Published on 18 October 2016
AC Attendees: Steve Crocker, Asha Hemrajani, Bruno Lanvin, Erika Mann (Chair), and Mike Silber
Other Board member Attendees: Rinalia Abdul Rahim, Ron da Silva, Chris Disspain, Rafael Lito Ibarra, and Lousewies van der Laan
ICANN Executives and Staff Attendees: Susanna Bennett (Chief Operating Officer), Xavier Calvez (Chief Financial Officer), Daniel Halloran (Deputy General Counsel), 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: Khaled Koubba; representatives from independent audit firm BDO; Gary Rolfes – independent financial advisor to the Audit Committee
The following is a summary of discussions, actions taken and actions identified:
Status Update on FY16 Audit – The BDO partner presented an overview of the status of the FY16 audit and the overall FY16 audit timeline. BDO reported that they expect to issue an unmodified opinion on the consolidated financial statements on or about 17 October 2016. BDO also reviewed the remainder of the schedule toward completion of the audit and indicated that there will be a final meeting with the Audit Committee just before the completion of the audited financial statements. BDO also referenced the issue, from an audit standpoint, of PTI as an affiliate of ICANN for which ICANN is the sole member. Staff reiterated that the audit of PTI will be consolidated into the ICANN audit, so that the audit will include both ICANN and PTI. In addition, PTI will have a separate audit as required of non-profit legal entities. The AC asked how the procedure and status of the FY16 audit compares to prior years. BDO reported that soon after last year's audit, staff and BDO went through the schedule for the year and discussed that if processes are being changed, BDO should be involved in the early stages, and this has happened. Staff refined some of their processes and BDO reported that they are working hand-in-hand with ICANN to ensure that the audit processes are likewise refined. There was nothing significantly different in this year's audit than last year's audit. Staff reiterated that management and BDO have collaboratively developed and implemented an audit process that includes early involvement of BDO and a more efficient audit process. The AC asked whether the auction proceeds are, or should be, separately identified in the financial documents. BDO and staff explained that currently the auction proceeds are a separate revenue line item. The AC requested and staff indicated that it will evaluate the process and effect of identifying the auction proceeds as a separate segment of the financials (as opposed to a separate line item). The AC also asked staff to consider whether and how certain expenditures could be separately identified in future fiscal years in order to increase transparency.
Staff to evaluate the process and effect of identifying the auction proceeds as a separate segment of the financials, and provide summary to the AC.
Staff to evaluate whether and how certain expenditures could be separately identified in the financials for future fiscal years, and provide summary to the AC.
Post IANA Stewardship Transition Audit Impact – Staff reminded the AC that in addition to a consolidated audit of ICANN and PTI in future fiscal years, PTI will also require a separate independent audit. Staff noted that it will continue to evaluate the topic of the separate PTI audit and that it has provided BDO with the Bylaws, Articles of Incorporation, and other relevant documents regarding the corporate structure of PTI, so that BDO can conduct due diligence on the relationship between the companies. Since PTI is a non-profit entity, it will need to have its own audit committee, which will include PTI board members. That PTI committee will make recommendations regarding the financial statements, audits, and auditors of PTI. BDO also reported that they are able do a separate schedule for each individual audit, as well as the consolidated audit which will show, among other things, how much each entity represents of the total. The AC asked what effect community involvement could have on the financial statements and audit process. BDO and staff responded that, in reviewing the documents related to PTI, they would analyze different scenarios and the controls currently in place.