Date:  November 11, 2004

TO:  MSBA Governance Committee

FROM:  Dan O’Connell

SUBJECT: Audit Function

After the last meeting of the Governance Committee, three questions remained on how to handle the audit function within the MSBA.

The first question is what committee would be assigned these responsibilities.  We began our discussion looking at whether a new committee should be created or whether these responsibilities should be assigned to the Operations Committee (one of the five Committees of the Assembly).  During our meeting we concluded that we would recommend assigning this function to the Operations Committee, subject to consultation with the Chairperson of that Committee.  I have discussed this with Pat Kelly, MSBA Treasurer and Operations Committee Chairperson, and he agrees that the Operations Committee should handle the audit functions.

The second question is what specific audit tasks should be assigned to the Operations Committee. My recommendation is that the Operations Committee be assigned the audit tasks identified in the “Guidelines For Audit Committees of Not-For-Profit Organizations,” including the suggested questions, both of which are attached.

The final question is whether the MSBA Bylaws should be amended to reflect this assignment to the Operations Committee.  My recommendation is not to amend the Bylaws at this time.  Both the governance structure of the MSBA and many of the audit expectations placed on nonprofits are new and evolving.  It is likely that implementing the new audit functions will require a degree of flexibility that will not exist if the standards are written into the Bylaws.  My recommendation is to have the Assembly adopt a resolution assigning the audit responsibilities to the Operations Committee, monitor the developments in this area, and in the future, consider drafting these responsibilities into the Bylaws.