Functions of the Board Audit and Risk Committee
Board Audit and Risk Committee Charter
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Functions of the Board Audit and Risk Committee
In accordance with the Public Governance, Performance and Accountability Act 2013 (PGPA Act) and the PGPA Rule 2014, the primary functions of our Board Audit and Risk Committee (the Committee) are to review the appropriateness of our organisation’s:
- financial reporting
- performance reporting
- system of risk oversight and management
- system of internal control.
The Committee acts as an advisory committee of our Board. It assists our Board in developing policy and monitoring organisational activity within the scope of this Charter. The Committee also makes recommendations to our Board for resolution. In addition, or to complement its primary functions, the Committee will:
- monitor the enterprise risk management policy framework, its implementation and adherence to procedures and make recommendations to our Board on changes to the framework
- monitor the internal control environment and procedures designed to achieve compliance with laws, regulations, internal standards and policies and oversee such compliance, including relating to financial disclosure and regulatory reporting
- make recommendations to our Board on the appointment, assessment and removal of the internal auditors, and oversee their independence
- assist the Australian National Audit Office (ANAO) with the appointment, assessment and removal of external auditors, and oversee their independence
- annually review and advise on the external and internal audit fees, plans and their scope
- provide an effective forum for communication between the directors, our senior managers and the internal and external auditors.
Our Board retains primary responsibility for managing transaction risk associated with individual counterparties and portfolio risk as a whole against available capital.
Duties and responsibilities
(a) Risk oversight, management and internal controls
- review and provide advice to our Board on the appropriateness of our:
- enterprise risk management policy framework and the necessary internal controls for the effective identification and management of our financial and non-financial risks
- approach to managing its key risks, including those associated with individual projects and program implementation activities
- key roles and responsibilities relating to risk management
- satisfy itself that the current areas of greatest financial and non-financial risk to our organisation have been identified and that Management are effectively managing the risks
- satisfy itself that effective systems of accounting, administrative and operational controls are in place to manage financial risk so that timely and meaningful financial statements are available to stakeholders.
(b) Financial and performance reporting
- review the annual and half-yearly financial statements and recommend acceptance by our Board
- review and advise our Board on the appropriateness of our accounting policies and practices in the light of relevant laws, accounting standards and principles
- satisfy itself that relevant issues relating to dividend policy have been raised for consideration by Management to our Board
- review the appropriateness of our performance reporting and review the annual performance statement and recommend acceptance by our Board.
- monitor compliance with obligations under the PGPA Act, and any other applicable legislation
- monitor compliance with Board-approved financial and non-financial limits and controls
- monitor changes of significance to our organisation in relation to the various laws, regulations, accounting policies and regulatory/reporting requirements that apply to us.
(d) An efficient and effective audit
- review the audit philosophy adopted by the internal and external auditors and their systems and procedures
- review and assess the findings of the internal and external auditors and the action taken and the timetable proposed by Management in response to those findings
- review, at least annually, the scope, results and performance of the external and internal auditors.
(e) Other responsibilities
- commission such special audits or investigations as may be necessary
- perform any other tasks our Board may authorise from time to time
- determine whether to approve of any consultants to the ANAO undertaking any non-audit consultancy work for us
- conduct its work in a proactive and outward-looking manner, having regard to better practice as it may apply in the context of our business, mandate and stakeholders.
The Committee will consist of at least three members, with a minimum of two non-executive Directors of our Board, and a majority of whom are not employees of Export Finance Australia. None of our Board Chair, Managing Director or Chief Financial Officer will be a member of the Committee.
All Committee members should have appropriate qualifications, knowledge, skills and experience to assist the Committee to perform its functions.
Our Board will appoint Committee members. They will be subject to rotation as determined by our Board.
Our Board will appoint one of the members as Chair of the Committee.
The Committee will manage succession planning for adoption by our Board.
Whenever possible, members designated will attend Committee meetings during a transition period prior to the retirement of the member that they will replace.
Any Board member is welcome to attend any Committee meeting, but will not be entitled to vote if they are not a Committee member.
Participation of non-members
Internal and external auditors and employees of Export Finance Australia may attend and participate (but will not be entitled to vote) at Committee meetings.
Our Managing Director & CEO and Chief Financial Officer are expected to attend Committee meetings, together with other members of Management that the Committee determines.
The Committee will have a discussion with the external auditors and internal auditors at least once a year, without members of Management in attendance.
The Committee will be entitled to call upon the expert advice it determines is appropriate to enable the Committee to satisfy its responsibilities and meet its objectives. The Committee will be provided with the necessary resources to obtain expert advice.
The Committee will hold at least three meetings per year, or such greater number as determined by the Chair. A member of the Committee may attend a meeting via telephone rather than in person.
At a Committee meeting, a quorum consists of two members.
The Board Secretary will keep minutes of Committee meetings. The minutes, or relevant extracts from them, will be provided to the internal and external auditors.
Internal Audit – Accountability
The internal auditors are accountable to the Committee.
While Management will handle day-to-day issues under the contract with the outsourced internal auditors, the internal auditors will have direct access to the Committee at any time.
The Committee will monitor that Management has a process in place for the internal audit to be conducted and that it is functioning objectively and effectively.
The Committee is the channel to our Board for communication with the external auditors, including the ANAO and any consultants engaged by the ANAO.
The Committee will meet separately with the external auditors to discuss any matters the Committee or external auditors believe should be discussed privately.
The Committee will also:
- regularly review with the external auditors the scope of the external audit, identified risk areas and any other agreed procedures
- regularly review the effectiveness and independence of the external auditors
- meet periodically with the external auditors and invite them to attend meetings of the Committee to:
- review plans for carrying out internal control reviews
- consider any comments and recommendations made by the external auditors
- make recommendations to our Board
- monitor and report to our Board on Management’s response to the external auditor’s findings and recommendations
- review all representation letters to the external auditors signed by Management and ensure information provided is complete and appropriate
- receive and review the reports of the external auditors.
Access to the Committee
On any matter within the Committee’s Charter, any employee of Export Finance Australia has access to the Chair of the Committee.
Access to information and management
Any access to our employees and business records required by the Committee to fulfil its Charter will be arranged through the Managing Director & CEO or Chief Financial Officer.
The Chair of the Committee will provide a report to our Board following each meeting. In addition, the Committee will provide:
- copies of its minutes to our Board
- a report annually to our Board on the trends/issues that have arisen in the Committee’s work over the previous 12 months
- such additional reporting as the Board may require.
Review of Performance
The Committee will review the scope and effectiveness of its activities at least every two years. The review will incorporate the input from relevant stakeholders and the Chair of the Committee will provide a report to our Board.
Review of Charter
The Committee will review its performance against its Charter annually and will review the Charter at least biennially.