Audit Committee Charter
In accordance with Principle 4 of the ASX Corporate Governance Principles, the Audit Committee is a committee of the Board of the Company with specific powers delegated under this Charter. The Charter sets out the Audit Committee’s function, composition, mode of operation, authority and responsibilities.
The primary function of the Committee is to assist the Board in fulfilling its responsibilities relating to accounting and reporting practices of the Company. In addition, the Committee will:
- oversee, co-ordinate and appraise the quality of the audits conducted by both the Company’s external and internal auditors;
- determine the independence and effectiveness of the external and internal auditors;
- maintain open lines of communications among the Board and auditors to exchange views and information, as well as confirm their respective authority and responsibilities;
- serve as an independent and objective party to review the financial information submitted by management to the Board for issue to shareholders, regulatory authorities and the general public; and
- review the adequacy of the reporting and accounting controls of the Company.
The Committee shall:
- meet as frequently as required to undertake its role effectively
- have the minimum quorum for a committee meeting (two members)
- keep minutes of its meetings
In performing its functions in accordance with any applicable law, the Committee:
- has unrestricted access to the external auditors, senior management and employees of the Company;
- has unrestricted access to information and reports relevant to fulfilling its responsibilities;
- may seek independent external advice on matters brought before the Committee or in relation to the functions and responsibilities of the Committee; and
- has the power to conduct or authorise investigations into any matters within the committee’s scope of responsibilities or when requested by the Board.
The Committee must promote an environment within the Company that is consistent with best practice financial reporting. In particular, the Committee must:
- perform an independent review of financial information prepared by management for external reporting. This will include conducting a review of the annual report, directors’ report, annual financial statements, half yearly financial statements and any other externally reported financial information required by law;
- monitor the integrity and effectiveness of financial reporting processes;
- review and assess the external audit arrangements;
- review and ensure the implementation of major accounting changes;
- ensure that appropriate policies are established and adequate systems are in place to identify, assess the propriety of and disclose any related-party transactions; and
- ensure the Board is kept regularly informed on general progress and activities, and is promptly briefed on significant matters.
External audit arrangements
The Committee shall report to the Board on external audit arrangements including:
- making recommendations to the Board on the appointment, re-appointment, replacement and remuneration of the external audit firm;
- review the terms of engagement for the external auditor;
- review the scope of the external audit with the external auditor including identified areas of risk
- monitor the performance of the external auditors including: assessment of the quality and rigour of the service provided; and the audit firm’s internal quality control procedures;
- review and monitor management’s responsiveness to the external audit findings; and
- meet with the external auditor without the presence of management as deemed appropriate
Appointment of external auditor
Should a change in auditor be considered necessary, a formal tendering process will be undertaken. The Committee will identify the attributes required of an auditor and will ensure the selection process is sufficiently robust so as to ensure selection of an appropriate auditor.
The Committee will ensure that prospective auditors have been provided with a sufficiently detailed understanding of the Company, its operations, its key personnel and any other information, including group structures and financial statements that will have a direct bearing on each firm’s ability to develop an appropriate proposal and fee estimate.
The Committee and the Board will consider the appointment in conjunction with senior management.
In selecting an external auditor, particular consideration will be given to determining whether the fee quoted is sufficient for the work required, that the work is to be undertaken by people with an appropriate level of seniority, skill and knowledge and whether the work proposed is sufficient to meet the Company’s needs and expectations.
The appointment of a new external audit firm will be placed before shareholders for ratification at the first general meeting after the appointment has been made.
Rotation and succession planning
The Committee will discuss with the auditor the provisions the audit firm has in place for rotation of the lead engagement partner and the independent review partner. The Company shall require that the lead engagement partner and review partner be rotated at least every 5 years.
Management sign-off procedure
The Audit committee will ensure that the Chief Financial Officer and Chief Executive Officer (or equivalent) prepares a written statement to the Board certifying that the Company’s annual financial report and half yearly financial report present a true and fair view, in all material respects, of the financial condition of the Company and its operational performance and are in accordance with relevant accounting standards and the Corporations Act.
The statement is to be presented to the Board prior to the approval and sign-off of the respective annual and half year financial reports.
This policy is reviewed annually.