Wikimedia Foundation Audit Committee/2022-10-05

Audit Committee Meeting

October 5, 2022

12:00 - 1:30 pm PDT

Participants: Amy Vossbrinck, Jaime Villagomez, James Baldwin, Julian Singh, Helen Pang, Shelby Langan, Linda Lenrow Lopez, Lisa Seitz-Gruwell, Michael Snow, Raju Narisetti, Nataliia Tymkiv, Tanya Capuano, Maryana Iskander.

Alternates: Rosie Stephnson-Goodknight, Victoria Doronina(UK) Lorenzo Losa.

KPMG: Jeremy Peters and Victory Ijegbai

Agenda

Kick off and approval of minutes - July 25, 2022 Meeting

Moved to approved by Raju Narisetti

Seconded by Tanya Capuano

Unanimously approved

KPMG FY 21-22 Audited Financial Statements

Jeremy Peters and Victory Ijegbai

Audit Overview

An unqualified opinion will be issued by KPMG. KPMG presented the results from their audit of the Foundation’s financial statements in accordance with auditing standards generally accepted in the United States. Those standards required that KPMG plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. They did not identify any issues or matters that would result in material weaknesses or significant deficiencies in the Foundation’s financial operations and report. There were no other matters to report related to required communication of the audit.

Capitalization of Software - Developments and Considerations

KPMG provided feedback on the Foundation’s software development cost capitalization processes as compared to best practices at other organizations. The Foundation began software capitalization in FY 2021, and in FY 2022, the Foundation continued to refine the process for determining and tracking capitalized software development costs. Accounting for internal use software is a particularly challenging accounting area, and there has been an increase in volume and this requires accounting and engineering teams to coordinate. KPMG provided considerations for further enhancements, but noted that the Foundation has appropriate processes in place to identify and track software development cost capitalization.

Inquiries

The Audit Committee is not aware of any fraud or irregularities. The management has been interviewed and they are not aware of any fraud or irregularities.

Tanya Capuano moved to approve the audit

Victoria Doronina seconded

Unanimously approved

Financial Overview

Revenue

We are on track to hit our Q2 goals.

We are monitoring recessionary risks and the impact of the changes in currency exchange rates. Currency devaluation of non US dollar denominated has had the biggest impact. The funds that we collect in non US currencies are somewhat offset by the expenses that we have, and pay (e.g. contractors and grants) in those same currencies.

Expenses

For the first two months of the fiscal year, the foundation's expense results are trending lower than the budgeted. The primary drivers for the budgetary under run are slower hiring than planned, lower compensation increases and timing differences between planned grantmaking awards and the actual award dates, which will be resolved at the end of the quarter.

As described under the Revenue discussion with the Audit Committee, the finance staff is monitoring the exchange rate impacts to our non-US denominated expenses. Additionally, we will be monitoring our ongoing budgetary decisions as we gain insights from the Big English campaign results.

Enterprise Risk Management (ERM)

The ERM staff presented the foundation’s plan to comprehensively refresh the register of risks that has been incrementally updated. The ERM staff has shared with senior leaders and other risk owners an overall timeline. The overall objective is to have the refresh completed by the end of the 2022 calendar year. The timeline is broken out into two phases.

Phase I - Refresh the progress of existing risks that were identified in the register. This will help reinvigorate the ERM process and bring the register up to date. ERM will work with teams across the organization, working with all risk owners to understand remediations undertaken.

Phase II -Identify new risks. This activity with Foundation teams will identify, prioritize, and register new risks and mitigants for risks that are current threats to meeting.

Next AC Meeting

Will be scheduled in February 2023

Preliminary Topics

● Form 990 approach - publish earlier than last year

● Annual planning

● Year to Date financial results and our Fiscal Year projection

● Continuous Process Improvement update

● ERM update

Respectfully submitted: Amy Vossbrinck