§ 2-5-1.1-6.3 — Audit and financial reporting subcommittee

Indiana § 2-5-1.1-6.3

• Jurisdiction: Indiana
• Art. 5: LEGISLATIVE AGENCIES AND STUDY
• Ch. 1.1: Legislative Council

Text

3. (a) The following definitions apply
throughout this section:
(1) "Audit committee" refers to the audit and financial reporting
subcommittee of the legislative council established by subsection
(b).
(2) "Audited entity" refers to the state, a municipality, a public
hospital, or another person or entity that is subject to an
examination by the state board of accounts under IC 5-11-1 or
another law. However, the term applies to an entity (as defined in
IC 5-11-1-16(e)) to the extent that the entity is required to be
examined under IC 5-11-1-9 or another law.
(3) "Examination" refers to an audit, examination, or other
engagement by the state board of accounts, its field examiners, or
private examiners under IC 5-11-1 or another law.
(b) The audit and financial reporting subcommittee of the legislative
council is established to assure the independence of the state board of
accounts. The subcommittee is comprised of five (5) voting members
and one (1) advisory member, who shall be the director of the office of
management and budget, or the director's designee. The chairman of
the legislative council, with the advice of the vice chairman of the
legislative council, shall appoint the voting members of the audit
committee and its chairperson. The audit committee may have
members who are not members of the legislative council. If the
individual appointed is not a member of the general assembly, the term
of the member is three (3) years. If the individual appointed is a
member of the general assembly, the term of the member is one (1)
year. However, to stagger the terms of the members, if the individual
appointed is not a member of the general assembly, the initial term of
two (2) of these members is two (2) years instead of three (3) years. All
members of the audit committee must possess or obtain a basic
understanding of governmental financial reporting and auditing. To
ensure the audit committee's independence and effectiveness, a
member of the audit committee may not exercise managerial
responsibilities that fall within the scope of an examination required by
IC 5-11-1.
(c) It is the responsibility of the audit committee to provide
independent review and oversight of the state board of accounts and the
examination process used by the state board of accounts. To carry out
this responsibility, the audit committee shall do at least the following:
(1) Review and monitor the independence and objectivity of the
state board of accounts and the effectiveness of the examination
process, taking into consideration relevant professional and
regulatory requirements.
(2) Evaluate the findings and recommendations of any peer
review of the state board of accounts that is required by
recognized government auditing standards.
(3) Receive and review reports of examinations submitted under
IC 5-11-5-1 or another law to monitor the integrity of the financial
reporting process and the effectiveness of the state board of
accounts in evaluating the internal accounting controls of audited
entities.
(4) Monitor the actions of the examined entities to follow up on
reported findings to assure corrective action is taken.
(5) Review the policy on the engagement of the state board of
accounts, its field examiners, and private examiners to supply
nonaudit services, taking into account relevant ethical guidance
regarding the provision of nonaudit services by the state board of
accounts.
(6) Provide guidance to the state board of accounts on any
accounting, examination, or financial reporting matter requested
by the state board of accounts.
(7) At least annually, report to the legislative council on how the
audit committee has discharged its duties and met its
responsibilities.
(d) An examined entity shall provide the audit committee with
information, including any reports of internal auditors and annual
internal audit work plans, that the audit committee requests as
necessary or appropriate to carry out the responsibilities of the audit
committee.
(e) IC 2-5-1.2 applies to the committee. In addition, the audit
committee may retain the services of at least one (1) financial expert
who is either an audit committee member or an outside party engaged
by the audit committee for this purpose. The financial expert must,
through both education and experience and in a manner specifically
relevant to the government sector, possess:
(1) an understanding of generally accepted accounting principles
and financial statements;
(2) experience in preparing or auditing financial statements of
comparable entities;
(3) experience in applying such principles in connection with the
accounting for estimates, accruals, and reserves;
(4) experience with internal accounting controls; and
(5) an understanding of audit committee functions.
The expenses of the audit committee shall be paid from appropriations
for the legislative council and the legislative services agency.
(f) The audit committee shall receive appeals and conduct hearings
as described in IC 5-11-1-9.3.

Legislative History

As added by P.L.104-2014, SEC.1. Amended by P.L.157-2020, SEC.1.