Audit Committee

Terms of reference

1 Members & Meetings

1.1 Members of the Audit Committee shall be appointed by the Board, on the recommendation of the Nomination Committee in consultation with the chairman of the Audit Committee. The minimum number of members shall be two.

1.2 All members of the committee shall be independent non-executive directors and at least one of the members shall have recent and relevant financial experience.

1.3 Only members of the committee have the right to attend meetings. However, other individuals such as the chief executive officer, chief financial officer, representatives from the finance team and external advisers may be invited to attend for all or part of any meeting, as and when appropriate.

1.4 The Board shall appoint the committee chairman from amongst the committee, who shall be an independent Non-Executive Director. In the absence of the Committee chairman and/or an appointed deputy, the remaining members present shall elect one of themselves to chair the meeting.

1.5 Two members of the Committee shall constitute a quorum. Matters arising at any meeting that require a vote of the Committee shall be decided by a majority of votes. If a vote is required, each member of the Committee present at a meeting of the Committee shall have one vote. A member of the Committee shall not vote in respect of any matter being considered by the Committee in which he has, directly or indirectly, a personal interest and shall not be counted in the quorum at a meeting in relation to any matter on which he cannot vote. If required under circumstances where there are an equal number of votes in favour of and against a particular matter arising, the chairman shall have a second and casting vote.

1.6 Committee meetings shall be held not less than four times a year and at such other times as any member of the Committee may require, or at the request of external or internal auditors if they consider a meeting is necessary.

1.7 Meetings of the committee shall be called by or on behalf of the chairman of the Committee. Unless otherwise agreed, notice of each meeting confirming the venue, time and date together with the agenda of items to be discussed, shall be forwarded to each member of the committee no later than four working days before the date of the meeting

1.8 The chairman of the Committee shall ensure that appropriate minutes of its proceedings are kept. The chairman can request the Company Secretary or his nominee to act as the secretary of the Committee and ensure that the Committee receives information and papers in a timely manner to enable full and proper consultation to be given to all issues. The appointed secretary of the Committee shall keep a record of all minutes and attendances at all meetings.


1.9 The chairman of the Committee shall make available the minutes of meetings of the Committee, once agreed, to all members of the Board, unless in the opinion of the Committee Chairman it would be inappropriate to do so.

1.10 The Company’s external auditors and any internal auditors shall be invited to attend meetings of the committee on a regular basis.

1.11 Appointments to the Committee shall be for a period of up to three years, which may be extended for two further three year periods, provided the member in question continues to be determined by the Board as being independent.

2 Duties

The Committee shall:

Internal controls and risk management systems

2.1 assess the scope and review the effectiveness of the Company's internal controls and the systems established by management to identify, assess, manage and monitor financial and non-financial risks;

2.2 review and approve the statements to be included in the annual report & accounts concerning internal controls and risk management;

2.3 consider the findings of internal investigations and managements' response to any investigations and recommendations;

2.4 ensure there is a thorough and regular review and evaluation of the nature and extent of the risks to which the Company is exposed;

2.5 review the company's risk management strategy and the results of any risk analysis;

2.6 review and supervise the Company's procedures for reporting of and detecting fraud;

2.7 monitor and review the adequacy and security of the Company’s arrangements for its employees and contractors to raise concerns, in confidence, about possible wrongdoing in financial reporting or in any other matters in the Company. The Committee shall ensure that these arrangements, including the Company’s "Whistleblowing" policy will allow proportionate and effective independent investigation of such matters and will ensure there is an appropriate response with recommendations implemented;

2.8 review the Company’s systems and controls for the prevention of bribery and corruption and receive reports on non-compliance.

2.9 ensure the Company has appropriate, adequate and necessary insurance

Internal Audit

2.10 review (at least annually) the need for an internal audit function. If the Committee determines that an internal audit function is required for best practice, it shall recommend to the Board what processes and procedures should be adopted and how such policies should be monitored and will monitor and review the effectiveness of the internal audit function. The Committee has the right to use third parties to effect any process or procedure to its satisfaction;

2.11 review and agree the recommendations made by any internal audit concerning maintenance of a sound control environment throughout the company and to review management’s responsiveness to the findings and recommendations of any internal auditor;

External Audit

2.12 make recommendations to the Board in relation to the appointment, reappointment and removal of the external auditor, the audit fee, the terms of engagement, including their engagement letter, and any questions of resignation or dismissal. If an auditor resigns, the Committee shall investigate the issues leading to this and decide whether any action is required;

2.13 discuss with the external auditor before the audit commences the nature and scope of the audit;

2.14 monitor and review annually the external auditor's independence, objectivity and effectiveness, taking into consideration the auditor's quality control procedures and steps taken by the auditor to respond to changes in relevant professional and regulatory requirements, satisfying 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);

2.15 meet regularly with the external auditor, including once at the planning stage before the audit and once after the audit at the reporting stage. The committee shall meet the external auditor at least once a year without management present, to discuss their remit and any issues arising from the half year and final audits and the intervening quarterly reviews, and any matters the auditor may wish to discuss (in the absence of management where necessary);

2.16 review and approve the annual audit plan and ensure that it is consistent with the scope of the audit engagement;

2.17 review the findings of the audit with the external auditor. This shall include but not be limited to the following:

i. a discussion of major issues which arose during the audit;
ii. any accounting and audit judgements.
iii. levels of error identified during the audit.

2.18 review the effectiveness of the audit, review any representation letter requested by the external auditor before they are signed by management, review the external auditor's management letter and management's response to this and the letter of representation;

2.19 develop and implement the policy for provision of non-audit services by the external auditor and to keep under review the nature and extent of non-audit services supplied by the auditors;

2.20 pre-approve fees in respect of non-audit services provided by the external auditor in accordance with the policy approved by the board and to ensure that the provision of non-audit services does not impair the external auditor's independence or objectivity;

2.21 monitor 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;

2.22 assess 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;

Financial Reporting

2.23 monitor the integrity of the half year and annual financial statements before submission to the Board, reviewing significant financial reporting and issues and judgments, focusing particularly on matters of material financial impact;

2.24 review any significant financial returns to regulators;

2.25 review and challenge where necessary:

i. the application of significant accounting policies and any changes to them, both on a year on year basis and across the Group;
ii. The extent to which the financial statements are affected by any unusual transactions in the period in question
iii. the methods used to account for significant or unusual transactions where different approaches are possible and how they are disclosed;
iv. whether the company has adopted appropriate accounting policies and made appropriate estimates and judgements, taking into account the external auditor’s views on the financial statements;
v. all material information presented with the financial statements, including the strategic report and the corporate governance statements relating to the audit and to risk management.
vi. the clarity of disclosures in the Company's financial reports and the context in which statements are made;
vii. significant adjustments resulting from the audit;
viii. the appropriateness of the going concern assumption;
ix. the Company's statement on internal control systems prior to endorsement by the board and reviewing the policies and process for identifying and assessing business risks and the management of those risks by the company;
x. any transactions or courses of dealing with directors, employees and shareholders of the Company and persons connected with them which are significant in size or which involve terms or other aspects that differ or are unusual from those which would be likely to be negotiated with independent parties.
xi. any formal announcements relating to the Company's financial performance;
xii. where, following its review the committee is not satisfied with any aspect of the proposed financial reporting by the Company, it must report its views to the board.

Other

2.26 report formally to the Board on its proceedings after each meeting on all matters within its duties and responsibilities.

2.27 escalate any significant issues to the board and make recommendations for resolving these issues.

2.28 consider other topics as defined from time to time by the board.

2.29 conduct an annual review of their work and these terms of reference and make recommendations to the board.

2.30 compile a report to shareholders on its activities to be included in the company's annual report.

2.31 have access to sufficient resources in order to carry out its duties, including access to the Company Secretary for assistance as required;

2.32 be responsible for coordination of the internal and external auditors;

2.33 oversee any investigation of activities which are within its terms of reference;

2.34 at least once a year, review its own performance, constitution and terms of reference to ensure it is operating effectively and recommend any changes it considers necessary for improvement to the Board for approval

3 Annual General Meeting

3.1 The chairman of the committee shall attend the Annual General Meeting and shall be prepared to respond to any shareholder questions on the committee's activities.

4 Authority

4.1 The committee is authorised by the Board to investigate any activity within these terms of reference and can seek any information it requires directly from any employee and all employees shall be directed to co-operate with any request by the committee. The committee may call any employee to be questioned at a meeting of the committee as and when required.

4.2 The committee may obtain, at the Company's expense, outside legal or independent professional advice and such advisors may attend meetings as necessary and appropriate. Such advice must be sought at a reasonable cost commensurate with the matter under review.

4.3 The committee is authorised by the Board to ensure that the internal audit, corporate secretariat and risk management functions are adequately resourced and have appropriate authority within the Company.

Members
L.Beal (Chair), M.Sunmonu, M.Phillips

 

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