Charge to the Audit and Compliance Committee of the Stanford Hospital and Clinics Board of Directors
Authority
The Audit and Compliance Committee (the “Committee”) is established pursuant to Article V, Section 5.07 of the Bylaws of Stanford Hospital and Clinics (“SHC”) and shall be a standing committee of the SHC Board of Directors (the “Board”). The Committee shall advise the Board of SHC in connection with the Board’s responsibilities relating to the quality and integrity of SHC’s financial reporting, compliance with government rules, and overall systems of internal control and risk mitigation. The Committee shall also oversee SHC’s compliance with community benefit reporting requirements.
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Membership
The voting membership of the Committee shall be appointed by the Board and shall consist of at least five non-employee members of the Board. The Chair of the Committee will also be designated by the Board. The term of Committee membership shall be at the discretion of the Board and shall be reviewed annually. Members of the Committee should have financial expertise in areas such as generally accepted accounting principles and procedures for financial reporting, an understanding of internal controls and financial statements, and an understanding of audit committee functions.
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Responsibilities
In carrying out its responsibilities, the Committee shall perform the following functions, as well as any other reviews, investigations or projects consistent with its purpose:
- Annually appoint the independent public accountant, review and approve the planned scope of the annual financial statement audit, and approve the fees to be paid to the independent public accountant for these annual audits; also recommend to the Board the termination of the relationship with the independent public accountant if that is deemed necessary.
- Review the annual financial statements with management and the independent public accountant, including any adjustments to those statements recommended by the independent public accountant, and any significant issues that arise in connection with the preparation of the statements. Approve the final annual financial statements and provide the Board of Directors with a report on the statements at its next regularly scheduled meeting.
- Review the independent public accountant’s management letter comments regarding SHC’s internal controls and accounting policies and procedures as well as management’s responses to those comments.
- Recommend to the Board of Directors, when the Committee deems it advisable, that the independent public accountant engage in specific studies and reports regarding accounting procedures, auditing matters and other matters.
- Approve in advance any non-audit services performed by the independent public accountant, and any audit-related services performed by the independent public accountant with a cost in excess of fifty thousand dollars ($50,000.00).
- Meet at least annually with the independent public accountant (outside the presence of management) to discuss any issues arising from the Committee’s responsibilities.
- Meet at least annually with management (outside the presence of the independent public accountant) to discuss management’s evaluation of the work performed by the independent public accountant and the appropriateness of the audit fees.
- Act as a liaison between the (1) independent public accountant and the Board of Directors, and (2) independent public accountant and management.
- Approve the hiring into a senior financial role of either the audit engagement partner or the person in charge of audit fieldwork for a period of three (3) years after such person has performed services to Stanford Hospital and Clinics.
- Require rotation of the independent public accountant’s engagement partner no less frequently than every seven (7) years.
- When the Committee deems it advisable, call special meetings of the Committee and request management to address specific issues within the mandate of the Committee.
- When the Committee deems it advisable, obtain the advice of outside consultants and professionals (including but not limited to retention of special legal counsel) to advise the Committee on matters within the scope of its Charge.
- At least annually review and, as appropriate, recommend changes to the Committee Charge.
- Monitor the adequacy of policies and practices on conflicts of interest for management staff, members of the Board and physicians in a leadership position.
- Review current and pending litigation and regulatory proceedings to which SHC is a party that bear on the Committee’s responsibilities.
- Monitor SHC’s system of internal control and the adequacy of accounting, financial and operational policies and practices on financial and significant compliance reporting.
- Review with management and the internal auditor the annual internal audit plan and discuss the extent to which it addresses high risk areas.
- Review the annual report on the activities of the internal audit department and discuss significant issues of control with the internal auditor and management.
- Approve hiring the internal auditor and approve any decision to terminate or significantly modify the responsibilities or compensation of the internal auditor.
- Meet at least annually with the internal auditor (outside the presence of management) to discuss any issues arising from the Committee’s responsibilities.
- Approve hiring the Chief Compliance Officer and approve any decision to terminate or significantly modify the responsibilities or compensation of the Chief Compliance Officer.
- Review with management and the Chief Compliance Officer, at least annually, the Code of Conduct and the compliance program and discuss the extent to which the compliance program addresses high-risk areas of compliance concern.
- Review the annual report on the activities of the Compliance Department.
- Receive periodic reports from the Chief Compliance Officer concerning the effectiveness of the compliance program, discuss significant compliance issues and ensure that an adequate mechanism exists for significant compliance concerns to be brought to the attention of the Committee.
- Meet at least annually with the Chief Compliance Officer (outside the presence of management) to discuss any issues arising from the Committee’s responsibilities.
- Oversee SHC’s compliance with legal and regulatory requirements related to community benefit activities.
- Ensure compliance with community benefits financial reporting requirements.
- Report annually to the Board a summary of the Committee’s activities and significant audit findings.
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Meetings
The Committee shall meet at least annually and at other times at the pleasure of the Chair of the Committee.
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Quorum
A majority of the voting members of the Committee then serving shall constitute a quorum.
Approved by Audit and Compliance Committee on March 24, 2010
Approved by Board of Directors on March 25, 2010
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