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New York State Thruway Authority
Audit Committee Charter

TAP-113 (04/2010)

AUDIT COMMITTEE CHARTER
New York State Thruway Authority
New York State Canal Corporation

Purpose

The Audit  Committee shall oversee:  (1) the quality and integrity of the financial statements of the New York State Thruway Authority (Authority), including the New York State Canal Corporation (Corporation) and the Canal Development Fund; (2) the qualifications and independence of the Authority/Corporation’s independent auditor; (3) the Authority/Corporation’s internal controls and compliance systems; (4) the Authority/Corporation’s compliance with applicable legal and regulatory requirements; and (5) the performance of the Authority/Corporation’s internal audit function.

Membership

Subject to statutory requirements, the Audit Committee shall consist of three (3) or more independent Board members who shall constitute a majority of the Committee; provided, however, that in the event the Authority/Corporation Boards have less than three (3) independent members, the Chairman may appoint non-independent members to the Committee, provided that the independent members constitute a majority of the Committee.  The Chairman of the Authority/Corporation Boards shall serve as an ex officio member of the Audit Committee.  All members shall possess the necessary skills to understand the duties and functions of the Audit Committee and shall be familiar with corporate financial and accounting practices. 

For the purposes of this Charter, the requirements for being an independent Board member are outlined in §2825 of the Public Authorities Law, as amended. 

The Chairman of the Authority and Corporation Boards is authorized to establish committee membership and amend as appropriate.

Meetings

The Committee shall meet a minimum of twice a year, with the expectation that additional meetings may be required to adequately fulfill all the obligations and duties outlined in this Charter.  One meeting shall be held prior to commencement of the annual independent audit of the Authority/Corporation’s financial statements to review the audit plan and to review progress made on any recommendations from the prior year’s audit.  The second meeting shall be held after the annual independent audit is completed.  Committee members shall be furnished with copies of the minutes of each meeting.  Committee Meetings shall be conducted in accordance with applicable provisions of Article 7 of the Public Officers Law, including notice and minutes requirements.

A majority of the members of the Committee then sitting shall constitute a quorum for the transaction of any business or the exercise of any power or function of the Committee and the Committee shall have the power to act by a majority of the members present (in person or via video conference) at any meeting.

Authority and Responsibilities

The Audit Committee shall be responsible for the appointment of the independent auditor retained by the Authority/Corporation and for approving the scope of services, the compensation terms and the terms and conditions for such auditor.  In no event shall the independent auditor be permitted to provide non-audit services to the Authority/Corporation or services which may pose a conflict or impairment of independence. 

The Audit Committee shall periodically review and approve the Authority/Corporation’s internal controls and compliance systems.

Financial Statements and Disclosure Matters

The Audit Committee shall:

  1. Review significant accounting and reporting policies and issues, including complex or unusual transactions and highly judgmental areas, and recent professional and regulatory pronouncements, and understand their impact on the financial statements.
  2. Review and discuss any significant risks reported in the independent audit findings and recommendations, and assess the responsiveness and timeliness of management’s follow-up activities pertaining to those risks.
  3. Meet with the Authority/Corporation’s independent auditor at least annually, to discuss the financial statements of the Authority/Corporation and any deficiencies noted with the Authority/Corporation’s management systems and operations. 
  4. Review reports from the Authority/Corporation’s independent auditor or the Chief Financial Officer, if any, on:

    1. Changes to significant accounting policies and practices.
    2. All alternative treatments of financial information within generally accepted accounting principles.
    3. Other material written communications between the Authority/Corporation’s independent auditor and the Authority/Corporation Executive Staff such as any management letter or schedule of unadjusted differences.
    4. Internal controls and the attestation of such reports by the Authority/Corporation’s independent auditor.

  5. Review, discuss and accept, in consultation with the Executive Director, the Chief Financial Officer and the Authority/Corporation’s independent auditor, the annual audited financial statements of the Authority/Corporation, including related disclosures, the management discussion and analysis section of such statements, and the single audit.
  6. Review, discuss and accept, as the Committee deems appropriate, in consultation with the Executive Director and the Chief Financial Officer, the Authority/Corporation’s financial report(s), including the results of the Authority/Corporation’s independent auditor’s review of such report(s), if any.

Oversight of the Authority/Corporation’s Independent Auditor

The Audit Committee shall:

  1. Review the performance of the Authority/Corporation’s independent auditor team.
  2. Review management’s assessment on the Authority/Corporation’s independent auditor’s internal quality control procedures, or any material issues raised by the most recent internal quality control review or peer review of the firm and all relationships between the independent auditor and the Authority/Corporation.

Oversight of the Authority/Corporation’s Internal Audit Function

The Audit Committee shall:

  1. Review management’s summary of the activities of the Department of Audit and Management Services and the Bureau of Fiscal and Toll Audit of the Department of Finance and Accounts including any identified material issues.  The Committee will review audit reports and approve procedures for implementing the accepted recommendations, when necessary.
  2. Approve the scope of the annual audit plans prepared by the Department of Audit and Management Services and the Bureau of Fiscal and Toll Audit submitted by the Director of Audit and Management Services.
  3. Review and adjust, as necessary, the reporting structure for the internal audit function to maintain organizational independence.
  4. Review management reports on internal controls submitted annually to the New York State Division of the Budget.

Compliance Oversight Responsibilities

The Audit Committee shall:

  1. Review reports from the Executive Director, the Chief Financial Officer, the General Counsel and the Authority/Corporation’s independent auditor regarding the Authority/Corporation’s conformity with applicable legal requirements.
  2. Review all reports sent to or delivered by the Office of the State Inspector General (OSIG) (or, where applicable, the Director of Audit and Management Services) to the Authority/Corporation.  The Committee Chair (or his/her designee) shall serve as a point of contact with the OSIG.
  3. Ensure procedures are in place for the confidential receipt, retention and investigation of complaints regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding auditing matters or allegations of fraud, corruption, criminal activity, waste or abuse and for the referral of appropriate matters to the Director of Audit and Management Services or OSIG.
  4. Investigate compliance with the Authority/Corporation’s policies and/or refer instances of non-compliance to OSIG (or, where applicable, the Director of Audit and Management Services) for investigation.
  5. Discuss with the General Counsel any legal matters that may have a material impact on the financial statements or the Authority/Corporation’s compliance policies.

Other Responsibilities

The Audit Committee shall:

  1. Obtain the necessary training to enhance Committee members’ understanding of the role of internal audits and the independent auditor, the risk management process, internal controls and to attain a certain level of familiarity in financial reporting standards and processes.
  2. Review and reassess the adequacy of this Charter, annually, and recommend any proposed changes to the Board to make amendments as needed.
  3. Conduct an annual self-evaluation of its performance, including its effectiveness and compliance with this Charter and request Board approval for proposed changes.
  4. Institute and oversee special investigations as needed.
  5. Perform such other duties as the Committee considers appropriate.