The Montana Library Association (MLA) Audit Committee’s role is to act on behalf of the governing board and oversee all material aspects of the organization’s financial reporting, internal control, and audit functions, except those specifically related to the responsibilities of another standing committee or officer of the board.

The audit committee consists of non-board MLA members who are well-trained and informed to understand financial statements and annual tax filings.

The audit committee:

(a) Reviews the organization’s financial statements and other official financial information provided to the public;

(b) Ensures that reports are received, monitored, and distributed correctly;

(c) Oversees the organization’s internal controls, including management’s compliance with applicable policies and procedures and risk management;

(d) Reviews the annual information returns (IRS Form 990EZ, related schedules, and forms) and recommends them for approval, signature, and submission by the appropriate officer. The audit committee also transmits the returns to the board for board review before signing and submission. The audit committee engages (on the board’s behalf) and interacts with the independent auditor or auditing firm;

(e) Reviews the organization’s procedures for reporting problems. The audit committee may exercise primary responsibility to review the whistleblower policy and process, and policy and procedures related to the discovery of errors or illegal acts, and other communication methods and determine the process for “special investigations” (whistleblower allegations, anti-fraud compliance, discovery of errors or illegal acts); and

(f) May be delegated other authority and/or duties as determined by the board.

1. Financial Expertise

The audit committee must have enough financial expertise among its members to conduct meaningful review of the organization’s financial statements and the work of the independent, external auditor. A single committee member may have this expertise, or the various members may have complementary skills and experience that, in combination, enable the committee to fulfill its purpose. The committee must not rely on MLA’s Executive Director or independent auditor to conduct the committee’s oversight duties.

1. Independence from Management

The audit committee is generally charged with overseeing the officers and managers of the organization in their financial duties. For this reason, the committee must be able to review and investigate matters within its purview without the influence of officers, managers, or employees of the organization.

To achieve this independence, the audit committee should report only to the board and should conduct its reviews and meetings in private. The committee members or their family members and close business associates should not have any financial interest in the organization and should not themselves be compensated by the organization.

Adopted June 21, 2017