1 COMPOSITION AND AUTHORITIES
1.1 The Chairman and members of the Audit Committee (“the Committee”) shall be appointed by the Board.
1.2 The Committee shall comprise at least two Directors of the Company, none of whom shall hold executive responsibility in the Company and all of whom shall be independent as determined by the Board. At least one member shall have relevant and recent financial experience.
1.3 The Company Secretary or his nominee shall act as Secretary of the Committee.
1.4 The quorum necessary for the transaction of business shall be two members. A duly convened meeting of the Committee at which a quorum is present shall be authorised to exercise all or any of the powers and discretions vested in or exercisable by the Committee.
1.5 The Committee shall meet at least three times a year. The external auditors may request a meeting if they consider that one is necessary.
1.6 Only Audit Committee members shall be entitled to be present at Audit Committee meetings. A representative of the external auditors shall normally attend meetings. Other board members or senior executives shall attend Audit Committee meetings at the invitation of the Audit Committee Chairman.
1.7 At least once a year the Committee shall meet with the external auditors without executive Board members or management present.
1.8 The Committee is authorised by the Board to obtain outside legal or other independent professional advice and to secure the attendance of outsiders with relevant experience and expertise if it considers this necessary. The Company shall meet the expense of such advice.
1.9 The Committee is authorised by the Board to investigate any activity within its terms of reference. It is authorised to seek any information it requires from any employee and all employees are directed to co-operate with any request made by the Committee.
2 RESPONSIBILITIES
2.1 The responsibilities of the Committee shall be:
(a) to oversee the company’s relations with the external auditors;
(b) to consider, and make recommendations on the appointment, re-appointment and removal of the external auditors;
(c) to approve the terms of engagement and remuneration to be paid to the external auditors in respect of audit services provided;
(d) to assess annually the qualification, expertise, resources, and independence of the external auditors and the objectivity and effectiveness of the audit process, taking into account relevant UK professional and regulatory requirements;
(e) to discuss with the external auditors before the audit commences the nature and scope of the audit, and ensure co-ordination where more than one audit firm is involved;
(f) To monitor the integrity of the half year and annual financial statements and, where appropriate, any other formal announcements relating to the company’s financial performance before final approval by the Board, particularly focusing on:
(i) any changes in accounting policies and practices;
(ii) key accounting and audit judgements;
(iii) the extent to which the financial statements are affected by any unusual transactions in the year and how they are disclosed;
(iv) the clarity of disclosures;
(v) significant adjustments resulting from the audit;
(vi) the going concern assumptions;
(vii) compliance with accounting standards; and
(viii) compliance with London Stock Exchange, Financial Services Authority and legal requirements.
(g) to discuss problems and reservations arising from the interim and final audits, and any matters the external auditors may wish to discuss;
(h) to review the external auditor's management letter and management's response;
(i) to review the external audit representation letters before consideration by the Board, giving particular consideration to non-standard issues;
(j) to develop and recommend to the Board the Company’s policy in relation to the provision of non-audit services provided by the external auditors and ensure that the provision of such services does not impair their independence or objectivity;
(k) to review the Company's statement in the annual report and accounts on the Company’s internal control systems and risk management framework prior to endorsement by the Board;
(l) to assess the scope and effectiveness of the systems established by management to identify, assess, manage and monitor financial and non-financial risks
(m) to receive reports on the results of internal audit work on a periodic basis to monitor and review the effectiveness of the internal audit function and the internal audit programme in the overall context of the Company’s risk management system;
(n) to ensure that the internal audit function is adequately resourced and has appropriate standing within the Company;
(o) to review the Company’s procedures for detecting, monitoring and managing the risk of fraud including arrangements by which staff may raise concerns about possible impropriety. The Committee shall ensure that arrangements are in place to allow proportionate and independent investigation of allegations and appropriate follow-up action. All confirmed instances of fraud should be reported for review by the Audit Committee; and
(p) to consider other topics, as defined by the Board.
3 REPORTING
3.1 The Committee shall report to the Board as appropriate.
3.2 The Committee shall prepare a report on its role and responsibilities and the actions it has taken to discharge those responsibilities for inclusion in the annual report and accounts.
3.3 The Chairman of the Committee shall be available to respond to any shareholders’ questions at any general meeting of the Company.
3.4 The Committee shall annually review its terms of reference and its own effectiveness and recommend any changes to the Board.
4 DUTIES OF THE SECRETARY
4.1 The Secretary shall be required to keep a proper and timely record of meetings of the Committee and circulate such minutes to all members of the Committee, the Board.
4.2 The Secretary shall ensure that the Committee is properly constituted within these Terms of Reference. Any actual or anticipated variance of these terms should be brought to the attention of the Chairman of the Committee and the Chairman of the Company as appropriate.
4.3 The Secretary shall ensure that these Terms of Reference are publicly available.
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