Board Governance and Auditors role

[Adam]

Hi Alex,

Members appoint the auditor; the auditor agrees the terms of the audit with management or those charged with governance (e.g., Board of Directors or Finance, Audit, Investment and Risk Committee).

The auditor is entitled to attend a meeting of members and be heard (i.e., at the option of the auditor). In addition, if a director or member gives notice within a certain period, the auditor shall attend the meeting of members and answer questions relating to the auditor’s duties.

Thanks!

Adam

[Alex]

Welcome to the Forum Adam. Q1 So do the auditors work on behalf of the members (as well as others), are accountable to the members (and others), attesting that the financial statements presented by management are correct?

Q2. Do you find it strange, that the auditors have not been present in past and don’t even seem to be on the agenda at the AGM?

[Adam]

Hi Alex,

(I appreciate that we have more than one conversation going on!)

Certainly an auditor – in expressing an opinion on the financial statements – would consider that the objective of financial statements is to communicate information that is useful to members, contributors, creditors and other users of the financial statements (in making their resource allocation decisions and/or assessing management stewardship).

In my experience, most of the reporting back from the auditor occurs through the Audit (or similar) Committee. For my audit clients, I was certainly also available to attend Board and/or Annual General Meetings, when asked to do so (which was occasionally) – some organizations took comfort that the auditor was present, even though questions were rare. So, I don’t find it strange when the auditor is not present at an AGM (nor do I find it strange when they are).

Thanks,

Adam

[Alex]

Thanks. My own experience in NFP board governance is that there is a wide gap – in some boards – between “what is” and “what should be”. Common practice vs best practice! The auditors are accountable to the members as they elect the auditors. What does it say when the auditors don’t bother showing up to those that elected them, to hear if there are any concerns?

Moreover what does it say when they are asked to attend as per the CNPA and CNPR – bound in law – to attend and don’t bother to answer specific written questions that were given with due notice?

. eh