WMF Audit Committee Charter 2010
Purpose of the Audit Committee
The purpose of the Audit Committee is to represent and assist the Board of Trustees ("Board") in its general oversight of the Foundation's accounting and financial reporting processes, audits of the financial statements, and internal control, and audit functions. Management is responsible for (a) the preparation, presentation, and integrity of the Foundation's financial statements; (b) accounting and financial reporting principles; and (c) the Foundation's internal controls and procedures designed to promote compliance with accounting standards and applicable laws and regulations. The Foundation's independent auditing firm is responsible for performing an independent audit of the consolidated financial statements in accordance with generally accepted auditing standards and rendering an opinion thereupon.
The Audit Committee members are not necessarily professional accountants or auditors and their functions are not intended to duplicate or to certify the activities of management and the independent auditor, nor can the Committee certify that the independent auditor is “independent” under applicable rules. The Audit Committee serves a Board level oversight role where it oversees the relationship with the independent auditor, as set forth in this charter, and provides advice, counsel and general direction, as it deems appropriate, to management and the auditors on the basis of the information it receives, discussions with the auditor, and the experience of the Committee’s members in business, financial and accounting matters.
Membership and selection
Appointment to the Committee, including the designation of the Chair of the Committee and the designation of any Committee members as “Audit Committee financial experts”, shall be made on an annual basis by the Chair of the Board of Trustees. The Audit Committee is comprised of at least one Trustee determined by the Board to meet independence and financial literacy requirements. Any Audit Committee members who are not Trustees must meet the same disclosure and certification requirements required of Trustees by the Foundation's Conflict of Interest Policy. The Chair of the Board of Trustees and the Executive Director of the Foundation also serve on the Audit Committee, both without vote.
The Audit Committee:
- Is directly responsible for the appointment, replacement, negotiation of compensation terms, and oversight of the work of the independent auditor. The independent auditor shall report directly to the Audit Committee.
- Reviews and discusses the statement from the independent auditor concerning any relationship between the auditor and the Foundation or any other relationships that may adversely affect the independence of the auditor, and, based on such review, assesses the independence of the auditor.
- Establishes policies and procedures for the review and preapproval by the Committee of all auditing services and permissible non-audit services (including the fees and terms thereof) to be performed by the independent auditor.
- Reviews and discusses with the independent auditor: (a) its audit plans, and audit procedures, including the scope, fees and timing of the audit; and (b) the results of the annual audit examination and accompanying management letters.
- Reviews and discusses reports from the independent auditors on (a) all critical accounting policies and practices used by, (b) alternative accounting treatments within GAAP related to material items that have been discussed with management, including the ramifications of the use of the alternative treatments and the treatment preferred by the independent auditor, and (c) other material written communications between the independent auditor and management.
- Reviews with the independent auditor its judgments as to the quality, not just the acceptability, of the Foundation's accounting principles and such matters as are required to be discussed with the Committee under generally accepted auditing standards.
- Reviews and discusses with management and the independent auditor various topics and events that may have significant financial impact on the Foundation or that are the subject of discussions between Management and the independent auditors.
- Reviews and discusses with management the Foundation's major financial risk exposures and the steps management has taken to monitor and control such exposures.
- Establishes policies and procedures that ensure full transparency into the use of all donor funds raised under the Wikimedia name or on its sites, including those raised by the Foundation, the Chapters and other affiliated organization.
- Reviews the information to be reported to the Internal Revenue Service on the Foundation's annual Form 990.
- Reviews and discusses with management and the independent auditor (a) the adequacy and effectiveness of the Foundation's internal controls (including any significant deficiencies and significant changes in internal controls reported to the Committee by the independent auditor or management; (b) the Foundation's internal audit procedures; and (c) the adequacy and effectiveness of the Foundation's disclosures controls and procedures, and management reports thereon.
- Reviews matters related to the corporate compliance activities of the Foundation
- Ensures procedures exist for the receipt, retention and treatment of complaints received by the Foundation regarding questionable accounting, internal accounting controls, or auditing matters; and the confidential submission by employees of concerns regarding waste, fraud, abuse, and other wrongdoing.
- Establishes policies for the hiring of employees and former employees of the independent auditor.
- Presents a report of the Committee’s activities to be included in Board minutes.
- When appropriate, designates one or more of its members to perform certain of its duties on its behalf, subject to such reporting to or ratification by the Committee as the Committee shall direct.
Procedures and process
The Audit Committee shall meet at such times and places as the Audit Committee shall determine. The Audit Committee shall meet in executive session with the independent auditor and the Foundation's management periodically. The Chair of the Audit Committee shall report on Audit Committee activities to the full Board.
The Audit Committee will engage in an annual self-assessment with the goal of continuing improvement, and will annually review and reassess the adequacy of its charter, and recommend any changes to the full Board.
The Audit Committee shall have the authority to engage independent legal, accounting and other advisers, as it determines necessary to carry out its duties. The Audit Committee shall have sole authority to approve related fees and retention terms.
The Chair of the Audit Committee and the Chair of the Board of Trustees are to be contacted directly by the independent auditor (1) to review items of a sensitive nature that can impact the accuracy of financial reporting or (2) to discuss significant issues relative to the overall Board responsibility that have been communicated to management but, in their judgment, may warrant follow-up by the Audit Committee.