercise administrative functions unless expressly authorized in the Boulder Charter and Boulder Revised Code, as such functions are reserved to the City Manager.

Committee Meetings -

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The Committee should meet at least two times per year, and at additional times when necessary. Meetings will be held at a convenient city location or virtually as established by the Committee. Committee members may be asked to review materials in advance of committee meetings. The Committee meetings will be open to the public. Public notice of Committee meetings will be provided via the City of Boulder’s calendar of events. The Committee may conduct separate meetings with any or all of the following: the independent financial auditors, City Manager, Chief Financial Officer, and City Attorney. The Chief Financial Officer or designee is responsible for ensuring that appropriate parties within the city address committee members’ questions to support their ability to fulfill duties outlined in the Committe charter. Any member of the Committee, the external auditor, the City Manager or the Chief Financial Officer or their designee may request a meeting of the Committee. For the committee to reach a quorum and meet for the purposes of conducting committee business, both committee members from the City Council must be present. Meetings of the Committee, like all council committee meetings, are not video or audio recorded.

City of Boulder Charter References to Council Committees Excerpt from Charter Article II. The Legislative Body: Its Powers and Duties, Sec. 9. Meetings of council. -

Except as provided in Charter Sec. 21A., all meetings of the council or committees thereof shall be public. The council shall have the authority to appoint council committees. Such committees shall generally consist of no more than two council members and in no event shall be equal or greater than a quorum of council. Other council members may attend any council committee meeting to observe but shall not participate.

Excerpt from Charter Article II. The Legislative Body: Its Powers and Duties, Sec. 15. Powers and duties of mayor. -

The mayor shall be ex officio a member of all council committees.

Charter Approval Date: [Date] Last Revised: [Date]