A. Composition of the Committee
The Company will have an Audit and Risk Committee established pursuant to a Charter approved by the Board comprised of at least three (3) members of the Board with the following structure:
- All Committee members will be non-executive Directors;
- The majority of the Committee members will be independent Directors;
- The Chairman of the Committee will not be the Chairman of the Board and will be an independent director;
- At least one member of the Committee must have formal accounting qualifications or with significant experience in financial and accounting matters;
- At least one member of the Committee will have an understanding of the industries in which the group operates;
- Membership of the Committee will be for an initial period of three (3) years;
- The position of Committee Chairman will be confirmed annually by the members;
- The Company Secretary will also be the Secretary of the Audit Committee;
- The Managing Director will be invited to attend all or part of Committee Meetings from time to time other Group's executives may also be invited to attend;
- The external auditors will attend each meeting of the Committee; and
- The Committee will meet with the external auditors at least once in the absence of any member of the executive team.
- The Committee will meet at least two times per year or on a more frequent basis if required by any member of the Committee or the external auditors or the Managing Director. Two members of the Committee will constitute a quorum.
- The Committee shall have the right to seek any information or explanations it may require from any Company employee who is required to co-operate with the Committee.
- The Committee is authorised to obtain at the Group's cost any external advice it may require to effectively discharge its duties and responsibilities. In these circumstances executive management will be informed that external advice is being obtained and, at the Committee's discretion, the nature of the advice requested and provided.
- The Committee is to make recommendations to the Board on all matters within the scope of the Committee's Charter
D. Responsibilities of the Committee
The Committee is responsible for reviewing the integrity of the Company's financial reporting and overseeing the independence of the external auditors. In particular, the Committee has the following duties:
- Accounting Practices and External Reporting Financial Statements:
a) to review the audited annual and half yearly financial statements and any reports which accompany published financial statements before submission to the Board, recommending their approval, focusing particularly on:
i) any changes in accounting policies or interpretations and applications of those policies;
ii) major judgmental areas;
iii) significant adjustments, accounting and financial reporting issues resulting from the external audit;
iv) compliance with accounting policies and standards and legal requirements;
b) to review the evaluation by management of factors related to the independence of the Group's external auditors and assist them in the preservation of such independence;
c) when appropriate, to oversee any changes to the Group's external auditor including the reasons for the resignation of the outgoing external audit firm and the qualifications and experience of management's recommendation as to the proposed incoming external audit firm.
- Related Party Transactions:
a) To monitor and review the propriety of any related party transactions and the disclosure thereof in the financial statements.
- External Audit Function
a) The Committee shall ensure that the Auditor that shall not provide services that are perceived to be materially in conflict with the role of the auditor. Such conflict services include bookkeeping, deal documentation, securities transactions, sale and purchase contracts, valuations, internal audit procedures, executive recruitment, design and implementation of IT systems, due diligence on investments, tax planning and strategic development;
b) each year, to review the appointment of the external auditor, their independence, the audit fee, and any questions of resignation or dismissal;
c) to discuss with the external auditor before the audit commences the nature and scope of the audit;
d) to meet privately with the external auditor on at least an annual basis;
e) to determine that no management restrictions are being placed upon the external auditor;
f) to discuss problems and reservations arising from the interim review and final audit, and any matters the auditors may wish to discuss (in the absence of management where necessary);
g) to review the external auditor's management letter and management's response;
- Assessment of Effectiveness:
a) To evaluate the adequacy and effectiveness of the Company's administrative, operating and accounting policies through active communication with operating management, internal auditors and the external auditors.
- Oversight of the Risk Management System:
a) To oversee the establishment and implementation by management of a system for identifying, assessing, monitoring and managing material risk throughout the Company. This system will include the Company's internal compliance and control systems;
b) to review at least annually the Company's risk management systems to ensure the exposure to the various categories of risk are minimised prior to endorsement by the Board;
c) to evaluate the Company's exposure to fraud;
d) to take an active interest in ethical considerations regarding the Company's policies and practices;
e) to monitor the standard of corporate conduct in areas such as arms-length dealings and likely conflicts of interest;
f) to determine the Company's risk profile describing the material risks, including both financial and non-financial matters, facing the Company;
g) to review and update the risk profile at least annually;
h) to liaise with management to ensure that the declarations made pursuant to section 295A of the Corporations Act are provided to the Board on a timely basis.
- Committee Charter:
a) The Committee charter is to be reviewed annually to ensure continued compliance with the ASX guidelines.
- Board Reporting
a) Minutes of Committee Meetings are to be provided to the Board as soon as they are approved. Should a Board Meeting fall between the date of a Committee Meeting and the date minutes are approved, the Committee Chairman will report orally to the Board in the interim;
b) When the minutes of the Committee do not sufficiently address matters in the consideration by the Committee of its responsibilities outlined within the Committee Charter, the Committee Chairman should report separately;
c) The report should contain all matters relevant to the Committee's role and responsibilities, including:
i) assessment of whether external report is consistent with Committee members' information and knowledge and is adequate for shareholder needs;
ii) assessment of the management processes supporting external reporting;
iii) recommendations for the appointment or removal of an auditor;
iv) assessment of the performance and independence of the external auditors and whether the audit Committee is satisfied that independence of this function has been maintained having regard to the provision of non-audit services.
v) the results of its review of risk management.