Corporate Governance

Finance and Audit Committee Charter

1. Purpose/objectives

The finance and audit committee is tasked by the board of directors to assist the board in discharging its oversight responsibilities. The committee will provide oversight and advice on the financial activities of the organisation and the financial reporting process to ensure the balance, transparency and integrity of published financial information. The committee will also monitor and review the following:

  • The effectiveness of the company’s internal controls.
  • The effectiveness of the company’s risk management activities.
  • The conduct of the independent audit process, including recommending the appointment and assessing the performance of the external auditor.

In performing its duties, the committee will maintain effective working relationships with the board of directors, management and external auditors. To perform their role effectively, each committee member will develop and maintain their skills and knowledge, including an understanding of the committee’s responsibilities and of the company’s business, operations and risk.

2. Authority

The finance and audit committee is authorised by the board of directors, within the scope of its responsibilities and approved budgets, to:

2.1. Engage independent counsel and other advisors as it deems necessary to carry out its duties.

2.2. Ensure the attendance of company officers at meetings as appropriate.

2.3. Through the chair of the committee and in coordination with the CEO, have access to management, staff, and information as required to acquit the duties of the committee.

2.4. Advise the board of directors to recommend to the members of JDRF at the Annual General Meeting the appointment or reappointment of the external auditor and the quantum of the engagement fee.

2.5. Review the provision of non audit services by the external auditor.

3. Organisation

Membership

3.1. The finance and audit committee will have independent directors and non-directors as members, and will be chaired by one of those independent directors, typically the treasurer. The chair of JDRF board is not eligible to chair meetings of the finance and audit committee.

3.2. The appointment or termination of an independent director’s membership to the finance and audit committee will be made by resolution of the board of directors.

3.3. The finance and audit committee may invite non-director members to augment its range of backgrounds and experience. The committee may also request relevant specialists as advisors to participate in meetings where the committee has resolved that specialist skills are required to assist the committee in the discharge of its responsibilities. Relevant specialist advisors are not members of the committee, and will meet only with the approval of the chair of the committee

3.4. The appointment (and reappointment or removal) of non-director members will be made by the board of directors following recommendation by the majority of independent director members of the committee. This will be done after consideration by the committee of the skill sets required to complement the existing members’ range of backgrounds and experience.

3.5. Non-director members will be appointed for a term of one year, with no fixed period to the number of annual reappointments.

3.6. The finance and audit committee will comprise at least three (3) members with at least two (2) members being independent non-executive directors.

3.7. A quorum of any meeting will be two (2) members with at least one (1) present member being an independent non-executive director.

3.8. Each member must be financially literate; at least one (1) member must have accounting or related financial expertise.

3.9. There maximum number of non-director members on the finance and audit committee is the number of independent director members on the committee at any point in time.

3.10. Non-director members will complete a JDRF approved non-disclosure agreement and all required police and other checks before taking their place on the finance and audit committee.

3.11. Voting rights on the finance and audit committee of independent director members and non-director members will be equal. Should a vote be split the vote containing a majority of independent director members will prevail. Should the split contain an equal number of independent director members, then the vote of the chair of the finance and audit committee will prevail.

3.12. Appointment of Relevant Specialist Advisors to the finance and audit committee will be made by resolution of the committee.

3.13. Appointment to the committee of Relevant Specialist Advisors is subject to completion of JDRF approved non-disclosure agreement and all required police and other checks.

3.14. The secretary of the committee will be the company secretary, or such other person as nominated by the committee.

Meetings

3.15. Only committee members are entitled to attend meetings. The committee may invite other people (such as the CEO, COO, accountant and external auditor) to its meetings as it considers necessary.

3.16. External auditors should be invited to make presentations to the committee as appropriate.

3.17. Meetings will be held not less than four times a year and should correspond with the company’s financial reporting cycle.3.18. Special meetings may be convened as required. The secretary will convene a meeting on receipt of a request by the external auditors, or the chair of the committee.

3.19. The secretary will circulate the agenda and supporting documentation to the audit committee members within a reasonable time before each meeting.

3.20. The secretary will circulate the minutes of meetings to members of the committee and make them available to the board and the external auditor where appropriate.

3.21. As a minimum, the chairman of the committee (or other committee member) will attend the board meeting at which the financial statements are tabled for approval.

3.22. Members of the finance and audit committee should ideally attend every meeting of the committee.

3.23. The committee will meet with the external auditor at least once a year and is entitled to do so with or without management being present.

3.24. Meetings of the finance and audit committee may be held by members attending in person or by electronic means.

4. Roles and Responsibilities

Risk management and internal controls

The finance and audit committee will:

4.1. Work with the Risk Manager, CEO and COO to set the organisation’s risk appetite for adoption by the board of directors, and review annually.

4.2. Oversee management’s identification, assessment and management of material risks including but not limited to financial, investment, fraud, anti-money laundering, operational and reputation risks and ascertain adequacy of management actions.

4.3. Review drafts and recommend submission to the board of directors for approval of key company policies requiring director approval.

4.4. Monitor adherence to the organisation’s policies.

4.5. Monitor the organisation’s internal controls and report at least annually on their adequacy to the board of directors.

4.6. Review any material incidents or breaches and corrective actions, and escalate for board review any residual risks outside of the risk appetite.

4.7. Review the risk manager’s risk report on a semi-annual basis.

4.8. Monitor the organisation’s framework for compliance with relevant statutory obligations including relevant laws, regulations and codes of practice, including by any joint venture partners or outsourced providers.

4.9. Review any material compliance breaches, ensure adequacy of corrective actions and escalate to the board where appropriate.

4.10. Recommend to the board the appointment of an external auditor and to review the appointment and scope of work annually.

4.11. Review the annual audit report for adoption by the board.

4.12. Review management’s responses to any adverse audit findings or recommendations and monitor the implementation of corrective actions.

Financial Oversight

The finance and audit committee will:

4.13. Work with the CEO and the COO for the preparation of the annual budget for adoption by the board.

4.14. Monitor budgets and forecasts.

4.15. Review investment decisions taken by management are in accordance with policy and are in the best interests of JDRF. Provide investment advice to management as appropriate.

4.16. Review management accounts and statutory accounts for adoption by the board.

4.17. Consider and recommend to the board expenditure proposed by the CEO that is outside of the board-approved annual budget.

4.18. Develop and review the CEO’s expenditure delegations for adoption by the board.Financial ReportingThe finance and audit committee will:

4.19. Gain an understanding of the current areas of greatest financial risk and opportunity and, how these are being managed.

4.20. Review significant accounting and reporting issues, including recent professional and regulatory pronouncements, and understand their impact on financial reports.

4.21. Oversee the periodic financial reporting process implemented by management and review the interim and annual financial statements before their release.

4.22. Meet with management and the external auditor to review financial statements, key accounting policies and decisions and the results of the audit.

4.23. Ensure that significant adjustments, unadjusted differences, disagreements with management and critical accounting policies and practices are discussed with the external auditor.

Working with the external auditor

The finance and audit committee will:

4.24. Review the professional qualifications of the external auditor including background and experience of partner and auditing personnel.

4.25. Consider the independence of the external auditor and any potential conflicts of interest.

4.26. Review on an annual basis the performance of the external auditor and advise the board to make recommendations to JDRF members at the Annual General Meeting for the appointment or reappointment of the external auditor.

4.27. Review on an annual basis the performance of the external auditor and if appropriate recommend to the board of directors, the termination of the external auditor.

4.28. Review the extent of the external auditor’s proposed audit scope and approach for the current year in light of the company’s circumstances and changes in regulatory and other requirements.

4.29. Discuss with the external auditor any audit problems encountered in the normal course of audit work, including any restriction on audit scope or access to information.

4.30. Ensure that significant findings and recommendations made by the external auditor and management’s proposed response are received, discussed and acted on appropriately.

4.31. Discuss with the external auditor the appropriateness of the accounting policies applied in the company’s financial reports and whether they are considered to be aggressive, balanced or conservative.

4.32. Be available to meet separately with the external auditor at least once a year to discuss any matters that the committee or auditor believe should be discussed privately.

4.33. Ensure the external auditor has access to the chairman of the audit committee when required.

Reporting responsibilities

4.34. Regularly update the board about committee activities and make appropriate recommendations.

4.35. Provide minutes of meetings of the finance and audit committee to the next available board meeting

4.36. Ensure the board is aware, in a timely manner, of matters that may significantly affect the financial condition or affairs of the business.

4.37. Prepare any reports required by law, or as requested by the board, such as a report on the committee’s activities and duties to be included in the section on corporate governance in the annual report.

Evaluating performance

The finance and audit committee will:

4.38. Evaluate the committee’s own performance, of individual members and collectively, on a regular basis.

4.39. Assess the achievement of the duties specified in the charter and report annually the findings to the board of directors.

Review of the committee charter

The finance and audit committee will:

4.40. Review the finance and audit committee charter at least every two years and discuss required changes with the board.

4.41. Ensure that the charter is approved or re-approved by the board, as required.

5. Subcommittees

5.1 The finance and audit committee may form subcommittees by resolution.

5.2 Subcommittees of the finance and audit committee will contain at least one member of the finance and audit committee who will typically assume the role of chair of the subcommittee.

5.3 Subcommittees will have a charter approved by the finance and audit committee which will be limited by the provisions of the charter of the finance and audit committee.

5.4 Subcommittees of the finance and audit committee may be formed (i) to attend to the requirements of a particular on going functional responsibility of the finance and audit committee or (ii) to attend to a specific task with a defined brief and duration.

5.5 Subcommittees of the finance and audit committee may appoint relevant specialist advisors at the discretion of the subcommittee chair.

5.6 Appointment of relevant specialist advisors of a sub-committee of the finance and audit committee is subject to satisfactory completion of JDRF approved non-disclosure agreement and police checks.

5.7 Minutes of subcommittee meetings will be approved by the chair of the sub committee and submitted to the next available meeting of the finance and audit committee.

5.8 The secretary of the finance and audit committee or his/her delegate will assume responsibility as secretary of subcommittees of the finance and audit committee.