Terms of reference for the audit committee

Governance

The Articles of Association provide that the Board may delegate any of its powers to committees.

The Audit Committee is a sub-committee of the Board, to which it reports directly. It assists the Board in fulfilling its oversight responsibilities, and has key responsibilities for the ongoing monitoring and review of financial performance, and the identification, management, mitigation and reporting of financial and operational risk.

Membership

The committee shall be appointed by the Board. There shall be a minimum of three members, two of whom shall be Board members. The Chairman of the Committee shall be appointed by the Board, and no member of the Audit Committee shall be a member of the Finance and Risk Committee. At least one member of the audit committee shall have significant, recent and relevant financial experience.

Quorum

Two members constitute a quorum, one of whom must be a Board member. Members must be present or capable of full participation in discussions via conference calls.

Secretary

The Company Secretary of the charity shall be the secretary of the Committee.

Attendance

In addition to members of the Audit Committee, the Chairman, Chairman of the Finance and Risk Committee, members of the senior management team and representatives of the external auditors shall attend meetings at the invitation of the Committee.

There shall be at least one meeting a year, or part thereof, where the Committee meets the external and internal auditors, if any, without executive members present.

Frequency of meetings

The Committee shall meet at least twice each year to coincide with key dates in the charity’s financial reporting cycle.

External auditors may request a meeting if they consider that one is necessary.

Authority

In addition to the duties listed below, and subject to the express approval of the Chairman, the Committee has the authority to:

seek any information that it requires from any employee of the charity and all employees are directed to co-operate with any request for the committee.
obtain outside legal or independent professional advice, at the charity’s expense, and secure the attendance of outsiders with relevant experience if it considers this necessary.

Duties

Financial reporting

The duties of the Committee shall be:

to review, and challenge where necessary, the actions and judgement of management in relation to the charity’s financial statements before submission to, and approval by, the Board and before clearance by the auditors. Particular attention should be paid to:
critical accounting policies and practices, and any changes in them
decisions requiring a significant element of judgement
the extent to which the financial statements are affected by unusual transactions in the year and how they are disclosed
the clarity of disclosure
significant adjustments arising from the audit
the going concern assumption
compliance with accounting standards and statements of recommended practice
compliance with charity and other legal requirements.
to consider other topics, as defined by the Board.

Internal control and risk management

The duties of the Committee shall be:

to review the charity’s procedures for detecting fraud and whistleblowing, and ensure that arrangements are in place by which staff may, in confidence, raise concerns about possible improprieties in matters of financial reporting, financial control or any other matters
to review management’s and the internal auditor’s reports, if any, on the effectiveness of the systems for internal financial control, financial reporting and risk management
to monitor the integrity of the charity’s internal financial controls
to review the statement in the charity’s annual financial statements on the charity’s internal control and risk management framework
to assess the scope and effectiveness of the systems established by the Finance and Risk Committee, with the senior management team, to identify, assess, manage and monitor financial and non-financial risks.

Internal audit

The duties of the Committee shall be:

to consider annually whether there is a need for an internal audit where no such function exists.

External audit

The duties of the Committee shall be:

to oversee the charity’s relations with the external auditor
to consider, and make recommendations on the appointment, reappointment and removal of the external auditor
to approve the terms of engagement and the remuneration to be paid, if any, in respect of audit services provided
to assess the qualification, expertise and resources, effectiveness and independence of the external auditors annually
to discuss with the external auditors, before the audit commences, the nature and scope of the audit
to review, with the external auditors, the findings of their work, including any major issues that arose during the course of the audit and have subsequently been resolved and those issues that have been left unresolved; key accounting and audit adjustments; levels of errors identified during the audit, obtaining explanations from management and, where necessary the external auditors, as to why certain errors remain unadjusted
to review the audit representation letters before consideration by the Board, giving particular consideration to matters that relate to non-standard issues
to discuss with the external auditors their views on the strengths and weaknesses of the systems of internal control
to assess, at the end of the audit cycle, the effectiveness of the audit process
to review and monitor the formal report from the external auditors of their audit findings, and the responses, where appropriate, from the management team
to develop and recommend to the board the charity’s policy in relation to the provision of non-audit services by the external auditor and that the provision of such services does not impair the external auditors’ independence.

Reporting

The Audit Committee shall annually review its terms of reference and its own effectiveness, and recommend any necessary changes to the Board.

The Audit Committee shall prepare a report on its role and responsibilities, and the actions it has taken to discharge those responsibilities for presentation to the Board and for possible inclusion in the financial statements. Such a report shall specifically include:

a summary of the role of the Audit Committee
the names and qualifications of all the members of the Audit Committee during the period
the number of Audit Committee meetings and attendance by each member
the way the Audit Committee has discharged its responsibilities.