Audit Committee Terms of Reference

Transcription

1 CORPORATE GOVERNANCE 1. Constitution Audit Committee Terms of Reference The Board hereby resolves to establish a Committee of the Board to be known as the Audit Committee ( the Committee ). 2. Membership The Committee shall be appointed by the Board, on the recommendation of the Nomination Committee and in consultation with the Chairperson of the Committee. The Committee shall consist of not less than three members, each of whom shall be an independent non-executive Director and at least one of which has recent and relevant financial expertise. The Committee as a whole shall have competence relevant to the sector in which the Group operates and Committee members shall bring an independent mind-set to their role. The Board shall ensure that the membership of the Audit Committee is refreshed in accordance with the Group Corporate Governance Policy. The Chairman of the Committee shall be appointed by the Board. Appropriate training will be provided to Committee members on an on-going and timely basis, following the completion of an induction programme by all new members. 3. Attendance at Meetings Only members of the Committee have the right to attend Committee meetings and a quorum shall be two members. The Group CEO, Group CFO, the Head of Internal Audit, the Group Financial Controller and a representative of the external auditors shall normally attend meetings. At least once a year the Committee shall meet with the external auditors and Head of Internal Audit without executive Board members present. The Company Secretary shall be the Secretary of the Committee and shall be entitled to delegate this role from time to time to a person approved by the Committee. The Company Secretary will ensure that the Committee receives information and papers in a timely manner to allow for full and proper consideration to be given to the issues. 4. Frequency of Meetings The Committee Chairman shall, in consultation with the Company Secretary, decide on the frequency and timing of meetings in line with key dates in the financial reporting and audit cycle and in particular to allow a sufficient period between the Audit Committee meetings and meetings of the Board. Meetings shall be held no less than four times a year. The external auditors may request a meeting if they consider that one is necessary. 5. Authority The Committee is authorised by the Board to investigate any activity within its terms of reference. It is authorised to seek any information it requires from any employee and all employees are directed to co-operate with any request made by the Committee. The Committee is authorised by the Board to obtain outside legal or other independent professional advice and to secure the attendance of advisors with relevant experience and expertise if it considers this necessary, the expense of which will be borne by the Company. 6. Duties of the Committee The Committee shall carry out the duties below for the Company, subsidiary undertakings and the Group as a whole, as appropriate. KERRY GROUP PLC AUDIT COMMITTEE TERMS OF REFERENCE 1

2 6.1 Financial Reporting The Committee shall monitor the integrity of the financial statements of the Company, including its annual and interim reports, other interim management statements and any other formal announcements relating to its financial performance, to determine whether the Company has kept proper books of account, focusing particularly on: any changes in significant accounting policies and practices; major judgmental areas; significant adjustments resulting from the audit; the going concern assumption; compliance with accounting standards; the methods used to account for significant or unusual transactions where different approaches are possible; (vii) compliance with stock exchange and legal requirements; (viii) true and fair view; (ix) (x) (xi) the profit and loss account of the Company; the clarity and completeness of disclosures in the Company s financial statements; and all material information presented with the financial statements, such as the strategic report and the corporate governance statements, relating to the audit and to risk management. Where requested by the Board, the Committee shall review the content of the annual report and accounts and provide advice to the Board on whether, taken as a whole, it is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company s performance, business model and strategy. The Committee shall review any other statements requiring Board approval which contain financial information first, where to carry out a review prior to the board approval would be practicable and consistent with any prompt reporting requirements under any law or regulation. Where the Committee is not satisfied with any aspect of the proposed financial reporting by the company, it shall report its views to the board. 6.2 Internal Control and Risk Management The Committee shall (on behalf of the Board which assumes responsibility for risk management and internal control systems): keep under review the monitoring and effectiveness of the Company s internal controls including financial internal controls and risk management systems, as well as considering its role in promoting sound risk management and internal control systems; review reports from management, internal audit and the external auditors on the effectiveness of the established internal control and risk management systems and consider whether the level of assurance obtained is enough to recommend to the Board that they are operating effectively; provide advice to the Board on whether the Company has carried out a robust assessment of its principal risks including a description of the risks and an explanation of how they are being managed or mitigated; and review and approve the Company s statement on internal control, risk management and longer term viability, prior to endorsement by the Board. 6.3 Whistleblowing and Fraud The Committee shall review the arrangements in place by which staff of the Company may, in confidence, raise concerns about possible improprieties in financial reporting or other matters. The Committee shall ensure that these arrangements allow proportionate and independent investigation of such matters and appropriate follow up action. The Committee shall review the Company s policies, procedures and controls for preventing and detecting fraud. 6.4 Internal Audit The Committee shall monitor and review the operation of the Internal Audit function and in particular: approve the appointment or removal of the Head of Internal Audit; KERRY GROUP PLC AUDIT COMMITTEE TERMS OF REFERENCE 2

3 ensure that the Head of Internal Audit has direct access to the Chairman of the Committee, Chairman of the Board and is accountable to the Committee; review and approve the role and mandate of internal audit, annually approve the internal audit charter and ensure that the Internal Audit function is adequately resourced, has unrestricted scope, has appropriate standing within the Company and is free from management or other restrictions; review and assess the annual internal audit plan ensuring that it is aligned to the key risks of the Group and ensure co-ordination between the external and internal auditors; ensure that there is open communication with different functions and that the effectiveness of the risk, compliance and finance functions are evaluated as part of the internal audit plan; receive a report on the results of the internal auditors work on a periodic basis; (vii) monitor and review the effectiveness of the Company s Internal Audit function in the context of the Company s overall risk management framework; and (viii) review and monitor management s responsiveness to the internal auditors findings and recommendations. The Committee may consider engaging an independent, third party to review the effectiveness of internal audit and its processes. 6.5 External Audit The Committee shall consider and make recommendations to the Board in relation to the appointment, reappointment and removal of the Group s external auditors. The Committee shall ensure that at least once every ten years the external auditor is rotated and shall oversee the tendering process to ensure that all firms have such access as is necessary to information and individuals during the duration of the tendering process. If the external auditor resigns, the Committee shall investigate the reasons leading to this and consider whether any action is required. The Committee shall oversee the relationship with the external auditor, including (but not limited to): approve their terms of engagement, including any engagement letter issued at the start of each audit and the scope of the audit and ensure co-ordination where more than one audit firm is involved; approve their remuneration, including audit and non-audit services, such that the level of fees is appropriate to enable an effective and high quality audit to be conducted; assess and report to the Board on an annual basis the qualifications, expertise, resources and independence of the external auditors and the effectiveness of the audit process including a report obtained from the external auditor on their own internal quality procedures; assess annually the independence and objectivity of the external auditor, taking into consideration relevant professional and regulatory requirements and consider the relationship with the auditor as a whole, including the provision of any non-audit services; monitor the external auditor s compliance with ethical and professional guidance on the level of fees that the Company pays relative to the overall fee income of the firm and regarding independence including the rotation of audit partners and staff, obtain information from the auditor annually on their policies and processes for maintaining independence and adherence to these; agree with the Board and monitor the implementation of a policy on the employment of former employees of the external auditor; and (vii) recommend to the Board, implement and monitor a policy on the supply of non-audit services by the external auditor to avoid any threat to auditor objectivity and independence, taking into account any relevant ethical guidance on the matter. The Committee shall meet with the external auditor regularly, including once at the planning phase pre the audit, to review the auditor s plan, ensuring consistency with the scope of the audit, having regard to the seniority, expertise and experience of the audit team. The Committee shall meet with and review the external auditor s findings and audit report including but not limited to: KERRY GROUP PLC AUDIT COMMITTEE TERMS OF REFERENCE 3

4 discussion of any major issues that arose during the audit, resolved and unresolved; review how risks to audit quality identified during initial discussions were addressed; key accounting and audit judgements; the auditor s view of their interactions with senior management; levels of errors identified during the audit; and the effectiveness of the audit process. The Committee shall discuss problems and reservations arising from the interim and final audits, and any matters the auditor may wish to discuss (in the absence of management where necessary). The Committee shall monitor the effectiveness of the external audit process including the performance and quality of the auditor s work, determining whether the auditor has met the agreed plan and understand the reasons for any changes to the plan. This review will also include obtaining feedback from management involved in the audit on the conduct of the audit. The Committee shall review the external auditor s management letter and managements response. 6.6 Reporting Procedures The Committee Chairman shall make reports to the Board on the business of the Committee and how it has discharged its responsibilities, including: the significant issues it has considered in relation to the financial statements and how these were addressed (as noted in the Financial Reporting section above); its assessment of the effectiveness of the external audit process and its recommendations on the appointment or reappointment of the external auditor (as noted in the External Audit section above); and any other issues on which the Board has requested the Committee s opinion. The Committee should consider its role in ensuring that shareholder interests are properly protected in relation to financial reporting and internal control. The Committee should also consider the clarity of its reporting and be prepared to meet investors. The Committee Chairman shall be available at the annual general meeting to answer questions on the Committee s activities. The Committee shall report on its activities in a separate section of the annual report including an explanation of: how the Committee assessed the effectiveness of the external audit process and the internal audit function; the significant issues it has considered in relation to the financial statements and how these were addressed, having regard to the matters communicated to it by the auditors; and all other requirements as set out in the FRC Guidance on Audit Committees. Note: where applicable, information disclosed elsewhere in the annual report and accounts will be referenced. Disagreements between the Committee and the Board shall be given adequate time for discussion. The Committee has the right to report unresolved issues to shareholders as part of its report on its activities in the annual report. The Committee shall conduct an annual self-evaluation of its own performance and describe how this performance evaluation was conducted as part of its report on its activities in the annual report. 6.7 Other The Committee shall have access to sufficient resources in order to carry out its duties. The Committee shall consider other functions, as defined by the Board or as prescribed by regulation. The Committee shall review at least annually its terms of reference and recommend any changes necessary to the Board for approval. KERRY GROUP PLC AUDIT COMMITTEE TERMS OF REFERENCE 4

5 7. Document Approval and Change History Approved by the Audit Committee 14 December 2017 Approved by the Board 14 December 2017 KERRY GROUP PLC AUDIT COMMITTEE TERMS OF REFERENCE 5