The purpose of the Audit Committee Charter is to detail the authorities and responsibilities delegated to the Audit Committee by the Board of Directors to enable the Audit Committee to monitor and make recommendations to the Board regarding the Group's financial reporting processes, systems of internal control, external audit processes, processes for compliance with laws and regulations, and general code of corporate conduct.
The Audit Committee has authority to conduct or authorise investigations into any matters relating to its areas of responsibility. In particular, and without limiting actions that can be taken, it is empowered to:
- Appoint, compensate, and oversee the work of any registered public accounting firm employed by the Group.
- Participate in the resolution of any disagreements between management and the auditor regarding financial reporting.
- Pre-approve all auditing and non-audit services to be performed by any registered public accounting firm employed by the Group.
- Retain independent counsel, accountants, or others to advise the Audit Committee or assist in the conduct of an investigation.
- Seek any information and obtain administrative support that it requires from employees, all of whom are directed to cooperate with the Committee's requests, or to seek information from external parties.
- Meet with Group officers, external auditors, or outside counsel, as considered appropriate.
The Audit Committee must consist of at least two non-executive directors of the Board. The Board retains the right to appoint the Committee Chair and other Committee members and to change the appointments from time to time.
The Committee is required to meet at least twice each year, and has authority to convene additional meetings, as circumstances require. All Committee members are expected to attend each meeting in person or by telephone conference. The Committee may invite members of management, the Group's auditors or others to attend meetings and provide pertinent information, as required. It may hold private meetings with auditors, executives and third parties. Meeting agendas are prepared and provided in advance to members, along with appropriate briefing materials. Minutes are to be taken of all meetings.
The Committee is expected to
- Review significant accounting and reporting issues, including complex or unusual transactions and reported information involving highly judgmental accounting treatments, and consider these in the light of long established and recent professional and regulatory pronouncements.
- Review with management and the external auditors the results of the audit, including any difficulties encountered and recommendations made.
- Review the annual and half yearly financial statements, and consider whether they are complete, consistent with information known to Committee members, reflect appropriate accounting principles, and give a fair view of the Group's consolidated financial position, financial performance and cash flow performance for the reporting period.
- Review other sections of the annual report and related regulatory filings before release and consider the accuracy and completeness of the information and whether there is compliance with generally accepted accounting practice in New Zealand and relevant International Financial Reporting Standards.
- Consider the effectiveness of the Group's internal control systems, including information technology security and control.
- Consider the scope of external auditors' review of internal control over financial reporting, and obtain reports on significant findings and recommendations, together with management's responses.
- Approve the internal audit Terms of Reference.
- Review with management the plans, activities, staffing, and organisational structure for internal audit functions.
- Review the results of internal audit activity.
- Review the effectiveness of internal audit functions.
- Consider the independence of internal audit.
- Review the external auditors' proposed audit scope and approach, including any reliance on, or coordination of audit effort with internal audit.
- Review the performance of the external auditors, and make recommendations to the Board on the appointment or discharge of the auditors.
- Consider the independence of the external auditors by reviewing relationships between the auditors and the Group, including in respect of non-audit services.
- Meet separately with the external auditors to discuss any matters that the Committee or auditors believe should be discussed privately.
- Review the effectiveness of the system for monitoring compliance with laws and regulations and the results of management's investigations and follow-ups (including disciplinary action) of any instances of non-compliance.
- Review the findings of any examinations of the Group by regulatory agencies, and any auditor observations.
- Review the processes for communicating codes of conduct to Group personnel, and monitoring compliance therewith.
- Review updates from management and the Group's legal counsel regarding compliance obligations.
- Report regularly to the Board about the work of the Committee, issues addressed and related recommendations.
- Review all Group reports that refer to Committee responsibilities and ensure that all references are accurate.
- Attend to other matters related to this charter as requested by the Board.
- Instigate and oversee special investigations as considered appropriate by the Committee or the Board.
- Review at least annually the appropriateness and adequacy of the Committee charter, and request Board approval for any proposed changes.
- Confirm annually to the Board that all responsibilities outlined in this charter have been carried out.
- Evaluate the Committee's and individual Committee members' contributions to the work of the Committee at least annually.