The legal responsibilities of the Board of Governors are set out in Section 9 of The McMaster University Act, 1976. While the President and senior administrative officers exert the central influence in policy as well as providing the dominant force in management under the authority of the Board, Board members play an important role in the governance of the University, since the Board is the legal owner and the final authority for the institution whose assets and operations the Board holds in trust. Except for such matters as are assigned by the 1976 Act to the Senate, the government, conduct, management and control of the University and of its property, revenues, business and affairs are vested in the Board. In carrying out its financial responsibilities, the Board must accept full accountability for the finances of the University, including monitoring and authorizing the annual operating budget, prudent investments, and comprehensive fund-raising activities, as well as the obligation to ensure that financial assets are appropriately managed. The Board receives nominations from the Senate with respect to the hiring, promoting and suspending of senior administrative and teaching personnel, and delegates the appointment, promotion, suspension or removal of all other officers, agents and employees of the University to officers of the University. The Board conducts its affairs by making by-laws, resolutions and regulations to supplement the Act. The composition of the Board of Governors is described in Section 8 of the University Act.
Audit and Risk Committee
60. The Audit and Risk Committee shall be composed of the Chair and the Vice-Chair(s) of the Board, and a minimum of three (3) other members of the Board.
61. The Chair of the Committee shall be appointed by the Board on the recommendation of the Nominating Committee.
62. Notwithstanding any other provisions in the By-laws, in any event, every Audit and Risk Committee member shall be an independent, external and unrelated Governor (not employed by the University nor enrolled in a course of study at the University).
63. Members of the Audit and Risk Committee shall be financially literate, with the ability to read and understand financial statements of the breadth and complexity comparable to those of the University. Optimally, at least one (1) member of the Committee will hold a professional accounting designation.
64. One-half (1/2) of the membership of the Committee shall constitute a quorum.
65. All meetings of this Committee are in Closed Session.
66. The following individuals will typically be invited to attend Audit and Risk Committee meetings: a) the President; b) the Provost and Vice-President (Academic); c) the Vice-President (Operations and Finance); d) the Associate Vice-President and Chief Financial Officer; e) the Chief Internal Auditor; and f) the Chief Risk Officer.
67. Meetings shall be held as required or upon the request of a member of the Audit and Risk Committee or of the University’s internal or external auditors.
68. The Committee Chair shall review an agenda in advance of each meeting.
69. The Audit and Risk Committee assists the Board in fulfilling its oversight responsibilities for the financial reporting process, the system of internal control, the audit process, the risk profile of the University and the University’s processes for monitoring compliance with laws, regulations and University policies.
70. The primary responsibilities of the Committee are as follows:
Financial Statements a) to oversee the system of internal control and the financial reporting process. In fulfilling this responsibility, the Committee shall:
(1) meet with the external auditors and review the results of the annual financial statement audit and approve such statements for recommendation to the Board; (2) review other sections of the annual report, including Management’s Discussion and Analysis, and any report or opinion that the auditors propose to render, and consider the accuracy and completeness of the information; (3) review and discuss with management and the external auditors significant variances, estimates and accruals, judgments, changes in accounting policies and standards, issues concerning litigation or contingencies and any difficulties encountered; (4) review any recent and relevant professional and regulatory pronouncements to understand their impact on the financial statements; (5) review and discuss with management whether adequate procedures and processes are in place to ensure the integrity of the financial statements; (6) review the appropriateness of significant accounting principles and practices, reporting issues, unusual or extraordinary items, transactions with related parties and the adequacy of disclosures; and (7) consider whether the financial statements are complete and consistent with information known to Committee members. Internal Control
b) to oversee the internal control structure and processes, the Committee shall: (1) review with management and the internal and external auditors, their evaluation of the University’s internal controls and processes, including internal controls over financial reporting, compliance with University policies and any material weaknesses or fraud and assess the steps management has taken to minimize significant risks or exposures; and (2) consider the effectiveness of the internal control system, including information technology security and control.
External Audit c) to oversee the external audit process, the Committee shall:
(1) select and recommend annually the public accountants for appointment as auditors for the ensuing fiscal year and, in consultation with the administration, the basis of their compensation; (2) approve the engagement letter, receive the independence letter and review the management letter and related materials; (3) discuss with the external auditors the scope and purpose of the upcoming audit and the procedures to be followed including coordination with internal audit; (4) review all matters required to be communicated to the Committee under Generally Accepted Auditing Standards; (5) review with the external auditors their findings, any restrictions on their work, cooperation received, and their recommendations and facilitate the resolution of any disagreements between management and the external auditors; (6) receive privately the external auditors’ opinion on various matters, including the quality and effectiveness of financial and internal audit staff, significant accounting principles and practices, unresolved material differences of opinion or disputes; (7) periodically review and approve a policy governing the engagement of the external auditors for the provision of non-audit services; and (8) annually review and assess the independence and performance of the external auditors.
Internal Audit d) to oversee the internal audit function and reports, the Committee shall: (1) review with the Chief Internal Auditor a summary of findings, any restrictions or limitations on their work, cooperation received, special investigation reports, findings from third party auditors (not including work performed by the appointed external auditors), and any recommendations arising therefrom; (2) review the proposed audit plans for the coming year, the criteria upon which they are based and the coordination of services provided to the external auditors; (3) periodically review and approve the internal audit mandate (the Internal Audit Department Policy Statement) for continued relevance; (4) review audit progress, findings, recommendations, responses and follow-up actions; in situations where the auditee has not responded appropriately in a timely fashion to the audit findings, follow-up and obtain a management response on those action items which remain outstanding for a significant period of time; (5) satisfy itself as to internal audit independence, cooperation received from management, interaction with external audit and any unresolved material disagreements with management; (6) review the budget, organizational structure, and qualifications of the internal audit department; (7) through its Chair, act as the formal supervisor of the Chief Internal Auditor and in consultation with the President and the Vice-President (Operations and Finance), have the final approval to appoint or discharge the Chief Internal Auditor and complete an annual performance review of the Chief Internal Auditor; (8) periodically review the effectiveness of the internal audit activity; and (9) meet privately with the Chief Internal Auditor at least quarterly.
Compliance e) to oversee compliance-related issues, the Committee shall:
(1) obtain regular updates from management and legal counsel regarding legislative and regulatory compliance and outstanding litigation matters; (2) review the effectiveness of the system for monitoring compliance with laws and regulations and the results of management’s investigation and follow-up (including disciplinary action) of instances of non-compliance; (3) review the findings of any examinations by regulatory agencies; and (4) review the process for communicating conflict of interest and code of conduct policies to employees and monitoring compliance.
Enterprise-wide Risk Management f) to oversee the University’s risk management framework which shall include approval of Management’s proposed Risk Appetite Statement and review of: (1) the identification and quantification of all significant risks (e.g., strategic, financial, operational, reputational, etc.) the University is exposed to; (2) the University’s appetite and tolerance for these risks on both an inherent and residual basis; (3) Management’s strategy and controls for managing these risks; (4) the roles and responsibilities for risk identification and management including risk ownership; (5) risk monitoring and reporting; (6) emerging risks including risk horizon, likelihood and severity of such risks; (7) opportunities identified by Management for the future growth of the University; (8) and shall provide input as appropriate as to the overall risk culture and tolerance of the University. The Audit and Risk Committee shall be satisfied that Management operates within the University’s approved Risk Appetite Statement.
Reporting g) to fulfill its reporting responsibilities, the Committee shall: (1) report to the Board of Governors as required about Committee activities, issues, and related recommendations; (2) report to the Board of Governors, on its review of Management’s proposed Risk Appetite Statement and present a final version for approval by the Board (3) complete periodic self-assessments of the Audit and Risk Committee’s effectiveness against its mandate and report any concerns to the Board; (4) periodically review the Terms of Reference of the Audit and Risk Committee and recommend any proposed changes for consideration by the Board of Governors; and (5) perform other activities as requested by the Board.
Other duties h) oversee the work of any public accounting firm engaged by the University where such work would be defined as “public accounting” within the meaning of the standards of the Canadian Institute of Chartered Accountants; i) investigate any matter brought to its attention with full access to all books, records, facilities and personnel of the University; and j) review and ensure that procedures are in place for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or audit matters.
The Executive and Governance Committee consists of six members of the Board of Governors.
71. The Executive and Governance Committee of the Board shall be composed of the Chair and the Vice-Chair(s) of the Board, and representatives from every Board Committee, including but not limited to:
a) Planning and Resources Committee Chair; b) Audit and Risk Committee Chair; c) External Engagement & Advancement Committee Chair; d) Investment Pool Committee Chair; e) Remunerations Committee Chair; f) one (1) Board member who shall also be a member of the Pension Trust Committee; and g) as ex officio members, the Chancellor, the President, the Provost, and the Vice-President (Operations and Finance).
72. The Chair of the Board shall be the Chair of the Committee. Five (5) members of the Committee, excluding the ex officio members, shall constitute a quorum.
73. All meetings of this Committee are in Closed Session.
74. The Executive and Governance Committee shall, between meetings of the Board, consider and take appropriate action on matters pertaining to the affairs of the Board, as referred to it by the Chair of the Board, the Standing Committees of the Board, the President or the Vice-Presidents.
75. All decisions made by the Committee on behalf of the Board shall be reported to the Board at its next meeting and shall be subject to confirmation by the Board; except that when unusual or urgent matters require decision, the action of the Committee shall be brought to the attention of the Board at its next meeting for information only.
76. The Executive and Governance Committee shall make recommendations to the Board on the appropriate form of all by-laws of the Board and on any alteration or other matter pertaining to such by-laws.
77. The Executive and Governance Committee shall annually: a) review and endorse the Strategy & Priorities put forward by the President for the upcoming Academic year, to be provided to the Board for approval; b) review and endorse the list of key performance metrics to be presented by University leadership to the Board throughout the year; c) develop a Board Workplan, taking into account the President’s priorities and other areas of interest to the Board for the upcoming Academic year; d) review Terms of Reference and Calendar/Workplan for each Committee and make recommendations to Committee Chairs consistent with the Governance Agenda; and e) review the performance and effectiveness of the Board of Governors, and make recommendations to the Board regarding board composition, processes & practices, training, and other matters that may serve to improve overall University Governance.
The Board of Governors By-Law No. 1, section 15, sub-section 3 (k) states:
The Human Resources Committee shall be composed of the Chair, the Vice-Chair(s), the Chair of the Remunerations Committee of the Board and the Chair of the Planning and Resources Committee of the Board. A majority of the members of the Committee shall constitute a quorum.
The Committee shall:
President’s Performance Review Process:
The evaluation of the President’s performance as specified above, shall include the following:
All committee meetings, except for the University Planning Committee, are held in closed session.
82. The Investment Pool Committee shall be a subcommittee of the Planning and Resources Committee and shall consist of
a) not fewer than six (6) members, as follows: (1) at least two (2) current members of the Board, appointed by the Board; (2) two (2) members with investment expertise appointed by the Planning and Resources Committee; (3) the Associate Vice-President & Chief Financial Officer; and (4) the Treasurer. b) the President and Vice-President (Operations and Finance) shall be ex officio members but shall have no vote; and c) the Chair shall be designated by the Board of Governors from the Board appointed members on the Committee.
83. Four (4) members of the Committee shall constitute a quorum.
84. Appointments shall become effective on July 1, and members shall hold office for a period of one (1) year. Members shall be eligible for re-appointment.
85. All meetings of this Committee are in Closed Session.
86. The overall objective of the Investment Pool Committee is to bring advice and knowledge to the effective management of the investments included in the University’s Investment Pool, consistent with the approved fund objectives.
87. Within this context, the Committee shall: a) review investment policies, objectives, strategies and make recommendations to the Planning and Resources Committee; b) make recommendations to the Planning and Resources Committee concerning the engagement and termination of investment managers and consultants; c) review and approve mandates and investment objectives given to individual investment managers; d) meet quarterly to monitor investment performance of the total Fund and of individual managers; e) meet regularly with external investment managers; f) monitor operating expenses such as fees paid to external fund managers, consultants, fund measurement services and custodians; g) monitor rebalancing of funds among the investment managers and exposure to non-Canadian currencies; and h) provide semi-annual performance reports to the Planning and Resources Committee.
88. The Nominating Committee shall be composed of the:
a) Chair of the Board, who shall be the Chair of the Committee; b) Vice-Chair(s) of the Board; c) President; d) Chancellor; and e) three (3) or more additional members of the Board.
89. One-half (1/2) of the members of the Committee, other than the President, shall constitute a quorum.
90. All meetings of this Committee are in Closed Session.
91. The Nominating Committee of the Board shall consider and recommend to the Board: a) persons to be elected under Section 8 (1) (b) of the 1976 Act; b) the membership and Chairs of Board Committees (and Vice-Chair if appropriate); c) Honorary Governors; d) the Chair; e) the Vice-Chair(s); f) the University Secretary; and g) such other offices as may be referred to the Committee by the Board.
The Chair of the Pension Trust Committee is elected by and from the members.
92. The Pension Trust Committee shall be composed of: a) four (4) members appointed by, but not necessarily from, the Planning and Resources Committee of the Board; b) eight (8) members of the Pension Plan: (1) three (3) of whom shall be appointed by the McMaster University Faculty Association, one (1) of whom typically shall be appointed from the professional librarians; (2) one (1) of whom shall be appointed by the McMaster University Clinical Faculty Association; (3) two (2) of whom shall be appointed by UNIFOR, Local 5555; (4) one (1) of whom shall be appointed by the McMaster University Retirees Association; and (5) one (1) of whom shall be appointed by the President, in consultation with the Associate Vice-President & Chief Human Resources Officer, from The Management Group; and c) the ex officio members who shall be the: (1) Chair and the Vice-Chair(s) of the Board; (2) President; and (3) Vice-President (Operations and Finance). 93. Eight (8) members of the Committee shall constitute a quorum. 94. All meetings of this Committee are in Closed Session. 95. Appointments shall become effective on July 1, and members shall hold office for a period of one (1) year but any member shall be eligible for re-appointment. If a vacancy occurs during the year, a replacement shall be appointed within sixty (60) days in the same manner as the prior appointment. 96. The Pension Trust Committee shall elect a Chair from among its members. 97. The Committee shall: a) recommend to the Board general pension investment policy and the annual Statement of Investment Policies and Objectives for submission to the Financial Services Commission of Ontario; b) monitor and review performance of Investment Consultants and Fund Managers: (1) make recommendations to the Board with respect to situations of deviation or proposed deviation by Fund Managers from the Statement of Investment Policies and Procedures; (2) make recommendations to the Board on the appointment or replacement of such Investment Consultants and Fund Managers; c) monitor the annual calculation of the “Net Interest on the Fund” and the “Annual Pension Increase”; d) discuss and promote awareness and understanding of the pension plan by members of the plan and persons receiving benefits under the plan; e) comment and make recommendations to the Planning and Resources Committee on: (1) the performance and appointment of the actuary; and (2) the actuarial methods and assumptions used in determining the financial condition of the pension plan and the contributions to the pension plan; (3) comment and make recommendations to the Planning and Resources Committee on proposed changes to the pension plan text, and propose changes to the pension plan text; and (4) monitor at least annually the administrative expenses paid from the pension plan, and determine whether they are appropriate. 98. Changes in the nature and structure of administrative expenses paid may be approved by the Board only if recommended by the Pension Trust Committee as a result of a ballot of all Pension Trust Committee members.
78. The Planning and Resources Committee shall be composed of:
a) not fewer than five (5) members of the Board; b) and the ex officio members who shall be the:
79. One-half (1/2) of the membership of the Committee, excluding the President and Vice-Presidents, shall constitute quorum. 80. All meetings of this Committee are in Closed Session. 81. The primary responsibilities of the Planning and Resources Committee are:
Financial Affairs
a) provide oversight of the financial affairs of the University and keep the Board informed thereon;
b) approve financial expenditures as required by the Approval and Signing Authority Policy;
c) review, at least once annually, interim financial statements in comparison with budgets;
d) review final annual budgets and make recommendations to the Board;
e) review and oversee the establishment of adequate financial controls to ensure the implementation of policies and decisions adopted by the Board, including budgetary matters;
f) provide oversight of investment policies and the management of McMaster’s investments and delegate such responsibilities as it sees fit to the University Administration in the implementation of established policies;
g) recommend to the Board of Governors the establishment and collection of fees and charges for tuition on behalf of any entity or organization of the University;
Capital Planning and Construction
h) review and approve plans for capital expenditures and all matters relating to building, expansion, maintenance or alteration of the physical resources of the University, as required by the Approval and Signing Authority Policy;
i) review and approve the award of contracts and the selection of professional consultants;
j) ensure capital projects and expenditures are within the resources of the University;
k) with the approval of the Board, determine limits within which authority for commitment of funds may be delegated to University officials;
l) when making decisions regarding building on campus, the Committee will consider factors that impact the aesthetic quality of campus, as well as the surrounding community; and
m) the Committee shall be responsible for reviewing projects and proposals with consideration to both financial and planning aspects of University business.
The Remunerations Committee consists of not fewer than three members of the Board of Governors.
104. The Remunerations Committee shall be composed of: a) not fewer than three (3) members of the Board; and b) the ex officio members who shall be the: (1) Chair and the Vice-Chair(s) of the Board; and (2) President and the Vice-President (Operations and Finance).
105. No employee of the University, other than the President and the Vice-President (Operations and Finance), shall be a member of the Remunerations Committee.
106. Three (3) members of the Committee, other than the President and Vice-President (Operations and Finance), shall constitute a quorum.
107. All meetings of this Committee are in Closed Session.
108. The primary function of the Remunerations Committee shall be to recommend to the Board policies regarding salaries, wages, benefits and other forms of remuneration and to provide advice, as necessary, to the University Administration in implementing and administering such policies.
109. In making its recommendations, the Committee shall have regard to the policies of the University as approved by the Planning and Resources Committee and the Board.
The Committee on External Engagement & Advancement consists of up to six members, at least half of whom shall be members of the Board of Governors.
Committee on External Engagement & Advancement
99. The Committee on External Engagement & Advancement shall be composed of: a) a minimum of six (6) but no more than ten (10) members, the majority of whom shall be members of the Board; and b) the ex officio members who shall be the: (1) Chancellor; (2) President; (3) Chair and the Vice-Chair(s) of the Board; (4) Vice-President, University Advancement; and (5) Chief Executive, External and Internal Engagement.
100. One-half (1/2) of the members of the Committee shall constitute a quorum.
101. All meetings of this Committee are in Closed Session.
102. The External Engagement and Advancement Committee will meet at least four times a year, or more often as required.
103. The Committee supports the Board in fulfilling its strategic and fiduciary oversight for external relationships and partnerships, fundraising, and brand, reputation and related risks. The primary responsibilities of the Committee are:
a) External Relationships i. Review strategies for engagement with donors, alumni, partners, governments, and other key constituencies. ii. Review annual marketing and communications plans and receive reports on their effectiveness.
b) Fundraising i. Review and recommend frameworks and policies that promote a strong, donor-focused culture aligned with McMaster’s institutional priorities. ii. Review long term fundraising strategies and goals as well as annual financial targets for recommendation to the Board. iii. Monitor fundraising progress and report to the Board regularly on outcomes and effectiveness. iv. Approve major gifts as required by the Approval and Signing Authority Policy.
c) Brand and Reputation i. Oversee the development and maintenance of the University’s brand and reputation. ii. Annually review brand use guidelines and policies and assess their effectiveness. iii. Obtain regular updates from management regarding any items or actions that have negatively impacted brand or reputation.
d) Other Duties i. Provide advice and recommendation on other matters within the mandate. ii. Perform other activities as requested by the Board.