1. Membership of the Committee

Transcription

1 Appendix 2 (Board Charter) AUDIT & RISK COMMITTEE CHARTER The Audit & Risk Committee (the Committee) is established under rule 8 of the Company's Constitution. 1. Membership of the Committee The Committee must consist of: only non-executive directors; a majority of independent directors; an independent chairman, who is not chairman of the Board; and a minimum of 3 members. Directors will be appointed to the Committee by the Board. The Board may remove and replace members of the Committee by resolution. Members may withdraw from membership by written notification to the Board. Non-committee members, including the other directors, members of management and the auditors (external and internal) may attend meetings of the Committee at the invitation of the Committee chairman. It is intended that all members of the Committee should be financially literate and have familiarity with financial management, and at least one member should have relevant qualifications and experience in these areas (i.e. be a qualified accountant or other finance professional with experience of financial and accounting matters). The Company Secretary must attend all Committee meetings as minute secretary. 2. Administrative matters Meetings The Committee will meet as often as the Committee members deem necessary in order to fulfil its role. However, it is intended that the Committee will normally meet quarterly, including meetings in each May (to review the annual financial statements) and November (to review the half year financial statements). Quorum The quorum is at least 2 members. Convening and notice of meeting Any member may, and the Company Secretary must upon request from any member, convene a meeting of the Committee. Programmed Maintenance Services Limited Board Charter Page 11

2 Chairman In the absence of the Committee chairman, the Committee members must elect one of their number as chairman for that meeting. The Committee chairman does not have a casting vote. Rights of access The Committee will be given the necessary power and resources to fulfill this charter. The Committee has rights of access to management, rights to seek explanations and additional information from management or auditors (external and internal), and access to auditors (external and internal) without management present. While the internal audit function reports to senior management, the internal auditor is entitled to present any significant findings or recommendations directly to the Committee. The Committee may seek the advice of the Company s auditors, solicitors or such other independent advisers as to any matter pertaining to the powers or duties of the Committee or the responsibilities of the Committee, as the Committee may require. Minutes Minutes of meetings of the Committee must be kept by the Company Secretary and, after approval by the Committee chairman, be presented at the next Board meeting. All minutes of the Committee must be entered into a minute book maintained for that purpose and be open at all times for inspection by any director. Reporting The Committee chairman will provide a report to the next Board meeting of any material matters arising out of a Committee meeting. All directors will be permitted, within the Board meeting, to request information of the Committee chairman or members of the Committee. Authority The Committee has authority from the Board to review and investigate any matter within the scope of this charter and make recommendations to the Board. However, the Committee has no delegated authority from the Board to determine any outcomes and the Board retains its authority over such matters. 3. Roles and responsibilities Overview The purpose of the Committee is to assist the Board in monitoring and reviewing any matters of significance affecting financial reporting and compliance. The Committee s key responsibilities and functions are to: oversee the preparation of the financial statements and reports; oversee the external audit service provided to the Company; Programmed Maintenance Services Limited Board Charter Page 12

3 monitor the effectiveness of internal controls and management information systems; monitor compliance with legislation and regulatory requirements; review processes for identification and management of material business and strategic risks; and provide reports and recommendations to the Board relating to the above responsibilities. The Committee will set aside sufficient time to discharge these responsibilities and functions to, among other things, ensure the integrity of the financial statements of the Company and the independence of the external auditor. Roles The Committee s primary roles are: Financial Statements To review the audited annual and reviewed half-yearly financial statements and any reports which accompany published financial statements before submission to the Board, recommending their approval or otherwise, focusing particularly on: any changes in accounting policies and practices; major judgmental areas; significant adjustments, accounting and financial reporting issues resulting from the external audit; compliance with accounting policies and standards; compliance with legal requirements; and whether such reporting is consistent with the information and knowledge of the members of the Committee, and is adequate for shareholder needs. Ensuring that, prior to approving any financial statements, the Managing Director and Chief Financial Officer have provided a declaration to the Board that: in their opinion, the financial records of the Company have been properly maintained; in their opinion, the financial statements of the Company comply with the appropriate accounting standards and in their opinion, the financial statements give a true and fair view of the financial position and performance of the Company; and their opinion has been formed on the basis of a sound system of risk management and internal control, which is operating effectively. External Audit A. To review and advise the Board on the selection, appointment, independence, terms of reference and performance of the external auditor in accordance with the Company s External Audit Policy (attached as Attachment A to this Charter), and if necessary, the removal of the external auditor. B. To review and discuss with the external auditor: Programmed Maintenance Services Limited Board Charter Page 13

4 the audit approach for the current year in light of the Company s circumstances and changes in regulatory requirements; the audit fee for the current year; any issues arising from the interim and final audits, and any matters the external auditor may wish to discuss (in the absence of management where necessary); and the external auditor s management letter and management s response. C. To ensure that, where the external auditor has identified deficiencies in financial processes, prompt remedial action is taken by the Company. Assessment of Effectiveness of Internal Controls To evaluate the adequacy and effectiveness of the Company s administrative, operating and accounting policies, controls and processes through communication with senior management, internal audit and external auditors, including: evaluating the Company s exposure to material fraud; monitoring the management processes supporting external reporting; monitoring the implementation by management of any material internal control recommendations made by the internal and external auditors; and identifying and monitoring any special projects or investigations deemed necessary. Internal Audit To evaluate the adequacy, objectivity and effectiveness of the Company s internal audit function by: reviewing and approving the internal audit plan, its scope and progress; ensuring that the internal audit function is adequately resourced and has appropriate standing within the Company; ensuring an appropriate program of internal audit activity is conducted each financial year; reviewing the internal audit reports; and ensuring management has implemented the internal audit recommendations. Risk Management The Committee s specific function with respect to risk management (including risks associated with economic sustainability, environmental sustainability and social sustainability, as defined in the ASX Corporate Governance Council s Corporate Governance Principles and Recommendations (3rd Edition) (see Glossary)) is to at least annually review the Company's risk management program and report to the Board that: the Company s ongoing risk management program effectively identifies and assesses areas of potential material risk; adequate policies and procedures have been designed and implemented to manage identified material risks; Programmed Maintenance Services Limited Board Charter Page 14

5 procedures are in place to ensure compliance with legislative and regulatory requirements; the Company s business continuity plans are adequate by evaluating their structure; regular reports, including the Programmed Risk Register and any other reports produced by the Programmed Risk Committee, are received and reviewed; and proper remedial action is undertaken to redress areas of weakness or exposure to unacceptable material risks. Nothing in this Charter overrides the ultimate responsibility of the Board to: ensure the integrity of the Company's financial reporting; and assess the effectiveness of the Company's systems for management of material business risks. It may be appropriate in the Company's circumstances for the Board to make additional enquiries and to request assurances regarding the management of material business risks. 4. Review The Board will, at least once in each year, review the membership and Charter of the Committee to determine its adequacy for current circumstances and the Committee may make recommendations to the Board in relation to the Committee s membership, responsibilities, functions or otherwise. Programmed Maintenance Services Limited Board Charter Page 15

6 Audit & Risk Committee Charter Attachment A External Audit Policy Appointment The Audit and Risk Committee (Committee) has the responsibility and authority (subject to any requirements in the Corporations Act 2001 (Cth)) for the appointment, reappointment or replacement and remuneration of the external auditor, as well as evaluating its effectiveness and independence. The Committee will review the appointment of the external auditor annually based on its assessment of the auditor s performance. Assessment of External Auditor The Committee will review the performance of the external auditor on an annual basis after completion of the year-end audit. In evaluating the effectiveness of external audit, the Committee will assess the effectiveness of the external auditor based on a number of criteria including but not restricted to: the overall comprehensiveness of the external audit plan; the timeliness and quality of communications promised under the plan and delivered during the audit; the competency and industry knowledge of external audit staff; and the adequacy of resources to achieve the scope as outlined in the plan. The Committee will seek feedback from management during the assessment process. Independence The Committee will review and assess the independence of the external auditor, including but not limited to any relationships with the Company or any other entity that may impair or appear to impair the external auditor s judgment or independence in respect of the Company. The review and assessment will be carried out annually at the time the external auditor presents its annual audit plan. Before the directors approve the half year and full year accounts, the external auditor will be asked to provide a declaration testifying to its independence in respect of the financial period in question. The external auditor will have a continuing obligation to notify the Committee, via the Company Secretary, of any new information it believes may be material to reviewing its independence. The Committee has responsibility to develop and oversee the implementation of the Company s policy on the engagement of the external auditor to supply non audit services and to ensure compliance with that policy. Rotation of External Audit Engagement Partner The external audit engagement partner is required to rotate at least once every 5 years. The Committee will review and report to the Board on the procedures for the rotation of external audit engagement partners. Programmed Maintenance Services Limited Board Charter Page 16

7 Policy on non-audit services provided by independent external auditors The Committee is responsible for oversight of the engagement of the external auditor to supply non audit services. This policy is intended to assist in maintaining the independence of the Company s external auditor by regulating the provision of non-audit services by the auditor. The policy aims to provide guidance to the Committee in fulfilling its role of determining the independence of the external auditor by reference to: (a) those non-audit services that the external auditor may not provide; and (b) non-audit services that the external auditor may provide with the Committee s approval. Services requiring Committee approval The Committee recognises that there may be circumstances where the external auditor may perform non-audit services without creating a perceived or real threat to the independence of the external auditor. Such circumstances may include small or minor tasks of an assurance or compliance nature or cases where the external auditor is uniquely positioned to perform the services. The following tasks may be performed by the external auditor, subject to the following approval limits: (a) Non-audit services where the fee for the particular engagement does not exceed $5,000 may be approved by the Chief Financial Officer and advised to the Chairman of the Committee; (b) Non-audit services where the fee for the particular engagement exceeds $5,000 but is less than $50,000 may be approved by the Chief Financial Officer and the Chairman of the Committee; and (c) Non-audit services where the fee for the particular engagement exceeds $50,000 may only be approved by the Committee. In addition to the approval limits described above, where the annual fees for all non-audit services exceed or are likely to exceed 50% of the external auditor s annual audit fees, specific approval must be obtained from the Board to determine that the external auditor s independence is not perceived to be compromised. Services which the Auditor is prohibited from providing Specifically, the following activities should not be provided by the external auditor: bookkeeping or other services relating to the accounting records or financial statements; the design and implementation of financial information systems or financial controls; Programmed Maintenance Services Limited Board Charter Page 17

8 providing appraisal or valuation and fairness opinions; management functions; internal audit outsourcing services; actuarial services; or acting as a broker-dealer, promoter or underwriter. Notwithstanding those services listed above, a service will be deemed to be prohibited if it creates a real or perceived material threat to the independence of the external auditor. Monitoring and reporting Internal Audit The internal audit function will monitor whether this policy is being complied with and must promptly report any breach of this policy to the Committee Chair. Chief Financial Officer The Chief Financial Officer must report to the Committee on a periodic basis regarding: any non-audit services provided by the auditor; and the amounts paid to the external auditor for those services Committee The Committee must provide an annual report to the Board detailing the non-audit services provided by the external auditor during the year. The report should include: the amounts paid or payable to the external auditor for non-audit services provided during the year; whether any non-audit services provided during the year by the external auditor are compatible with the general standard of independence of auditor imposed by the Corporations Act; and the reasons why the Board should be satisfied that any non-audit services provided during the year by the external auditor did not compromise the auditor independence requirements of the Corporations Act. A full analysis of the total fees paid to the external auditor, including a breakdown of fees for non-audit activities will be disclosed in the Company's annual reports. Programmed Maintenance Services Limited Board Charter Page 18