The Audit Committee terms of reference

1. Constitution
1.1. The audit committee is constituted as a committee of the board
1.2. The committee’s terms of reference may be amended at any time by the board.
1.3. The committee may from time to time investigate, discuss or review matters
outside its terms of reference if required to do so by the board.

2. Authority
The committee is authorised:
2.1. to seek any information it requires from any employees of the company in order to perform its duties
2.2. to obtain, at the company’s expense, outside legal or other professional advice on any matter within its terms of reference
2.3. to call any employee to be questioned at a meeting of the committee as and when required
2.4. to have the right to publish in the directors’ annual report details of any issues that cannot be resolved between the committee and the board.

3. Membership
3.1. The committee shall be appointed by the board from amongst its members and shall consist of not less than three members.
3.2. The chairman of the committee shall be appointed by the board.
3.3. Members of the committee shall be non-executive directors at least one of whom shall have recent and relevant financial experience.
3.4. The chairman of the board shall not be a member of the committee.
3.5. Appointments to the committee shall be for a period of up to three years, which may be extended for further periods of up to three years, provided the director still meets the criteria for membership of the committee.
3.6. The company secretary is secretary to the committee and also a member of the committee.

4. Attendance at Meetings
4.1. The quorum necessary for the transaction of the business of the committee shall be at least two committee members (including the chairman).
4.2. Only members of the committee have the right to attend committee meetings. However, other individuals such as the chairman of the board, CEO, finance director, other directors (non-executive and executive) and members of staff may be invited to attend all or part of any meeting.
4.3. At the request of the committee a representative of the external and internal auditors shall attend meetings.

5. Frequency of meetings
5.1. Meetings shall be held at least twice a year at appropriate times in the reporting and audit cycle and otherwise as required.

6. Duties
6.1 Financial reporting
The committee shall review and challenge where necessary
a) the consistency of, and any changes to, accounting policies on a year by year basis
b) the methods used to account for significant or unusual transactions where different approaches are possible
c) whether the company has followed appropriate accounting standards and made appropriate estimates and judgements, taking into account the views of the external auditor
d) the clarity of disclosure in the company’s financial reports and the context in which statements are made; and
e) all material information presented with the financial statements, such as the business review/operating and financial review and the corporate governance statement (insofar as it relates to the audit and risk management).

6.2 Internal controls and risk management systems
The committee shall
a) keep under review the adequacy and effectiveness of the company’s internal financial controls and internal control & risk management systems; and
b) review and approve the statements to be included in the directors’ annual report about internal controls and risk management.

6.3 Compliance, whistleblowing and fraud
The committee shall
a) review the adequacy and security of the company’s arrangements for its employees and its contractors 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.
b) review the company’s procedures for detecting fraud
c) review the company’s systems and controls for the prevention of bribery and receive reports on non-compliance

6.4 Internal audit
The committee shall
a) monitor and review the need for an internal audit function and, where appropriate the effectiveness of the company’s internal audit function in the context of its overall risk management system

6.5 External audit
The committee shall
a) consider and make recommendations to the board in relation to the appointment, re-appointment and removal of the company’s external auditor.
b) review and monitor the external auditor’s independence, objectivity and the effectiveness of the audit process which shall include a report from the external auditor on their own internal quality procedures
c) oversee the relationship with the external auditor and the scope of the audit engagement
d) review the findings of the audit with the external auditor.
e) review the management letter and management’s response to the auditor’s findings and recommendations.