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Minutes – Board Audit Committee (AC) Meeting 6 March 2010

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

Other Board member attendees: Peter Dengate Thrush, Ramaraj Rajasekhar , and George Sadowsky

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

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

  1. Reviewed the minutes from the prior AC meeting, and all voting members in attendance unanimously approved the minutes.
  2. Received an update on the genesis of and status of the Cost Accounting and Procurement Guidelines posted on ICANN’s website, and received request from the Board Finance Committee (BFC) to assist in oversight of compliance once the Guidelines are implemented. Also received staff report that staff training is part of implementation planned before the Brussels meeting, and the plans for staff to progress on plans to engage an independent auditor to prepare a report on specialized cost accounting reports. The AC also received a report on the inclusion of a reconciliation process in the Procurement Guidelines.
    • Actions:
      • Staff to modify the procurement guidelines to more clearly address invoice matching with receipts and purchase processes.
      • Staff to provide more specific information to the AC on the reconciliation process as part of management’s report on internal controls in Brussels.
  3. Discussed the AC Best Practice materials revised by staff and the need to integrate the documentation into a planning document, to allow for prioritization in meeting unmet best practices. In order for the AC to reach conclusion on the Best Practice documentation provided by staff, discussed the need for helpful changes to the organization of the document to better structure the AC agenda and work plan.
    • Actions:
      • AC members to provide staff with comments on AC Best Practices by 1 April 2010.
      • Staff to revise documentation to provide benchmark dates for completion of required best practices to assist in AC prioritization.
      • By Brussels, staff to provide a proposed process for attaining outside financial expertise for the AC, including costs.
      • Staff to propose dates for executive sessions with management.
      • By Brussels, staff to provide proposal to AC for testing of the whistleblower reporting system.
  4. Reviewed the proposed engagement of the independent auditor, and noted that in line with best practices on selection of independent audit firms, the engagement is to be with a new audit partner from the same firm. The AC unanimously agreed to recommend the engagement of Moss Adams as the independent audit firm with Scott Simpson as the Partner in Charge, and noted that staff must work to be responsive on information requests from the independent auditor to meet the proposed time limit and costs.
    • Action:
      • Staff to forward AC recommendation of engagement of independent auditor to Board for approval.
      • Engage auditor (after Board approves).
  5. Discussed the proposed creation of an internal audit function and the scope and purpose of the proposed function.
    • Action:
      • Staff to work to create a strawman list of issues for inclusion in internal audit function bid, and coordinate with AC chair to seek suggestions from independent auditor on potential topics for review.
      • Staff to seek bids from firms to provide the internal audit function, utilizing the strawman list of issues and other identified topics as the basis of bid and seeking recommendation of additional projects that could be delivered within specified budgets.
  6. Staff provided an update on various items of information for the AC, including an update on the new Form 990 work and training plan for the Board; update on the 401k compliance review; and new FBAR filing requirement from the IRS.
    • Actions:
      • Staff to provide AC with closing report on 401k compliance review upon its completion.
      • Counsel to provide information on California requirements for separation of AC and Finance Committee roles.