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Charter of the Audit and Finance Committee

The audit and finance committee is a standing committee of the board of trustees of Puget Consumers Co-op, or PCC Community Markets. This charter specifies the scope of the responsibilities of this committee and the manner in which the committee is to perform those responsibilities.

Purpose

The purpose of this committee is to assist the board in fulfilling its financial oversight responsibilities by (1) overseeing the accounting and financial reporting of PCC; (2) overseeing PCC’s business risk management processes and compliance with legal and regulatory requirements; (3) overseeing the management of PCC’s financial resources and financial risks; and (4) overseeing PCC’s real estate functions.

Committee Membership and Organization

Membership on the committee is to be determined by the board upon the recommendation of the governance and membership committee. The committee should be composed of three or more non-employee trustees, each of whom will serve until his or her successor is duly appointed or his or her earlier resignation or removal. Each member of the committee should be able to read and understand fundamental financial statements, including a balance sheet, income statement and cash flow statement. The board may remove a member of the committee at any time with or without cause and may appoint any non-employee trustee to fill any vacancy on the committee.

The board may designate a chairperson of the committee. If a chairperson has not been designated by the board, the members of the committee may designate a chairperson by majority vote of the full committee membership.

The committee may form and delegate authority to subcommittees when appropriate or to one or more members of the committee.

The committee may obtain advice or assistance from consultants, legal counsel, accounting or other advisors as appropriate to perform its duties and responsibilities. The fees and costs of any consultant or advisor engaged by the committee to assist the committee in performing its duties and responsibilities must be approved by the board chair and are to be borne by PCC.

Committee Meetings

The committee is to meet as often as it determines necessary or advisable to discharge its duties and responsibilities. The committee may establish its own rules and procedures for notice and conduct of its meetings so long as they are not inconsistent with the provisions of PCC’s bylaws applicable to committees of the board.

The committee is to meet with members of PCC’s financial management team at least quarterly to review PCC’s financial affairs. The committee is to meet with the independent auditor of PCC prior to the annual audit, upon completion of the annual audit, and at other times as the committee deems appropriate, to review the independent auditor’s audit plan, examination and management report.

The committee may invite any person whose presence the committee believes to be desirable and appropriate to attend and observe meetings of the committee. Individuals who are invited to attend meetings of the committee may not participate in any discussion or deliberation of the committee unless invited to do so by the committee chairperson and may not vote on any matter brought before the committee.

The committee should maintain minutes or other records of its meetings and activities. The committee is to make regular reports to the board concerning the meetings and activities of the committee.

Committee Authority and Responsibilities

The committee has the following authority and responsibilities, subject to any modification or additional authority as the board may approve from time to time:

Oversight of PCC’s independent auditor

  • The committee is responsible for the appointment, determination of compensation and retention of the independent auditor engaged by PCC for the purpose of preparing or issuing an audit report or related work and is to be directly involved in the oversight of that engagement.
  • The committee is to review regularly with the independent auditor any significant difficulties encountered during the course of the audit, any restrictions on the scope of work or access to required information and any significant disagreement between management and the independent auditor in connection with the preparation of the financial statements.

Review of financial information

  • The committee is to review and discuss with management and the independent auditor PCC’s annual audited financial statements and any certification, report, opinion or review rendered by the independent auditor, and recommend to the board whether to accept the audited financial statements. The committee is to review and discuss with management and the independent auditor PCC’s quarterly financial statements.

Risk management, legal compliance and ethics

  • The committee is to establish procedures for the receipt, retention and treatment of complaints received by PCC regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of PCC of concerns regarding questionable accounting or auditing matters. The committee may adopt, as necessary, appropriate remedial measures or actions with respect to those complaints or concerns.
  • The committee is to review periodically with management and the board PCC’s guidelines and policies to govern the process by which risk assessment and management is undertaken and handled by PCC. The committee is to include in this review PCC’s business risk management processes relating to the identification and management of legal, financial and reputational risk exposures and the steps management has taken to monitor and control those exposures.

Oversight of financial resources and financial risks

  • The committee is to review and monitor the management of PCC’s financial resources and financial risks, including policies with respect to investments and uses of cash and other significant financial actions proposed by management, significant capital expenditure plans and projects, and plans and strategies for debt financings.
  • The committee is to review the annual and multi-year budgeting process and operating plans with management and recommend to the board whether to approve those plans.
  • The committee is to review with management and recommend approval to the board PCC’s policies and practices regarding the distribution of profits to members as a patronage rebate or refund and any other provisions regarding the distribution of surplus funds.

Oversight of real estate function

  • The committee is to review with management potential new store sites, reports of new store performance, financial terms of new store leases and management’s store expansion strategy. The committee is to report to the board on potential new store sites and projected new store performance, recommend to the board whether to approve the expansion strategy and the financial parameters of new store leases, and approve any subsequent modifications to board-approved parameters for new store leases.

Periodic review

  • The committee is to conduct a periodic review and evaluation of the scope of its responsibilities and its performance of its duties. The committee should report to the board the results of this performance evaluation and recommend any changes to this charter to the board.