AUDIT COMMITTEE

 

General Information:

<         The entire board of directors is legally responsible for finances.

<         Audits are necessary to confirm compliance with board and other lawful agencies policies.

<         Audits should include assessment: evidence supporting financial statement amounts and disclosures; accounting principles used; the overall financial statement presentation.

 

Membership:

<         The committee should consists of at least 3 people who are familiar with auditing, keeping books, or running a business.

 

Responsibilities:

<         Select an auditing method.

<         Verify deposit amounts and dates.

<         Verify award inventory.

<         Inventory association-owned equipment, if applicable.

<         Review canceled checks and supporting documents.

<         Make sure checks bear the appropriate signature(s).

<         Review financial statement for accuracy.

<         Review checkbook to verify entries and reconcile bank statements.

<         Review and evaluate financial records.

<         Document audit completion (See Documentation Requirements)

<         Communicate audit results during annual meeting or as requested by TSYABA President.

 

Frequency:

<         Audits should be conducted annually.

<         It is recommended that a special audit be conducted when a new president or treasurer takes office.

 

Suggested Methods:

<         Trace every entry from beginning to end for the year.

<         Select a time period within the year and trace entries within this period from beginning to end. 

 

Suggested Issues to Review:

<         Who can sign checks?

<         Are checks signed by authorized person(s)?

<         How are disbursements made?

<         How are cash receipts maintained?

<         Is there a requirement on the number of days for a deposit to be made?  If so, are deposits made within the required time frame?

<         Are financial reports and records provided to the membership?

 

Documentation Requirements (Choose one method):

<         Method 1

Each audit committee member will document signature and date on checkbook.

Each audit committee member will document signature and date on ledger.

<         Method 2

Complete attached Auditing Committee Verification Report.

                     

 

 

 

                                                             ADDITIONAL INFORMATION

 

 

What is an audit?

 

The formal definition of an audit according to the Oxford American Dictionary is An official examination of accounts to see that they are in order.@  A regular examination and checking of accounts or financial records, a settlement or adjustment of accounts, an account thus examined and adjusted, and a final statement of account are all four varied statements that apply to the function that should be performed at least yearly to your association records.

 

It is of utmost important, and should be stressed very strongly, that an audit is performed NOT to imply that there has been misappropriation of funds or other assets of the association, but rather to show that all monies and accounts are handled properly and/or to identify methods for improving efficiency.

 

The audit is performed to establish and substantiate that the financial officer(s) are complying with the direction and policies of the Board and with any other lawful authority that may have jurisdiction over the association. 

 

Who should perform the audit?

 

The act of auditing is an exacting science and normally requires specialization on the part of the auditor.  People on the Audit Committee should have basic knowledge in auditing methodology and protocol, as well as basic bookkeeping knowledge and/or knowledge of how businesses are run.  If there appears to be problems with the records, a Certified Public Accountant should be retained to review and examine the records. 

 

How should the audit be planned?

 

The Audit Committee should get together prior to the performance of the audit and determine the following:

<         How extensive will be audit be, e.g., will every entry be traced from beginning to end, or will a specific period of activity be reviewed?  This approved methods are stated in the Suggested Methods section on Page 1.

<         What will each member be responsible for reviewing? 

<         How will the audit be documented?  The approved methods are noted in the Documentation Requirements stated on Page 1.

 

What are some of the basic things the Audit Committee should look for during financial review part of the audit?

<         Are the checks numbered with no missing check numbers?

<         Are there extremely large amounts?

<         Review items made payable to individuals including officers.

<         Are there disbursements unrelated to normal bowling/associational activities?

<         Do the checks agree with the associated check stub?

<         Has the check disbursement been entered in the check book with the correct corresponding check number, amount, date, and description?

<         Do the monthly bank statements reconcile?

<         Do bank deposits coincide with receipts?

<         Do checks bear the authorized signature(s)?

<         Are there Apre-signed@ checks?  (This practice is strongly DISCOURAGED.)