Minutes | Board Audit Committee (AC) Meeting
Published on 03 February 2017
AC Attendees: Steve Crocker, Asha Hemrajani, Erika Mann (Chair), and Mike Silber
AC Member Apologies: Bruno Lanvin
Other Board Member Attendees: Rinalia Abdul Rahim, Ron da Silva, Rafael Lito Ibarra, and Lousewies van der Laan
ICANN Executives and Staff Attendees: Susanna Bennett (Chief Operating Officer), Xavier Calvez (Chief Financial Officer), Jessica Castillo (Operations Project Coordinator), Samantha Eisner (Deputy General Counsel), John Jeffrey (General Counsel and Secretary), Melissa King (VP, Board Operations), Vinciane Koenigsfeld (Board Operations Content Manager), Becky Nash (VP, Finance), Wendy Profit (Board Operations Specialist), and Amy Stathos (Deputy General Counsel)
Invited Guests: Maarten Botterman, Khaled Koubba, Akinori Maemura, and Gary Rolfes – independent financial advisor to the Audit Committee
The following is a summary of discussions, actions taken and actions identified:
Committee Charter Review – The AC briefly discussed the value of reviewing the Charter on an annual basis to determine if there are any questions or suggested changes. The AC Charter is structured pursuant to laws applicable to non-profit entities, and is focused on the audit and the oversight that the AC provides to the performance of the audit. The AC further noted that the addition of PTI does not require any changes to the AC Charter.
Audited Financial Statements – The AC recalled that at the last meeting the AC briefly discussed the audited financial statements, and also noted that the audited financial statements were published on ICANN’s website on 25 October 2016. The audited financial statements contain three sections: (i) the report of the auditor, which is a clean opinion; (ii) the statements of activities, operation, and cash flows; and (iii) the notes, which provide clarity and details on policies and procedures underlying the financial statements. In addition, Note 3 provides the breakdown between the two segments that the financial statements contain, which are the ICANN operations and the New gTLD Program. The AC was reminded that the auditors review the financial statements produced by management to determine the accuracy of the financial statements and issue their report. The AC then discussed where oversight sits on whether the money is spent in the way it was intended.
Overview of Finance Team – The Vice President of Finance provided a brief overview of the members of the finance team who work on a daily basis on the financial statements and manage the support to the auditors. The overview provided an explanation of the organization and structure of the finance team, which includes a team of professionals that participate and contribute to the annual audit process. The AC then discussed whether ICANN currently maintains an internal auditor position, and was informed that this function is being developed and is very timely due to the implementation of the ERP system. The AC further noted that the AC Charter allows for certain oversight and the possibility to mandate internal audit activities.
Audit of PTI – The Vice President of Finance provided a brief overview of the audit requirements for PTI, reminding the AC that PTI is required to have an independent audit and audit report, as required of non-profit legal entities. In addition, from an audit standpoint, PTI is an affiliate of ICANN for which ICANN is the sole member, so the audit of PTI will be consolidated into the ICANN audit. The Chief Financial Officer then provided an overview of how the PTI audit will be organized, along with recommendations regarding auditor selection. It was noted that the selection of the PTI auditor will be the decision of the PTI Board.
Auction Proceeds Audit Impact – The Chief Financial Officer provided an overview of the audit impact of the auction proceeds and disbursement. It was noted that even though the use and method of the auction disbursements will be organized pursuant to the multistakeholder process, it remains an asset of ICANN and there is a fiduciary requirement to ensure that the disbursements are consistent with ICANN’s mission and that ICANN is accountable for the uses of the funds. The AC also discussed that, as a result, ICANN must ensure that evaluation and monitoring policies and procedures exist, are effective, and ensure compliance of the funds disbursements and usage.