All higher education institutions are required by their funding councils to have an audit committee, established in accordance with the relevant funding council’s audit code. The committee’s role is to govern the audit process, largely through meeting regularly with the internal and external auditors to hear about their work and how the institution has responded to their recommendations.
The audit committee should comprise independent (external) governors, possibly with co-opted members, to add expertise in specific areas or of audit committee work generally. It will usually be small (3-4 members is common), with a chair who is strong, suitably experienced and has the confidence and respect both of fellow governors and more widely within the institution. Audit committee members should not normally be concurrently members of the finance committee (or equivalent).
The funding councils may provide model terms of reference for audit committees.
Chapter 3 of Getting to Grips with Audit [PDF, 71KB] includes:
Chapter 4 [PDF, 64KB] discusses what the governing body should expect from its audit committee. The key test is whether governors are receiving positive assurance, in good time, that institutional processes and controls are fit for purpose and working well. Note also what the audit committee should expect from the governing body, in particular that the committee’s reports receive careful attention.
A number of issues relating to the role and effectiveness of the audit committee are raised by Sir David Melville in his independent review arising from the clawback of funds from London Metropolitan University in 2009.