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Board of Directors Committees

Executive Committee  |  Audit Committee  |  Finance Committee  |  Governance, Nominating and Human Resources Committee

Audit Committee Charter

1. Purpose
   The Audit Committee will assist the Board of Directors and the Executive Committee in fulfilling its oversight responsibilities by monitoring: (1) the overall systems of internal control and risk mitigation; (2) the integrity of the financial statements of the Nature Conservancy; (3) compliance by the Conservancy with legal and regulatory requirements and ethical standards; and (4) the independence and performance of the Conservancy’s internal and independent auditors.
2. Comittee Membership
   Committee members shall have a basic understanding of finance, accounting and fundamental financial statements, and at least one member of the Committee shall be a financial expert as determined by the Executive Committee.
3. Committee Meetings
   The Audit Committee shall meet quarterly with the internal auditor and twice each year with the independent auditor in separate executive sessions to provide the opportunity for full and frank discussion without members of senior management present.
4. Authority
   The Committee’s role is one of oversight. The Conservancy’s management is responsible for preparing the Nature Conservancy’s financial statements and the independent auditors are responsible for auditing those financial statements. The Committee recognizes that management, the internal audit staff and the independent auditors have more time, knowledge, and detailed information about the Conservancy than do the Committee members. Consequently, in carrying out its oversight responsibilities, the Committee is not providing any expert or special assurance as to the Conservancy’s financial statements or any professional certification as to the independent auditor’s work.
   
   The Committee shall have the power to conduct or authorize investigations into any matters within the Committee’s scope of responsibilities, with access to all books, records, facilities and personnel of the Conservancy. The Committee shall have the power to retain special legal, accounting, or other consultants to assist in the conduct of such investigations or to advise the Committee at The Nature Conservancy’s expense and without further Board of Director or Executive Committee approval.
   
   The Committee may request any person including, but not limited to, any officer or employee of the Conservancy or the independent auditor, to attend Committee meetings or to meet with any members of, or advisors to, the Committee.
5. Key Responsibilites
   The Committee shall undertake the following responsibilities which are set forth as a guide. The Committee is authorized to carry out these activities and other actions reasonably related to the Committee’s purposes or assigned by the Board of Directors or Executive Committee from time to time.
   • Internal and Independent Audits
     • Internal Audit
       • Recommend the appointment, compensation, performance evaluation, and replacement of the Director of Internal Audit, who shall report functionally to the Audit Committee;
       • Review the risk assessment that drives the internal audit plan and annually approve the plan;
       • Review the activities of the internal audit function; and
       • Review the effectiveness of the internal audit function including staffing.
     • Independent Audit
       • Recommend the appointment and, if appropriate, termination of the independent auditor, and evaluate, compensate, and oversee the work of, the independent auditor who shall report directly to the Committee;
       • Review and approve the terms of the independent auditor’s engagement, and scope of the annual audit, and pre-approve any audit related and permitted non-audit services (including the fees and terms thereof) to be provided by the independent auditor;
       • Review and confirm the independence of the independent auditor annually by obtaining and reviewing a report from the independent auditor delineating all relationships between the independent auditor and the Conservancy and discussing with the independent auditor any such disclosed relationships and their impact on the independent auditor’s independence and by obtaining the auditor’s assertion of independence in accordance with professional standards;
       • At least every five years, review and approve the terms of the independent auditor’s retention, including a review of fees charged by the auditors for the annual audits.
       • At least annually, review a report from the independent auditor describing the auditing firm’s internal quality-control procedures and any material issues raised by the most recent quality-control review of the firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, with respect to one or more independent audits carried out by the firm, and any steps taken to deal with any such issues; and
       • Review with the independent auditor any problems the auditor has encountered performing the audit and any management letter provided and the Conservancy’s response to that letter, and matters that the independent auditor is required to communicate to the Committee.
   • Internal Control and Risk Mitigation
     • Review with management and the independent auditor the Conservancy’s major financial risk exposures and evaluate the steps management has taken to monitor and minimize such exposures;
     • Monitor the effectiveness of the Nature Conservancy’s internal control systems, including through regular executive sessions, whether internal control recommendations identified by internal and independent auditors have been implemented by management, review annually the ethics code of the Conservancy and the effectiveness of the procedures established to monitor compliance at every level, and ensure through inquiry and other appropriate means that management is communicating the importance of the organization’s values, code of conduct and ethics, and internal controls;
     • Review adherence to the conflicts of interest and related entities policies, and recommend action as appropriate; and
     • Establish procedures for receiving, retaining, and treating complaints received by the Conservancy regarding accounting, internal accounting controls, or auditing matters and the confidential, anonymous submission by Conservancy employees regarding questionable accounting or auditing matters.
   • Financial Reporting
     • General
       • Review with the independent auditor significant accounting and reporting issues, including recent professional and regulatory pronouncements, understand their impact on the financial statements, and ensure that all such issues have been considered in the preparation of the financial statements; and
       • Review with the general counsel, management, and the independent auditor, including in separate executive sessions, key functional activities of the Conservancy, including legal, tax, or regulatory matters that may have a material impact on the financial statements and any material reports or inquiries received from regulators or government agencies.
     • Annual Financial Statements
       • Review with management and the independent auditor any complex and/or unusual transactions;
       • Review with management and the independent auditor, including in separate executive sessions, issues related to judgments made involving valuation of assets and liabilities and commitments and contingencies;
       • Review with management and the independent auditor, in separate executive sessions, the annual financial statements and the results of the audit;
       • Review with management the annual audit report and recommendations of the independent auditor, including any audit problems or difficulties, and management’s response; and
       • Meet annually with management and the external tax expert to review any issues or judgmental areas relating to the disclosures in the Conservancy’s IRS forms.
   • Compliance with Laws, Regulations, Ethics, and Policies
     • Conduct an annual review of the Conservancy’s compliance with law, and with its ethical standards and policies;
     • Review with management, including the General Counsel and Compliance Officer, all legal and ethical compliance issues;
     • Oversee the functions of the Compliance Officer;
     • Act on findings of the Compliance Officer with respect to issues of non-compliance;
     • Review with management and the independent auditor, including in separate executive sessions, the findings of any examinations by regulatory agencies; and
     • Review with the internal auditors any possible areas of noncompliance with laws and ensure that management follows up with relevant procedures where appropriate.
   • Conflict of Interest
     • Review, with the General Counsel and Compliance Officer, all issues of conflict of interest;
     • Coordinate, with the Conservation Project Review Committee, the resolution of conflict of interest issues with respect to conservation projects; and
     • Oversee compliance with the Nature Conservancy’s conflict of interest policy.
   • Other Responsibilities
     • Ensure that significant findings and recommendations made by the internal and independent auditors are received and addressed by management on a timely basis;
     • Annually review and update the Committee’s charter, as needed;
     • Conduct an annual performance evaluation of the Committee and make any changes to the Committee’s composition or function necessary to address areas of improvement revealed in the evaluation; and
     • Maintain minutes of meetings and periodically report Committee actions and make such recommendations as the Committee deems appropriate.

For More Information about The Nature Conservancy’s Board of Directors:

• Audit Committee: Conservation Projects and Practices Sub-committee
• The Nature Conservancy’s Board of Directors
• Board of Directors Committees
• Common Language for Committee Charters
• Board of Directors Charter of Governance Responsibilities
• Board of Directors Member Profiles
• Bylaws of The Nature Conservancy and Summary Articles of Incorporation