(a) The City Audit Committee shall:
(1) Review with the Director of the Department of Finance, the independent auditor, and the Commissioner of Internal Audit, the City’s policies and procedures to reasonably assure the adequacy of internal control’s over accounting, administration, compliance with laws and regulations and financial reporting;
(2) Have familiarity, through the individual efforts of its members, with the accounting and reporting principles and practices applied by the City in preparing its financial statements. Further, the City Audit Committee is to make, or cause to be made, all necessary inquiries of the City and the independent auditor concerning established standards of conduct and performance and deviations therefrom;
(3) Review, prior to the start of the annual audit, the scope and general extent of the independent auditor’s planned examination, including its engagement letter. The auditor’s fees shall be summarized by the Director of Finance for review by the City Audit Committee. The Committee’s review should entail an understanding from the independent auditor of the factors considered by the auditor in determining the audit scope, including:
A. Risk characteristics of the City of Cleveland; and
B. External reporting requirements; and
C. Quality of internal accounting, administrative and compliance controls; and
D. Extent of internal auditor’s involvement with the audit examination; and
E. Other areas to be covered during the audit engagement.
(4) Review the extent of non-audit services planned to be provided by the independent auditor in relation to the objectivity and independence needed in the audit;
(5) Review with the City staff and the independent auditor, upon completion of its audit, financial results and findings prior to their finalization and dissemination to the public.
(b) The City Audit Committee is to review the City’s comprehensive annual financial report, including the financial statements and footnote disclosures and supplemental disclosures required by generally accepted accounting principles, with respect to the following:
(1) Significant transactions not a normal part of the City’s operations; and
(2) Selection of and changes, if any, during the year in the City’s accounting principles or their application; and
(3) Significant adjustments proposed by the independent auditor; and
(4) The process used in formulating accounting estimates and the independent auditor’s conclusions regarding the reasonableness of those estimates; and
(5) Any disagreements between the independent auditor and management about matters that could be significant the City’s financial statements or the auditor’s report; and
(6) Difficulties encountered in the performance of the audit.
(c) The City Audit Committee shall also:
(1) Evaluate the cooperation received by the independent auditor during its audit, including its access to all requested records, data, and information and inquire of the independent auditor whether there have been any disagreements with City management that, if not satisfactorily resolved, would have caused the independent auditor to issue a nonstandard report on the City’s financial statements;
(2) Discuss with the independent auditor the quality of the City’s financial and accounting process and any recommendations that the independent auditor may have, including improvements to internal financial controls, controls over compliance with laws and regulations, the selection of accounting principles and management reporting systems;
(3) Review written responses to “letter of comments and recommendations” from the independent auditor and discuss with the City the status of implementation of prior period recommendations and corrective action plans;
(4) Recommend any extensions or changes in the duties of the City Audit Committee
(5) Issue an annual report on the discharge of the duties of the City Audit Committee.
(Ord. No. 1957-2000. Passed 11-13-00, eff. 11-22-00, without the signature of the Mayor)