If you have ever served on a Board of Directors before, it is normal practice for minutes to be kept. The Board minutes serve as an impartial witness to ensure that the Board is carrying out its fiduciary obligations and employing a deliberative decision-making process. But what happens when an in camera session is called? The below discusses what in camera sessions are and their importance to both the organization and to an underlying audit.
What is an In Camera Session?
In camera is a Latin term which means an in private session. These types of sessions normally only have Board members present. No staff of the organization are permitted at these meetings, unless specially permitted by the Board. These meetings allow for a higher level of self-management and oversight. Without staff present, this can foster greater truthfulness among Board members and reinforce the Board’s independence from management.
An in camera meeting can occur at either the beginning or end of a regular Board meeting. A formal motion would be called for the Board to enter a closed or in camera session. These meetings are devised to handle sensitive issues that cannot be discussed publicly. An in camera session serves the following purposes:
- Assures confidentiality.
- Creates a mechanism for Board independence and oversight.
- Strengthens or enhances the relationship between Board members and management.
Minutes Kept from In Camera Session
Similarly to traditional meeting minutes in camera minutes must also be kept during these sessions. The recorded minutes or any documents supplied during this meeting are not made public. These minutes are not attached to the regular Board meeting. If a decision is made during the in camera session, this decision should be recorded in the regular Board minutes. This formal record is required by law.
When to Use an In Camera Session
In camera sessions should be used if the three purposes above are met. In camera sessions should not be held as a means of secrecy. This can be seen as a misuse of trust and can harm or damage authority. Below are some examples of when an in camera session may be necessary:
- Succession planning.
- Personnel items such as salaries.
- The evaluation of the Executive Director or CEO compensation.
- Discussions of a lawsuit currently aimed at the organization.
- Time sensitive opportunities that cannot yet be made public.
Why Auditors Need In Camera Minutes
The purpose of an audit is to form an opinion on whether the information presented in the financial report is presented fairly and accurately. To arrive at this opinion, the auditor needs to review evidence and supporting documentation to assist or refute this opinion. One form of evidence is by reviewing in camera minutes. Similar to the need for the auditor to review regular Board meetings, minutes are reviewed for the following reasons:
- Oversight and governance – Board minutes provide insight into the resolutions, discussions and actions taken by the organization’s Board of Directors. Auditors review the minutes to evaluate the overall quality of the organization’s governance and oversight practices.
- Compliance – minutes can reveal information about the organization’s compliance with relevant laws, regulations and internal policies. Auditors use the minutes to ensure the Board is executing its fiduciary duties and operating within the boundaries of applicable rules and regulations.
- Risk identification – the issues, risks and concerns discussed in Board meetings are often documented in the minutes. Auditors analyze the minutes to identify potential risk areas that may require further examination or mitigation efforts.
- Accounting and financial reporting – Board minutes may contain information relevant to the organization’s accounting practices, financial reporting and major transactions. Auditors review the minutes to corroborate financial data and ensure the accuracy of the organization’s books and records.
- Internal control assessment – auditors may use the Board minutes to assess the effectiveness of the organization’s internal controls.
By refusing to provide the auditor with the in camera minutes, the organization is hindering the auditor from gaining a more comprehensive understanding of the organization’s governance, compliance, risk management and financial reporting practices. This information is crucial for conducting a thorough and effective audit.
For more information about in camera minutes at your organization, speak to your trusted RLB advisor today.
