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Audit committee responsibilities are generally spelled out in the California Nonprofit Integrity Act, the California Corporations Code, and, indirectly, in auditing pronouncements independent auditors are required to follow. Under the California Nonprofit Integrity Act, the audit committee must be separate from the finance committee, if the nonprofit has one. The Act provides that audit committee members cannot receive any compensation from the charity in excess of the compensation, if any, received by board members, and may not have a material financial interest in any entity doing business with the charity. Under the Corporations Code, the business judgment standard for a board member of a nonprofit requires the director, including a board member who serves as an audit committee member, to perform duties loyally, in good faith, without self interest, in a manner that the director believes to be in the best interests of the entity, and with the care, including reasonable inquiry, as an ordinary prudent person in a like position would use under similar circumstances. Auditing pronouncements require audit committee members to oversee the details of the nonprofit's accounting and financial internal control functions, and to be prepared to respond to inquiries by, and communications from, the outside auditor.

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