Minutes | Board Audit Committee (BAC) Meeting 1 September 2021

BAC Attendees: Sarah Deutsch (Chair), Avri Doria, Akinori Maemura, Mandla Msimang, and Ihab Osman

BAC Member Apologies: Merike Käo

ICANN Organization Attendees: Xavier Calvez (SVP, Planning and Chief Financial Officer), Franco Carrasco (Board Operations Specialist), Liz Le (Associate General Counsel), Becky Nash (VP of Planning), Brett Peterson (Director Accounting), Shani Quidwai (Sr. Director Finance), and Amy Stathos (Deputy General Counsel)

Invited Guests: Representatives from independent auditor firm BDO, LLP and the Independent Financial Advisor to the BAC

The following is a summary of discussions, actions taken and actions identified:

  1. Presentation by Independent External Audit Firm The BAC received a presentation from representatives of independent external audit firm, BDO, LLP, regarding ICANN's FY21 audit process. BDO provided the BAC with information regarding its FY21 audit services, including the scope, anticipated timeline, and the implementation of a new revenue recognition standard for FY21. The audit strategy is to assess risk and material misstatement in the consolidated financial statements, whether due to fraud or error, and design the audit procedures accordingly in response to those risks. The audit also includes evaluating the appropriate accounting policies and the reasonableness of those significant accounting policies and estimates that are disclosed in the financial statements. The audit also includes consideration of prior year audit results, the inherent risk within the organization, and a look at recent developments in the industry the regulatory environment and general economic conditions in assessing the risk areas. The areas of focus include fraud risk, revenue recognition, contributions receivables, accounts receivables and the related estimates, investments, software capitalization, net asset classification, and ensuring that PTI is properly consolidated. BDO reviewed the anticipated audit timeline, which commenced in August through October. BDO noted that the new lease standard has been deferred another year, to 2023.
  2. BAC Workplan – The BAC reviewed the Committee workplan, which is on target.
  3. Overview of ICANN Audits – The BAC received a briefing on all the audits that are conducted by ICANN: the ICANN independent audit (consolidated with PTI), the PTI independent audit, the Singapore statutory audit, and the 401(k) audit. The ICANN and PTI consolidated independent audit, which is overseen by the ICANN Audit Committee, is the audit of the consolidated financial statements that represent then entirety of ICANN and that are inclusive of ICANN and PTI. The PTI independent audit is a standalone audit of PTI as a legal entity that occurs in conjunction with the ICANN audit. The PTI audit is overseen by the PTI Board Audit Committee. The Singapore audit is an audit of the financial statements of the Singapore, specifically produced for the purpose of the audit. Offices registered in Singapore as a branch are required to submit audited financial statements to the Accounting and Corporate Authority. The 401(k) audit is mandated and heavily regulated by the Employee Retirement Income Security Act. The four audits are carried out separately and have different drivers to their existence. The org reported that it intends to add reporting actions relative to these other audits to the Committee's workplan, so the Committee is notified when they are taking place and when the audits have been successfully concluded. The Committee noted that any inconsistencies that may be raised during any of these audits would be raised to management, and corrected.
  4. Audit Firm Rotation – The Committee discussed the pros and cons of audit firm rotation.

Published on 27 September 2021