Ky. Admin. P. Ct. Justice. 2

As amended through November 7, 2024

Section 2 - Audit Oversight Committee

(A)Purpose/Mission

(1) The Audit Oversight Committee (Committee) will assist the Chief Justice of the Commonwealth in fulfilling his or her oversight responsibility as executive head of the Kentucky Court of Justice (KCOJ).

(2) The Committee must advise the Chief Justice on:

(a) The integrity and presentation of the financial and operational reporting process of the AOC;

(b) The qualifications, independence, and performance of independent external auditors, the audit services provided by the Division of Audit Services, and the internal audit function of the AOC;

(c) The system of internal controls within the AOC, including information technology security and controls, and including procedures for detecting fraud, waste, and abuse;

(d) The adequacy of the AOC's strategic and operational risk management processes;

(e) The AOC's compliance with applicable laws, Administrative Procedures of the KCOJ, and Rules of Court, and with all AOC policies and procedures;

(f) The adequacy of the AOC's investigation processes;

(g) The AOC's ethics, values, and culture; and

(h) Other matters as directed by the Chief Justice.

(B)Membership

(1) The Chief Justice is the Chair of the Audit Oversight Committee.

(2) The Committee is comprised of the following additional members:

(a) A justice of the Kentucky Supreme Court, appointed by the Chief Justice;

(b) The AOC Director;

(c) The Secretary of the Finance and Administration Cabinet or designee;

(d) The AOC Deputy Director;

(e) The AOC Chief Information Officer; and

(f) The AOC Director of Finance and Administration.

(3) The AOC General Counsel or designee is an advisory member.

(C) Responsibilities

(1) Key responsibilities of the Committee include but are not limited to:

(a) Approving decisions regarding the appointment and removal of the AOC Director of Audits.

(b) Overseeing the audit function of the AOC, reviewing and approving its budget, resource plan, activities, and organizational structure with the AOC Director of Audits.

(c) Reviewing and approving the internal audit charter which is included within AP Part XIX.

(d) Assessing the independence of the internal audit function of the AOC.

(e) Reviewing and approving the internal audit strategy developed by the AOC Director of Audits.

(f) Reviewing and approving the audit plan established by the Office of Audits, including internal audits of the AOC as well as audits of Circuit Court Clerks, Master Commissioners, Domestic Relations Commissioners, and operating costs for Court Facilities. In connection with this review, the Committee is authorized to offer recommendations regarding programs or activities to be audited.

(g) Reviewing the results of audits performed by the Office of Audits.

(h) Assessing the adequacy of corrective action plans in response to audit findings and recommendations and recommending actions as necessary to address unresolved audit findings and recommendations.

(i) Reaching a consensus regarding recommendations in final audit reports.

(j) Reviewing quality assurance assessments of the Division of Internal Audit annually and quality assessment reviews in accordance with the Institute of Internal Auditors' (IIA's) Global Internal Audit Standards every five years.

(k) Discussing any scope or resource limitations with the AOC Director of Audits and AOC senior management.

(l) Reviewing and approving the proposed audit scope of any external auditors, including coordination of audit effort with the internal audit function.

(m) Reviewing the performance of any external auditors and exercising final approval on the appointment or discharge of external auditors.

(n) Reviewing and overseeing special investigations as needed.

(D)Meetings

(1) The Committee must meet at least quarterly, or more frequently as circumstances may dictate, with the AOC Director of Audits. External auditors with pending business may meet with the Committee at those quarterly meetings as needed. Meetings may be called by the Chief Justice, the AOC Director, or the AOC Director of Audits. A majority of Committee members will constitute a quorum for any meeting.

(2) All recommendations from the Committee must be reached by consensus of those members present at the meeting. If consensus cannot be reached, then any recommendations must be reached by a vote of a simple majority of the Committee members present and the various perspectives of the members noted in the minutes.

(3) The AOC Director of Audits will prepare an agenda in advance of each meeting. Minutes must be prepared and maintained for each Committee meeting.

(4) The AOC Director of Audits will staff and attend Committee meetings.

(5) During the quarterly meetings, the AOC Director of Audits will present the audit plan and any adjustments thereto to the Committee and will deliver results of any audits, engagements, or special investigations to the Committee.

(6) Records

(a) Pursuant to KRS 26A.200, all records received, generated, kept, or maintained by or on behalf of the Committee shall be the property of the KCOJ and are subject to the control of the Supreme Court of Kentucky.

(b) All records created for or generated by the Committee shall not be considered Administrative Records of the AOC as defined by AP Part XVII.

(c) Use of a report issued by the Office of Audits shall be restricted as described therein.

Ky. Admin. P. Ct. Justice. 2

Adopted by Order 2019-11, eff. 10/23/2019; amended by order 2021-34, eff. 9/20/2021; amended by order 2024-35, eff. 11/7/2024.