Executive Committee
The Executive Committee shall consist of two ex officio members, the Chairman of the Corporation and the Chancellor of The University of North Carolina at Chapel Hill, and two or more other directors elected by the Board of Directors of the Corporation at any annual or special meeting by action of a majority of the number of directors then in office. The Chairman of the Corporation shall serve ex officio as Chairman of the Committee. Subject to such restrictions and limitations as may be imposed from time to time by the Board of Directors, the Executive Committee shall have and may exercise the full authority of the Board of Directors in the management of the Corporation, except that it shall have no authority as to the following matters: (a) distributions, as defined in the North Carolina Nonprofit Corporation Act; (b) the dissolution, merger or consolidation of the Corporation, the amendment of the charter of the Corporation, or the sale, lease or exchange of all or substantially all of the property of the Corporation; (c) the designation of any committee of the Board of Directors or the filling of vacancies in the Board of Directors or in any such committee; (d) the amendment or repeal of the bylaws or the adoption of new bylaws; or (e) the amendment or repeal of any resolution of the Board of Directors which by its terms shall not be so amendable or repealable. The Executive Committee shall report to the Board of Directors from time to time with respect to significant actions taken by it.
Audit Committee
At any annual or special meeting, by action of a majority of the number of directors then in office, the Board of Directors may elect an Audit Commjttee consisting of two or more directors, none of whom shall be an employee of the Corporation or of The University ofNorth Carolina at Chapel Hill. The Audit Committee shall have the following duties and responsibilities: (a) to review, from time to time, accounting policies and procedures and systems of internal control of the Corporation, (b) to review the annual audit ofthe Corporation with its external auditors and with employees of the University, (c) to make recommendations to the Board of Directors with respect to the appointment of external auditors and the scope of their audit, and (d) to make such other recommendations and reports to the Board of Directors relating to the financial statements, controls, records and systems of the Corporation as it shall deem appropriate. The Audit Committee shall have such other duties and responsibilities as may be delegated to it from time to time by the Board of Directors.
Nominating Committee
At any annual or special meeting, by action of a majority of the number of directors then in office, the Board ofDirectors may elect a Nominating Committee consisting of two or more directors. The Nominating Committee shall from time to time identify qualified individuals willing to serve on the Board of Directors of this Corporation and recommend such individuals to the Board of Trustees of the University and the ex officio directors of the Corporation.
Audit Committee Charter
This Audit Committee Charter is an administrative supplement to the By-Laws of the Board of Directors of The University of North Carolina at Chapel Hill Foundation, Inc. (Foundation). This administrative supplement to the by-laws addresses audit matters for the Foundation.
I. Background
Article IV, Section 4 of the bylaws currently provides the following description of the composition and duties of the Foundation’s Audit Committee:
At any annual or special meeting, by action of a majority of the number of directors then in office, the Board of Directors may elect an Audit Committee consisting of two or more directors, none of whom shall be an employee of the Corporation or of The University of North Carolina at Chapel Hill. The Audit Committee shall have the following duties and responsibilities: (a) to review, from time to time, accounting policies and procedures and system of internal control of the Corporation, (b) to review the annual audit of the Corporation with its external auditors and with employees of the University, (c) to make recommendations to the Board of Directors with respect to the appointment of external auditors and the scope of their audit, and (d) to make such other recommendations and reports to the Board of Directors relating to the financial statements, controls, records and systems of the Corporation as it shall deem appropriate. The Audit Committee shall have such other duties and responsibilities as may be delegated to it from time to time by the Board of Directors.
The duties of the Audit Committee do not replace or duplicate established management responsibilities and delegations. Instead, the Committee serves in an advisory capacity to guide the direction of management’s actions and set broad policy for ensuring accurate financial reporting, sound risk management, and ethical behavior.
II. Composition
Each Committee member must be independent of management of the University and free of any relationship that would impair such independence. Members may not receive consulting, advisory, or other fees from the University.
A majority of the members of the Committee should be financially literate and, if possible, at least one member should be a financial expert. Financial literacy is the ability to understand fundamental financial information and statements. A financial expert is someone who has an understanding of generally accepted accounting principles and financial statements preferably relative to higher education; experience in applying such principles; experience in preparing, auditing, analyzing, or evaluating financial information; experience with internal controls and procedures for financial reporting; or an understanding of the audit committee function. If feasible, the role of financial expert will be rotated on an annual basis.
III. Supplemental Duties and Responsibilities
The following shall be the supplemental audit-related duties and responsibilities of the Committee:
A. Audit Firm Oversight
• Confirm that the audit firm has not performed any prohibited, non-audit services as defined in the Sarbanes-Oxley Act and approve any non-audit services such as tax services, provided by the audit firm.
• Request, as needed, that the audit firm rotate the lead partner assigned to the Foundation’s financial statement audit at least every seven years with a timeout of at least two years.
• Review the audit engagement letter and other significant audit related communications from the audit firm. The audit firm will be directed to copy the Committee on any such communications.
• Review management’s representation letter to the audit firm.
• Be available to meet during the year with the audit firm or its staff for consultation purposes or to discuss the auditor’s judgments about the quality, not just the acceptability, of the Foundation’s accounting principles and underlying estimates in its financial statements.
• Review and resolve any significant disagreement between management and the audit firm in connection with the preparation of the financial statements or with other audits.
• If an employee of the engaged audit firm during the one-year period preceding the audit assumes a senior administrative position within the Foundation or the Finance and Administration division of the University of North Carolina at Chapel Hill, the Committee shall consider changing audit firms or fully document the decision to hire.
B. Internal Controls
• Review internal audit reports and monitor internal control systems at the Foundation. Ensure that management is devoting adequate attention to issues raised.
• Review the mechanisms for receiving, resolving, and retaining records of complaints, regarding accounting, internal control, and auditing matters. Receive briefings from management or internal auditors regarding any significant complaints or misuse of funds.
C. Other
• Consult with the Foundation’s counsel to review any legal matters that may have a significant impact on the University’s financial statements or overall financial performance.
• Review and forward with recommendations to the Board of Directors significant management initiatives involving financial reporting matters.
