1. Overall Purpose/Objectives
The Committee will assist the Board in fulfilling its responsibilities. The Committee will review the financial reporting process, the system of internal control and management of financial risks, the audit process and the Company’s process for monitoring compliance with laws and regulations and its own code of business conduct. In performing its duties, the Committee will maintain effective working relationships with the Board of Directors, management and the external auditors. To perform his/her role effectively, each Committee member will obtain an understanding of the detailed responsibilities of Committee membership as well as the Company’s business, operations and risks.
The Board authorises the Committee, within the scope of its responsibilities, to:
• Seek any information it requires from:
○ Any employee (and all employees are directed to co-operate with any request made by the Committee)
○ External parties
• Obtain, after due consultation with the Board, at the Company’s expense, outside legal or professional advice on any matters within its terms of reference.
The Committee shall have no executive powers with regard to its findings and recommendations.
3.1 Membership of the Committee shall be appointed by the Board in consultation with the Chairman of the Committee.
3.2 The Committee will comprise of not less than three Directors, including the Chairman of the Committee and where possible these should be independent non-executive directors. The Committee should include the Chairman of the Company, and at least one member shall have recent and relevant financial experience.
3.3 The quorum for any meeting will be two.
3.4 The secretary of the Committee will be the Company Secretary, or such other person as nominated by the Board.
3.5 In the absence of the Committee Chairman, the remaining members shall elect one of themselves to chair the meeting.
3.6 Meetings shall be held not less than twice a year. Special meetings may be convened as required.
3.7 The Committee may invite such other person(s); e.g. the Chief Executive Officer, the Finance Director, to its meetings as it deems necessary. The Finance Director shall normally attend meetings. The external auditor shall normally attend the meetings of the Committee at which it communicates audit risks and planning, and the full year’s results. From time to time the Committee shall meet with the external auditors without any executive board member present.
3.8 The external auditors should be invited to make presentations to the Committee as appropriate.
3.9 Meetings shall be called by the Chairman or Secretary of the Committee at the request of any Committee members or the external auditors if they consider it necessary. Notice shall be forwarded to each member of the Committee, and any other person required, one week before the date of the meeting. Supporting papers shall be sent to the Committee members and other attendees as appropriate, at the same time.
3.10 The proceedings and resolutions of all meetings of the Committee, including the names of those present and in attendance, will be minuted and circulated promptly to all members of the Committee, unless a conflict of interest exists.
3.11 The Secretary shall ascertain, at the start of each meeting, the existence of any conflicts of interest and minute them accordingly.
3.12 The Chairman of the Committee shall attend the Annual General Meeting and be prepared to respond to any shareholder questions on the Committee’s activities.
4. Duties and Responsibilities
The Committee should undertake the following:
Internal Control and Risk Management
4.1 Evaluate whether management is setting the appropriate “control culture” by communicating the importance of internal control and the management of risk and ensuring that all employees have an understanding of their roles and responsibilities.
4.2 Review the Company’s internal financial controls and internal control and risk management systems.
4.3 Gain an understanding of whether recommendations made by external auditors have been implemented by management.
4.4 Review and note the statements to be included in the Annual Report concerning internal controls and risk management (which will be approved by the Board as a whole).
4.5 Gain an understanding of the current areas of greatest financial risk and how management is managing these effectively.
4.6 Consider with the external auditors any fraud, illegal acts, deficiencies in internal control and other similar issues.
4.7 Review significant accounting and reporting issues, including recent professional and regulatory pronouncements, and understand their impact on the financial statements.
b) Annual Financial Statements
4.8 Review and monitor the integrity of the annual financial statements before their submission to the Board and determine whether they are complete and consistent with the information known to Committee members; assess whether the financial statements reflect appropriate accounting principles.
4.9 Meet with management and the external auditors to review the financial statements, the significant financial reporting judgements contained in them, and the results of the audit
4.10 Review the appropriateness of the going concern assumption.
c) Preliminary Announcements, Interim Financial Statements and Analysts’ Briefings
4.11 Be briefed on how management develops preliminary announcements, interim financial information and analysts’ briefings; and the extent to which external auditors review such information
4.12 Assess the fairness and monitor the integrity of the preliminary and interim statements and disclosures before their submission to the Board. Obtain explanations from management and external auditors where necessary.
4.13 Review the appropriateness of the going concern assumption.
4.14 Review the external auditor’s terms of engagement, proposed audit scope and approach and ensure no unjustified restrictions or limitations have been placed on the scope.
4.15 Review the performance of the external auditor and make recommendations to the Board, to be put to shareholders for approval at the AGM, in relation to the appointment, reappointment and removal of the external auditors, as well as the remuneration for both audit and non-audit services and any question of resignation or dismissal.
4.16 Assess annually the independence and objectivity of the external auditor, taking into account relevant professional and regulatory requirements and the relationship with the auditor as a whole, including provision of any non-audit services.
4.17 Assess the qualifications, expertise and resources and the effectiveness of the audit process which shall include a report from the external auditor on their own internal quality procedures.
4.18 Monitor the auditor’s compliance with relevant ethical and professional guidance on the rotations of audit partners.
4.19 Review the findings of the audit with the external auditor and discuss any major issues arising, any accounting and audit judgements, levels of error identified during the audit, the effectiveness of the audit, review any representation letter requested by the external audit, review the management letter and management’s response to the auditor’s findings and recommendations.
4.20 Develop and implement a policy on the engagement of the external auditor to supply non-audit services taking into account any relevant ethical guidance regarding the provision of non-audit services, and report to the Board, identifying any matters in respect of which it considers that action or improvement is needed and making recommendation as to the steps to be taken.
4.21 Meet separately with the external auditor and without any executive directors present to discuss any matters that the Committee or auditor believe should be discussed privately and to respond to any contact made by the external auditors from time to time.
Compliance with Laws and Regulations
4.22 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 any fraudulent acts or non-compliance.
4.23 Obtain regular updates from management and the Company’s legal advisers regarding compliance matters.
The Chairman of the Committee shall make a brief report of the findings and recommendations of the Committee to the Board after each Committee meeting and on how it has discharged its responsibilities.
6.1 Perform other oversight functions as requested by the full Board.
6.2 If necessary, institute special investigations and, if appropriate, engage special counsel or experts to assist.
6.3 The Committee shall once a year, evaluate its own performance, constitution and terms of reference and recommend any changes it considers necessary to the Board for approval.