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Audit Committee Terms of Reference (as approved by the Board of Directors on 28 February 2007) A. Membership 1. The Committee shall be appointed by the Board on the recommendation of the Nomination Committee. All members of the Committee shall be independent non executive directors of the company, with at least one member having relevant and recent financial experience. The Committee shall consist of not less than three members. A quorum shall be two members. The Chairman of the Board shall not be a member of the Committee. 2. The Chairman of the Committee shall be appointed by the Board from amongst the independent non executive directors. 3. Appointments are for a period of up to three years, extendable by no more than two additional three year periods, so long as members continue to be independent. B. Attendance at Meetings 1. The Finance Director, a representative of the internal auditors and a representative of the external auditors shall attend all meetings at the invitation of the Committee. 2. The Chairman of the Board, the CEO and other board members shall attend if invited by the Committee. 3. There should be at least one meeting a year, or part thereof, where the external auditors and the internal auditors attend without management present. 4. The Company Secretary or a nominee shall act as Secretary of the Committee and, in conjunction with the Chairman, will assist in drawing up meeting agendas and maintaining minutes of all meetings. The Company Secretary will also ensure that the Audit Committee receives information and papers in a timely manner to enable full and proper consideration is given to the issues. C. Frequency of Meetings 1. Meetings shall be held not less than three times a year, and where appropriate will coincide with key dates in the Company's financial reporting cycle. 2. External auditors or internal auditors may request a meeting if they consider that one is necessary. D. Authority The Committee is authorised by the Board to: - 1. Investigate any activity within its terms of reference. 2. Seek any information that it requires from any employee of the company and all employees are directed to cooperate with any request made by the Committee. 3. Obtain outside legal or independent advice at the company's expense and such advisors may attend meetings as necessary. E. Responsibilities The responsibilities of the Committee shall be: - 1. To consider the appointment of the external auditor (and approve their terms of engagement) and assess the qualifications, expertise, effectiveness and independence of the external auditor, ensuring that key partners are rotated at appropriate intervals. 2. Set and apply a formal policy on non audit work for auditors. 3. To recommend the audit and tax compliance fee to the Board and pre approve any fees in respect of non audit services provided by the external auditor and to ensure that the provision of non audit services does not impair the external auditors' independence or objectivity. This pre approval occurs where non audit work is in excess of £50k per project or £100k in aggregate in any one year. There is a schedule of activities that the Board perceive to be in conflict with the role of the external auditor. 4. To discuss with the external auditor, before the audit commences, the nature and scope of the audit and to review the auditors' quality control procedures and steps taken by the auditor to respond to changes in regulatory and other requirements. 5. To oversee the process for selecting the external auditor and make appropriate recommendations through the Board to the shareholders to consider at the AGM. 6. To review the external auditors' finding (including matters relative to the company's internal financial controls), management's response and the overall effectiveness of the audit process. 7. To review the internal audit programme and ensure that the internal audit function is adequately resourced and has appropriate standing within the company, with direct access to the Company Chairman and accountable to the Audit Committee. 8. To receive periodic reports on the results of the internal auditors' work and review and monitor management's responsiveness and responses to these finding and recommendations. 9. To approve the appointment or dismissal of the internal auditors. 10. To review the company's procedures for handling allegations from whistleblowers and detecting fraud. 11. To monitor the integrity of the company's internal controls and to assess the scope and effectiveness of the systems established by management to identify, manage and monitor financial and non financial risks. 12. To review, and challenge where necessary, the actions and judgements of management, in relation to the interim and annual financial statements before submission to the Board, paying particular attention to:
13. To determine the policy on employment of former audit employees. 14. Review of audit representation letters before consideration by the Board. 15. To consider other topics, as defined by the Board. 16. The Audit Committee will review annually it's Terms of Reference and it's own effectiveness and recommend any changes to the Board. The Board will also review the Audit Committee's effectiveness annually. F. Reporting Procedures 1. The Secretary shall circulate the minutes of meetings of the Committee to all members of the Board, and the Chairman of the Committee or, as a minimum, another member of the Committee shall attend the Board meeting at which the accounts are approved. 2. The Committee's duties and activities during the year shall be disclosed in the Annual Financial Statements. 3. The Chairman of the Audit Committee shall attend the AGM and shall answer questions, through the Chairman of the Board, on the Audit Committee's activities and their responsibilities. |
