DRAFTDRAFTNational Collegiate Athletic Association

 

Finance Committee of the NCAA Executive Committee

 

Audit Charter

 

Effective January 9, 2004

 

 

I. Purpose.

 

The Finance Committee (the ?Committee?) shall assist the National Collegiate Athletic Association (NCAA) Executive Committee in providing oversight regarding:

 

a. The integrity of the Association?s financial statements;

 

b. The Association?s compliance with legal and regulatory requirements;

 

c. The independent auditor?s qualifications and independence; and

 

d. The performance of the Association?s independent auditors.

 

II. Responsibilities and Duties.

 

The responsibilities and duties enumerated in this section shall be common recurring activities of the Committee in carrying out its purposes. The Committee may assume additional duties or responsibilities, carry out additional functions or adopt additional policies and procedures as may be appropriate to meet its purposes or this may be necessary because of changing business, legislative, regulatory, legal or other conditions. The Committee shall also carry out any other responsibilities and duties delegated to it by the NCAA Executive Committee from time to time.

 

a. Retention and Terms of Engagement. The Committee shall exercise the sole authority and responsibility to appoint or replace, determine the compensation and other terms of engagement, and oversee the work of any independent auditor.

 

b. Annual External Audit Plan. The Committee shall approve, after discussion with the independent auditor, the overall audit scope and plan.

 

c. Annual Financial Statements. The Committee shall review the Association?s annual audited financial statements with management and the independent auditors prior to public dissemination and discuss with the independent auditors matters required to be discussed by Statement of Auditing Standards No. 61.

 

d.                  Internal Control Report. The Committee shall review and discuss with management and the independent auditors the annual internal control report of management required by applicable rules and best practices.

 

e. Accounting Policies and Alternatives. The independent auditors shall inform and review with the Committee all matters regarding:

 

1. Critical accounting policies and practices to be used by the Association.

 

2. Alternative treatments of financial information within generally accepted accounting principles for policies and practices related to material items that have been discussed with management, the ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditor.

 

3. Other material written communications between the independent auditor and management, such as any management letter or schedule of unadjusted differences.

 

4. Issues regarding accounting changes and internal controls. The Committee shall review major issues regarding accounting principles and financial statement presentations, including any significant changes in the Association?s selection or application of accounting principles, any major issues as to the adequacy of the Association?s internal controls, and any special audit steps adopted in light of material control deficiencies.

 

5. Analyses regarding financial statements. The Committee shall review analyses prepared by management or the independent auditor setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements.

 

6. Regulatory and accounting initiatives. The Committee shall review periodically the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on the financial statements of the Association.

 

f. Resolution of Disagreements. In overseeing the work of the independent auditor, the committee shall resolve any disagreement between management and the auditor regarding financial reporting.

 

g. Approval of Services. The Committee shall approve in advance any audit or non-audit services provided to the Association by the independent auditor. Management shall be responsible for ensuring the requisite disclosure of any approval by the Committee of non-audit services. Approval in advance is not necessary for non-audit services if: the aggregate amount of all such non-audit services provided to the Association constitutes not more than five percent of the total amount of revenues paid by the Association to its independent auditor during the fiscal year in which the non-audit services are provided.

h. Annual Evaluation. While taking into account the opinions of the Association?s management, the Committee shall perform an annual review of qualifications and performance of the independent auditor. The Committee will evaluate the lead partner and the concurring partner of the independent auditor to ensure rotation between the two. The documented results of the report will describe:

 

1. The auditing firm's internal quality-control procedures.

 

2.                  Any material issues raised by the most recent internal quality-control review, or peer review, of the auditing firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years, respecting one or more independent audits carried out by the auditing firm, and any steps taken to deal with any such issues.

 

3.                  The auditor?s independence and any relationships between the independent auditor and the Association.

 

4. Any audit problems or other difficulties encountered by the auditor in the course of the audit process, including any restrictions on the scope of the independent auditors activities or on access to requested information, and any significant disagreements with management.

 

i. Other.

 

1. Legal Matters. The Committee may review periodically, with the Association?s General Counsel, legal matters that could have a material impact on the Association?s financial statements.

 

2. Risk Assessment and Management. The Committee shall review and discuss the Associations guidelines and policies with respect to risk assessment and risk management.

 

3. Hiring Policies. The independent auditors may not provide audit services to the NCAA if a former partner or employee of the auditors is employed by the NCAA as its CEO, CFO, controller or in any other financial reporting oversight role unless such employment would not impair the auditor?s independence.

 

III. Limitations on Role.

 

Committee Oversight. The Association?s management is responsible for preparing the Association?s financial statements and providing all required certifications relating to the financial statements. The external auditors are responsible for auditing the financial statements. In carrying out its responsibilities, the committee is not providing any expert or special assurance or any guarantee as to the Association?s financial statements or other public disclosure or any professional certification as to the external auditor?s work.

 

Delegation of Approval. The Committee may delegate to one or more of its members the authority to approve in advance all audits or permitted non-audit services to be provided by the independent auditor.

 

IV. Structure and Operation.

 

a. Composition and Qualifications.

 

Number and Independence. The committee shall comprise not fewer than four members of the Executive Committee appointed by the Executive Committee.

 

Literacy and Expertise. Each member of the Committee shall have a working familiarity with basic finance and accounting practices and at least one member should have prior audit committee or financial experience.

 

b. Appointment and Removal.

 

Finance Committee Appointment. The members of the Committee shall be appointed by the Executive Committee and shall serve until such member?s successor is duly elected and qualified or until such member?s earlier resignation or removal.

 

Finance Committee Replacement. The members of the Committee may be replaced, with or without cause, by action of the Executive Committee.

 

c. Chair. The Executive Committee shall designate a Chair from among the members of the Committee.

 

d. Subcommittees. The Executive Committee or the Finance Committee may appoint such subcommittees of the Committee from among the members of the Committee as they shall deem necessary or appropriate to carry out specific duties and responsibilities.

 

e. Investigations, Access and Outside Advisors. In discharging its duties and responsibilities, the Committee is empowered to investigate any matter relating to its purpose, duties or responsibilities that it deems appropriate and shall have full access to all books, records, facilities and personnel of the Association. The Committee shall have full authority without the need for any other Board approval to retain outside legal counsel, accounting or other advisors in carrying out its duties and responsibilities, including the authority to approve the fees payable to such advisors and any other terms of retention. Such advisors shall have such access to the books, records, facilities and personnel of the Association as the Committee shall consider appropriate.

 

V. Meetings.

 

a. Frequency. The Committee shall meet at least semi-annually or at such additional times as the Committee shall consider appropriate to fulfill its duties and responsibilities.

 

b. Separate Meeting. The Committee may meet separately with management including the president, the senior vice-president of administration and CFO, and the managing director of finance and operations. The Committee may meet separately with the independent auditors to discuss any matters believed appropriate.

 

c. Periodic Disclosure Meetings. The Committee shall meet with the independent auditors and management annually to review the Association?s financial statements as provided in this Charter.

 

d. Call of Meetings. The Chair of the Finance Committee or any member of the Committee may call meetings of the Committee in accordance with its charter.

 

e. Action without a Meeting. A majority of the members will constitute a quorum. A majority of the members present at any meeting in which a quorum is present may act on behalf of the committee. The committee may meet by telephone, video conference or in-person to carry out its responsibilities.

 

e.                   Committee Reports. The Committee will report its recommendations and actions to the Executive Committee, and approval of actions shall be recorded in the Executive Committee minutes. Its recommendation may take the form of an oral report by the chair or any member of the Committee designated by the Committee to make such report.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The National Collegiate Athletic Association

May 18, 2004 JLI:gmn