Section 2-5-1.1-6.3 - Audit and financial reporting subcommittee(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.Amended by P.L. 157-2020,SEC. 1, eff. 7/1/2020.Added by P.L. 104-2014, SEC. 1, eff. 3/25/2014.