AUDIT & RISK COMMITTEE CHARTER

Transcription

1 AUDIT & RISK COMMITTEE CHARTER April

2 INTRODUCTION The ABC Board has established the Audit & Risk Committee in compliance with Section 32 of the Commonwealth Authorities and Companies Act 1997 (CAC Act) and Regulation 6A of the Commonwealth Authorities and Companies Regulations 1997 (CAC Regulations). The Audit and Risk Committee Charter provides a broad conceptual framework, professional standards and guidelines for the Audit and Risk Committee (the Committee) and describes the roles and responsibilities of the Committee. OBJECTIVE The objective of the Committee is to provide independent assistance to the ABC Board on the Corporation s risk, control and compliance framework, and its external accountability responsibilities. This includes: Assisting the Board to discharge its oversight and governance responsibilities in relation to the Corporation s: Internal Control Framework. Financial Reporting and Management. Risk Management. Legislative Compliance. Providing a forum for communication between the Board, senior management and both the internal and external auditors. Monitoring and reviewing the independence, integrity and objectivity of the Corporation s internal and external auditors. Monitoring and reviewing compliance with standards of ethical behaviour expected within the Corporation. AUTHORITY AND ACCESS The Board authorises the Committee, within the scope of its role and responsibilities, to: Obtain any information as reasonably required from any employee and/or external party (subject to their legal obligation to protect information). Discuss any matters with the internal/external auditor, or other external parties. Request the attendance of any employee, including directors, at Committee meetings. Obtain external legal or other professional advice, as reasonably required to meet its responsibilities, at the Corporation s expense. 2

3 COMPOSITION The Board is responsible for the appointment of Committee members and the Chair of the Committee. The Committee will consist of at least three members, with the majority being non-executive Directors drawn from the Board. The Chair of the Committee must be a member of the Board. The Board Chair should not also be the Chair of the Committee. The term of appointment should be determined by the Board but should not exceed an initial period of three years, after which members will be eligible for extension or reappointment as the Board may determine. The re-appointment of members may incorporate a formal review of their performance. The Committee, taken collectively, will have a broad range of skills and experience relevant to the operations of the Corporation. At least one member of the Committee should be an expert with accounting or related financial management experience with an understanding of accounting and auditing standards. The Committee may obtain such expertise from external sources, as required. The Managing Director, Chief Operating Officer and the Head Group Audit will not be members of the Committee, but attend meetings as observers. ROLES AND RESPONSIBILITIES The Committee is directly responsible and accountable to the Board for the exercise of its responsibilities. The Committee has no executive powers, unless delegated to it by the Board. The Committee has the power to make recommendations to the Board but does not have the power to implement its recommendations without the endorsement of the Board. The responsibilities of the Committee may be revised or expanded in consultation with, or as requested by, the Board from time to time. In order to achieve its objectives, the Committee s responsibilities are: Internal Control Framework To review whether management s approach to maintaining an effective internal control framework, including over external parties such as contractors and advisors, is sound and effective. To review whether management has in place relevant policies and procedures and that these are periodically reviewed and updated. To determine whether the appropriate processes are in place to assess whether policies and procedures are complied with. To review whether appropriate policies and procedures are in place for the management and exercise of delegations. Financial Reporting and Management 3

4 To review the financial statements and recommend their signing by the Chair of the Board. This would include review and/or consideration of: - Material changes in accounting policies and practices. - Significant judicial decisions affecting the Corporation. - Significant adjustments resulting from the audit. - Compliance with accounting standards. - Compliance with Government, legal and other requirements. - The Management Representation Letter. - Related-party transactions. Assessing the manner in which any significant estimates and judgements in financial reports are determined and enquiring of the external auditors the basis for their conclusion on the reasonableness of management s estimates. Any recommendations arising from the audit. To satisfy itself that the financial statements are supported by appropriate management signoff on the statements and on the adequacy of the systems of internal controls. To review the processes in place designed to ensure that financial information included in the Corporation s annual report is consistent with the signed financial statements. To satisfy itself that the Corporation has appropriate mechanisms in place to review and implement, where applicable, relevant Parliamentary Committee or Australian National Audit Office (ANAO) reports and recommendations. Risk Management To review whether management has in place a sound and comprehensive risk management framework, and associated procedures for effective identification and management of the Corporation s financial and business risks, including fraud and major projects. To review the impact of the Corporation s risk management framework on its control environment and insurance arrangements. To review whether a sound and effective approach has been followed in establishing the Corporation s business continuity planning arrangements, including whether disaster recovery plans have been tested periodically. 4

5 To review the Corporation s fraud control plan and satisfy itself the Corporation has appropriate processes and systems in place to capture and effectively investigate fraud related information. Legislative Compliance To determine whether management has appropriately considered legal and compliance risks as part of the Corporations risk assessment and management arrangements. To provide advice to the Board regarding the issue of the Corporation s annual Compliance Report. To review the effectiveness of the system for monitoring the Corporation s compliance with relevant laws, regulations, standards and associated government policies. Internal Audit To act as a forum for communication between the Board, senior management and internal audit. To review the internal audit coverage and annual work plan, ensure the plan is based on the Corporation s risk management plan, and recommend approval of the plan by the Board. To assess the adequacy of internal audit resources to carry out its responsibilities, including completion of the approved internal audit plan. To oversee the coordination of audit programs conducted by internal and external audit and other review functions. To review audit reports and provide advice to the Board on significant issues identified in audit reports and action taken on issues raised. To monitor management s implementation of internal audit recommendations. To review the internal audit charter to ensure appropriate organisational structures, authority, access and reporting arrangements are in place. To confirm that the internal auditors are independent of the activities that they audit. To periodically review the performance of ABC Group Audit and its external service providers. The Chair of the Audit & Risk Committee will also participate in the annual performance review of the Head Group Audit. 5

6 To maintain and support the continued independence and integrity of the internal audit function by requiring the Committee s endorsement of proposed changes to the Head Group Audit, or their role and to the appointment of co-sourced internal audit providers to period contracts. External Audit To act as a forum for communication between the Board, senior management and external audit. To provide input and feedback on the financial statement and performance audit coverage proposed by external audit and provide feedback on the audit services provided. To review all external audit plans and reports in respect of planned or completed audits and monitor management s implementation of audit recommendations. To assess action taken on significant issues raised in relevant external audit reports and better practice guides. To oversee the coordination of audit programs conducted by internal and external audit and other review functions. To review the performance of the external auditors. Ethical Culture In monitoring and reviewing compliance with standards of ethical behaviour as set out in the Code of Conduct and Corporation policies, the Committee will: Consider significant cases of employee conflict of interest, misconduct, fraud or irregularities. Monitor trends in fraud and corruption, and the appropriateness of preventative strategies. REPORTING The Chair of the Committee will report to the Board on the work performed by the Committee following the meeting. The Committee may, at any time, report to the Board any matter it deems of sufficient importance to do so. In addition, at any time an individual Committee member may request a meeting with the Chair of the Board. The Corporation s annual report shall include a statement describing the Committee s role and activities, attendance at meetings and the total number of meetings held during the year as well as any other information, considered appropriate. 6

7 ADMINISTRATIVE ARRANGEMENTS Meetings The Committee will meet at least four times per year. If required, a special meeting may be held to review the Corporation s annual financial statements and the Chair may call additional meetings, as required, to discharge the duties of the Committee. The Chair is required to call a meeting if asked to do so by the Board, or another Committee member. Attendance at Meetings and Quorums A quorum will consist of a majority of Committee members. The Chair of the Board and other Board members may be invited to attend Committee meetings. The Managing Director, Chief Operating Officer, Head Group Audit and a representative of the Corporation s external auditors will be invited to attend each meeting, unless requested not to do so by the Chair of the Committee. As required, the Committee may also request Directors or other employees attend Committee meetings or participate in certain agenda items. The Committee or its representative will meet separately with both the internal and external auditors, without management present, at least once a year, or as required. Secretariat The Board Secretariat will provide secretariat support to the Committee. The Secretariat will ensure the agenda for each meeting is approved by the Chair and then circulated with supporting papers at least one week before the meeting, and ensure the minutes of the meetings are prepared and maintained. Minutes must be approved by the Chair and circulated, as appropriate. Conflicts of Interest Committee members will comply with the ABC Board Protocol in respect of conflict of interest matters. Committee members must declare any conflicts of interest at the start of each meeting or before discussion of the relevant agenda item or topic. Details of any conflicts of interest should be appropriately minuted. Where members or observers at Committee meetings are deemed to have a real, or perceived, conflict of interest or conflict of duty they must withdraw from the meeting and the Committee deliberations on the issue where a conflict of interest or duty exists. Induction New members will receive relevant information and briefings on their appointment to assist them to meet their Committee responsibilities. 7

8 Assessment Arrangements The Chair of the Committee, in consultation with the Chair of the Board, will initiate a review of the performance of the Committee at least once every two years. The review will be conducted on a self-assessment basis (unless otherwise determined by the Board) with appropriate input sought from the Board, the Managing Director, the internal and external auditors, management and any other relevant stakeholders, as determined by the Board. The review may be conducted by external consultants appointed by the Committee. The Chair of the Committee will provide advice to the Board on a member s performance where an extension of the member s tenure is being considered. Review of Charter The Committee will review this charter, at least every two years. This review will include consultation with the Board. Any substantive changes to the charter will be proposed by the Committee and formally approved by the Board. 8