According to GFOA, should every government establish an audit committee?

Establishing an audit committee is highly recommended by the Government Finance Officers Association (GFOA) because such committees enhance the governance and accountability of government entities. An audit committee provides a structured forum for financial oversight and plays a crucial role in ensuring that there is adequate transparency in financial operations.

An audit committee typically comprises members who can provide independent evaluation of the financial reporting process and internal controls. This helps to promote a culture of compliance and fiscal responsibility, which is essential in maintaining public trust. The committee can also facilitate communication between the auditors and management, helping to address issues before they escalate and ensuring that audit recommendations are appropriately implemented.

While some may argue that only larger governments or those with significant findings should establish such committees, the GFOA advocates for all governments to do so. This is to ensure that even smaller entities or those with fewer issues maintain a strong oversight framework, which is vital regardless of the size or complexity of their operations. This proactive approach prevents potential problems, safeguarding public funds and enhancing overall financial management practices.