Government Audit Committees – Part 1 – Charter, Roles and Responsibilities

Sponsored by the AICPA’s Government Performance & Accountability Committee (GPAC)

Lori A. Sexton, CPA, CGMA

A government’s audit committee provides governance and accountability but must address the enhanced transparency expectations of the public which it serves. Developing an entity specific charter as well as creating roles and responsibilities of the audit committee which may include unique requirements is the first step in achieving a successful audit committee. Before we dig into best practices of a government audit committee, there are certain limitations placed on the audit committee and therefore will not be addressed. The audit committee is not responsible for planning or conducting audits; this is the independent auditor’s responsibility. Neither is the audit committee responsible for (1) preparing and fairly presenting the government entity’s financial statements in accordance with generally accepted accounting principles, (2) maintaining effective internal control over financial reporting, and (3) ensuring the government entity’s compliance with applicable laws, regulations, and other requirements. These responsibilities are management’s, and the independent auditor and the audit committee have independent and complementary oversight responsibilities for determining that the related objectives of management’s responsibilities are achieved.

The audit committee begins it’s responsibilities by creating a charter that lays out it’s specific governance responsibilities, expectations and measures as applicable. This includes the committee’s purpose, reporting hierarchy, committee membership, authority and responsibilities. This article links to the full report https:// www.cgma.org/content/dam/cgma/resources/reports/downloadabledocuments/cgma-govt-audit- committee-part-1.pdf which includes a tool of 20 best practices for developing a government audit committee charter.

Author Bio Lori A. Sexton, CPA, CGMA

Lori Sexton is a Senior Technical Manager, Management Accounting with the Association of International Certified Professional Accountants (AICPA). Research and development of management accounting resources, serving as an advocate for the public sector and liaison to the Government Performance and Accountability Committee (GPAC) are included among her responsibilities. Other experiences include providing audit, attest, tax and consulting services to public sector and not-for-profit entities as well as those in healthcare, manufacturing, financial services and other niche sectors. Her roles within the private sector included international financial services and GSEs (Government Sponsored Entities) with a focus on financial and risk management.

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