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Audit & Risk Committee Charter

1. Objectives

The primary objectives of the Audit and Risk Management Committee are to:

1.1 Assist the Board in discharging its responsibilities by oversight and review of:

  • financial reporting
  • risk management
  • debt structure and debt instruments
  • accounting policies
  • the evaluation of all major capital expenditure proposals
  • business ethics, policies and practices
  • internal controls
  • compliance with taxation and other applicable laws and regulations
  • integrity and performance of the internal audit function
  • corporate governance

1.2 Provide a forum for communication between the Board, senior management and both the internal and external auditors.

2. Authority

The Committee is authorised, within the scope of its responsibilities, to:

  • Seek information it requires from any Corporation employee or contractor, the external auditor and/or any external party
  • Obtain outside legal or other professional advice at the Corporation’s expense, and initiate special investigations as deemed necessary

3. Membership

3.1 The Committee shall comprise no less than two and no more than three non-executive directors of the Board. In addition, an independent representative of the firm appointed as Internal Auditor of the Corporation shall attend each meeting of the Committee as advisor to the Committee.

3.2 Members shall be appointed by the Board for an initial period of one year, after which appointments may be subject to annual rotation. The Board shall appoint one of its members as chairperson of the Committee, however the Chairman of the Board shall not be appointed chairperson of the Committee

3.3 Members shall be appointed on the basis of their requisite business and financial skills

3.4 Regular attendees to Committee meetings shall be the Executive General Manager – Finance & IT, and the Secretary & General Counsel who shall be the minute secretary of the Committee

3.5 The Committee may invite various parties to attend its meetings depending on the meeting agendas and these parties would include the Chief Executive Officer, external auditors, the manager responsible for risk management, the manager responsible for internal audit, and other members of the executive team.

3.6 Any Director who is not a member of the Committee will have the right to attend any meeting of the Committee

4 Meetings

4.1 The Committee shall hold a minimum of quarterly "face-to-face" meetings and such additional meetings as the Chairperson shall decide in order to fulfil its duties.

4.2 A quorum shall consist of two Committee members.

4.3 All decisions of the Committee shall be determined on the basis of a majority vote of members. In any instances of a tied vote, the Chairperson of the Committee shall have the casting vote.

4.4 When the Committee must reach a decision between meeting dates, this decision may be made by circular resolution. In carrying out a vote by circular resolution, the Chairperson of the Committee has an obligation to attempt to contact all Committee members. A circular resolution will be taken to be carried only when the majority of Committee members vote in the affirmative.

4.5 Prior to each meeting the Committee may convene privately without any members of Management in attendance, for meetings with :

  • The external auditor
  • The Internal Auditor
  • The Executive General Manager – Finance & IT
  • The Secretary & Legal Counsel

5. Organisation

5.1 The Secretary & Legal Counsel shall be responsible for keeping minutes of all meetings of the Committee. Once the minutes of each meeting have been adopted and signed by the Chairperson of the Committee, they shall be routinely submitted to the Board for information.

5.2 The Executive General Manager – Finance & IT will be the Co-ordinator for the Committee, responsible for:

  • agreeing the agenda for each meeting with the Chairperson of the Committee
  • preparing and distributing all papers required for each meeting
  • notifying all staff of the Corporation, and the auditors and other external parties who are required to attend any meeting for specific agenda items

6 Duties and Responsibilities

6.1 The Committee shall consider any matters relating to the financial affairs and risk management issues of the Corporation that it determines to be desirable. In addition, the Committee shall examine any other matters referred to it by the Board.

6.2 An external advisor who is independent from the Internal Auditor will be appointed as Facilitator to develop an annual Enterprise Risk Management Plan (ERMP). The Facilitator will develop the first draft of this plan with Management and present it to the Committee for consideration and reassessment if necessary.

6.3 The Committee shall evaluate the priorities determined by Management in the draft ERMP and seek a reassessment or modification of those priorities to complete a final ERMP. The Committee will recommend the final ERMP to be adopted by the Board showing both Management’s priorities for risk mitigation actions, or with different priorities as determined by the Committee.

6.4 On the basis of the ERMP adopted by the Board, the Committee shall establish an Annual Work Plan that defines the activities and timeframes for items to be considered by the Committee. The Annual Work Plan shall be part of a three year Internal Audit program and it shall incorporate:

  • Reviews of Management’s performance in taking action to mitigate risks identified in the ERMP
  • The timetable necessary to complete the Corporation’s Annual Financial Report and to meet the requirements of the external auditors
  • The Annual Internal Audit Plan which shall incorporate regular reports on areas selected for investigation consistent with the three-year Internal Audit Program approved by the Committee
  • The Corporation’s Fraud & Corruption Control Plan which shall address fraud identification, and its control and investigation
  • The adequacy and cost of insurance cover

6.5 The Internal Audit Program shall be agreed with the Internal Auditor at the time of their appointment and shall cover the three year period of their appointment. The Internal Audit program shall be dissected into three Annual Work Plans which will include, but not be limited to the following audit activities:

  • Expenditure Control
  • Project management
  • Procurement
  • IT, including information security
  • Revenue collection
  • The exposure of the Corporation to fraud and corruption

7. Activities of the Committee

The activities of the Committee may include, but shall not be limited to the following:

External Auditors

(a) to discuss with the external auditor before the audit commences the nature and scope of the audit;

(b) to discuss the issues and/or reservations arising from the interim and final audits, and any matters the auditor may wish to discuss;

(c) the consider the external auditor’s management letter and management’s response;

Financial Control and Reporting

(d) to examine the Annual Report before submission to the Board, focusing particularly on:

  • changes in accounting policies and practices;
  • major judgemental areas;
  • asset valuation
  • significant adjustments resulting from the audit;
  • compliance with accounting standards;
  • compliance with Government and legal requirements;
  • reports prepared by management for release to the stakeholders;

(e) oversight and review major risks to which the Corporation is exposed and verify that the internal control systems are adequate and functioning effectively;

(f) review with management and/or the internal auditors the policies covering the control of the Corporation’s assets and information systems, the staffing of the key functions and the plans for enhancement of operations;

Internal Audit

(g) to appoint the Internal Auditor on the basis of a three year period which may be extended at the discretion of the Committee;

(h) to consider the internal audit Annual Work Plan and ensure that the internal audit function is adequately resourced and has appropriate standing within the Corporation;

(i) to promote co-ordination between management and internal and external auditors;

(i) to review any significant matters reported by the internal auditors and ascertain whether management’s response is adequate;

(j) to ensure that the internal auditors are independent of the activities that they audit;

Risk Management

(k) to appoint a party independent to the Internal Auditor as facilitator to the ERMP which shall be conducted on an annual basis;

(l) to evaluate the priorities determined by Management in identifying, assessing and prioritising risks;

(m) to evaluate the risk mitigation strategies defined and implemented by Management;

Insurance

(n) to evaluate the performance of the Corporation’s broker and to appoint the insurance broker recognising the recommendations of Management;

(o) to evaluate the adequacy and cost of insurance cover across the organisation;

(p) to monitor all major insurance claims made by the Corporation;

Legal Compliance

(m) to review all significant transactions that do not form part of the Corporations’ normal business;

(n) to consider compliance with any regulatory or statutory requirements;

(o) to review any current and pending litigation which has some financial risk exposure for the Corporation;

Compliance with the Corporation’s Code of Conduct

(p) to discuss and review with management, its philosophy with respect to business ethics and corporate conduct, its written code of conduct and program it has to monitor compliance with that code;

(q) to consider significant cases of employee conflict of interest, misconduct or fraud;

Other

(r) to evaluate the Corporations’ exposure to fraud and corruption;

(s) to request and review special audits or investigations as may be necessary;

(t) to consider other matters, as referred to the Committee by the Board.

8. Reporting

The Committee shall:

  • record proceedings of each meeting and circulate them to the Board;
  • prepare a report to the Board summarising work performed by the Committee to fully discharge its duties
  • ensure that the Charter of the Audit & Risk Committee is posted on the Corporation’s website.

The Corporation’s Annual Report should include a statement describing the responsibilities and activities of the Committee.