News

How Serving on the Audit Committee Is Important to Your Municipality

As a municipal councillor you have a lot of responsibilities. You work for the residents of your community to ensure their views and concerns are represented at city hall and provide leadership to guide your municipality towards a prosperous future.

Your role in providing oversight of city management is just as important. As an elected councillor, you must ensure that the resources entrusted to the city by the public are being well-managed and that sound stewardship is in place.

Where can you make a meaningful contribution to effective oversight? Serving on your council’s audit committee!

The Reality in Municipalities Today

To start, we need to understand the key challenges and opportunities facing municipalities:

• Confidence in governance institutions is often low and resources are stretched thin.
• Audit is a key feature of modern public administration – it isn’t going away.
• Municipal councils can help fulfill their fiduciary responsibilities by making use of the audit and oversight tools at their disposal.
• Audit provides the opportunity to improve management and accountability.
  • Audit can enhance public confidence that a local government is well managed
  • Audit can show where improvements can be made to improve service delivery.
• There might be bad news, but council and management can get ahead of problems and take action to correct identified issues in an open and transparent way.

Without an audit committee, council may struggle to appropriately review financial statements, receive audit reports and discuss responses to audit recommendations with management. The committee’s work gives comfort to council that the systems of internal control are being reviewed on a regular basis and meet current standards. Council also gains assurance concerning the risk management activities of the management team and that the risks taken are appropriate to the risk model adopted by council.

An audit committee that meets regularly and has a program of work will take the time to focus on the issues of financial management and audit. Without an audit committee these tasks too often take on a pro-forma review and council may not be able to devote adequate time to delve into the details. If your municipal council has not established an audit committee then council should be asking why not.

What Can an Effective Audit Committee Achieve?

• Provide actionable insights to oversee and improve programs, services and financial practices and reporting.

A municipality’s reputation is its greatest asset. Having an audit committee communicates a message of independence, reliability and trust and can help build public confidence in municipal governance.

• Protect against fraud by playing a proactive role working with your municipality’s leadership team and auditors in creating and reviewing an organization-wide fraud prevention and detection program.
• Enhance and support the municipal audit function and the impact of its work.
• Oversee the external audit work including the annual audit of the financial statements and ensure that independence is maintained between the auditors and the municipality’s management team.

Ultimately, through these actions, an effective audit committee can strengthen credibility with stakeholders, including the public.

 

---

Want to learn more about how municipalities can provide effective oversight through audit? Check out our online self-paced course, Municipal Oversight for Councillors.