TERMS OF REFERENCE FOR AUDIT COMMITTEE
- The committee shall be appointed by the board and shall consist of not less than two members. A quorum shall be two members. At least one member of the audit committee shall have recent and relevant financial experience.
- The chairman of the committee shall be appointed by the board.
ATTENDANCE AT MEETNGS
- The finance director and a representative of the external auditors may be requested to attend meetings. At least once a year the committee shall meet with the external auditors without executive board members present.
- The company secretary shall be the secretary of the committee.
FREQUENCY OF MEETINGS
- Meetings shall be held not less than three times a year. Any member of the committee or external auditors may request that a meeting be convened if they consider that one is necessary.
- The duties of the committee shall be:
- to review and monitor the integrity of the half-year and annual financial statements and any other formal announcement relating to the company's financial performance, focusing particularly on:
- the consistency of, and any changes to, accounting policies both on a year on year basis and across the company/group,
- the methods used to account for significant or unusual transactions where different approaches are possible;
- whether the company has followed appropriate accounting standards and made appropriate estimates and judgements, taking into account the views of the external auditor;
- the clarity of disclosure in the company's financial reports and the context in which statements are made;
- all material information presented with the financial statements, such as the operating and financial review and the corporate governance statement (insofar as it relates to audit and risk management matters);
- major judgmental areas;
- the going concern assumption;
- compliance with stock exchange and legal requirements
- 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);
- to keep under review the effectiveness of the company's internal control systems and to review and approve the statements to be included in the annual report concerning internal controls and
- to consider the findings of internal investigations and management's response.
- The Committee is authorised:
- to seek any information it requires from any employee of the company in order to perform its duties;
- to obtain, at the company's expense, outside legal or other professional advice on any matter within its terms of reference and
- to call any employee to be questioned at a meeting of the committee as and when required.
ANNUAL GENERAL MEETING
- The chairman of the committee shall attend the annual general meeting prepared to respond to any shareholder questions on the committee's activities.
- The committee shall:
- consider and make recommendations to the board, to be put to shareholders for approval at the annual general meeting, in relation to the appointment, re-appointment and removal of the company's external auditor. The committee shall oversee the selection process for new auditors and if an auditor resigns the committee shall investigate the issues leading to this and decide whether any action is required;
- oversee the relationship with the external auditor including, but not limited to:approval of their remuneration, whether fees for audit or non audit services, and that the level of fees is appropriate to enable an adequate audit to be conducted;
- approval of their terms of engagement, including any engagement letter issued at the start of each audit and the scope of the audit;
- assessing annually their independence and objectivity taking into account relevant professional and regulatory requirements and the relationship with the auditor as a whole, including the provision of any non audit services;
- satisfy itself that there are no relationships (such as family, employment, investment, financial or business) between the auditor and the company (other than in the ordinary course of business);
- agreeing with the board a policy on the employment of former employees of the company's auditor, then monitoring the implementation of this policy;
- monitoring the auditor's compliance with relevant ethical and professional guidance on the rotation of audit partners, the level of fees paid by the company compared to the overall fee income of the firm, office and partner and other related requirements; and
- assessing annually their qualifications, expertise and resources and the effectiveness of the audit process which shall include a report from the external auditor on their own internal quality procedures.
- meet with the external auditor, including once before the audit commences and once after the audit at the reporting stage;
- review the findings of the audit with the external auditor. This shall include but not be limited to the following:
- a discussion of any major issues which arose during the audit;
- any accounting and audit judgements; and
- levels of errors identified during the audit.
- review any representation letter requested by the external auditor before they are signed by management;
- review any management letter and management's response to the auditor's findings and recommendations;
- implement a policy on the supply of non audit services by the external auditor, taking into account any relevant ethical guidance on the matter and
- where non-audit services are provided by the auditor to provide an explanation in the annual report how auditor objectivity and independence is safeguarded.
- The committee shall:
- review annually and record whether there is a need for an internal audit function and make a recommendation to the board accordingly and
- approve the reasons given for the absence of such a function disclosed in the company's annual report.
- The committee chairman shall report formally to the board on its proceedings after each meeting on all matters within its duties and responsibilities;
- The committee shall make whatever recommendations to the board it deems appropriate on any area within its remit where action or improvement is needed; and
- The committee shall compile a report to shareholders on its activities to be included in the company's annual report.
- The committee shall
- have access to sufficient resources in order to carry out its duties;
- be provided with appropriate and timely training, both in the form of an induction programme for new members and on an ongoing basis for all members and
- at least once a year, review its own performance, constitution and terms of reference to ensure it is operating at maximum effectiveness and recommend any changes it considers necessary to the Board for approval.
- The secretary shall circulate the minutes of meetings of the committee to all members of the board.
- The committee shall review the company's arrangements for its employees to raise concerns, in confidence, about possible wrongdoing 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.
Approved by the board on 3rd July 2008