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Minutes – Audit Committee (AC) Meeting 20 June 2010

AC Attendees:  Rita Rodin Johnston – Chair; Harald Alvestrand, Steve Crocker, and Dennis Jennings

Staff Attendees: Doug Brent – Chief Operating Officer; John Jeffrey – General Counsel and Secretary; Kevin Wilson – Chief Financial Officer; Diane Schroeder, and Amy Stathos

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

  1. Reviewed and approved minutes from previous AC meeting.

  2. Received initial presentation from the external independent audit firm.  The auditors introduced themselves to the committee and provided the required communications to those charged with governance.  The auditors described the audit process, the concept of materiality, significant audit areas, auditors’ responsibilities, and the timing requirements for the audit from beginning to completion.

    • Action:
      • Staff to schedule an initial call with auditors and audit committee without staff.
  3. Discussed and approved the revised audit committee charter, which includes additional references to best practices and the standard language that all of the more recent charters include.
    • Actions:
      • Staff to forward the revised charter to the Board Governance Committee for review and recommendation to the Board for approval.
  4. Discussed and approved the AC Best Practices, calendar and project plan.

  5. Discussed the idea of obtaining an independent external advisor to provide financial expertise, as needed, to the audit committee.  The AC discussed that it would be important for such an advisor to be independent and without conflict, as well as to perform services in an economically efficient manner.

    • Actions:
      • Staff to draft position description for AC review.
      • Staff to develop suggestions as to where such a position should be advertised.
      • Staff to provide AC examples of how such positions have been filled by volunteers.
      • Staff to schedule committee meeting in July to discuss the above items and determine next steps.
  6. Discussed staff-facilitated test of the Whistleblower anonymous hotline reporting function.  Staff reported that in preparing for the test, questions were raised that had not previously been discussed and an enhanced response process was developed. 

  7. Discussed introductory conference call with selected internal audit firm.

    • Staff and committee to participate in introductory call with internal audit firm while in Brussels.

  8. Staff reported on the requirements under the California Non-Profit Integrity Act for limitations on overlap of finance and audit committee membership.  Staff further reported that currently there is no overlap.

  9. Staff provided management report on internal controls.  Three main aspects include reporting, clarifying accounting processes and reviews.  Staff reported that the purpose of internal controls is to ensure that financial reporting is accurate and fairly stated, the company assets are protected, and risks are mitigated.  Staff further reported on both past and current reporting mechanisms, and provided a list of the types of compliance reporting company is doing.  A key goal is to develop comprehensive finance and accounting Guidelines Manual.  Review takes various forms, such as, Independent auditor, Board committee interactions, community interactions.  Staff further noted that the Independent auditor is required to provide a report on internal controls as part of its independent audit of ICANN’s year-end financials.   Further, staff noted that the internal audit function may review and report on internal controls, if deemed appropriate.

    • Actions:
      • Staff to support independent audit firm’s efforts to prepare for report on internal controls; October
      •  Accounting and Finance Guidelines; Proposal for completion of content, format, and processes; September
      • Aim for Internal audit function report in September