The Committee shall carry out the duties below for the Group, as appropriate.
1.1. Financial Reporting
The Committee shall:
monitor the integrity of the financial statements of the Group, including annual and interim reports, preliminary results announcements and any other formal announcement relating to financial performance, reviewing significant financial reporting issues and judgements which they contain. The Committee shall also review summary financial statements and any financial information contained in other public documents.
review and challenge where necessary:
the appropriateness, consistency of and any changes to accounting policies both on a year on year basis and across the Group;
the methods used to account for significant or unusual transactions where different approaches are possible;
whether the Group has followed appropriate accounting standards and made appropriate estimates and judgements, taking into account the views of the external auditor;
the clarity of disclosure in the financial reports and the context in which statements are made;
all material information presented with the financial statements, such as the operating and financial review and the corporate governance statement;
whether the financial statements, taken as a whole, are fair, balanced and understandable; and
management’s assessment of the Group’s Financial Position and Prospects and Directors’ Risk Assessment.
1.2. Internal Controls and Risk Management Systems
The Committee shall:
keep under review the adequacy and effectiveness of internal controls and risk management systems including systems for ensuring compliance with the regulatory environment within which the Group operates; and
review and approve the statements to be included in the Annual Report concerning internal controls and risk management.
1.3. Compliance Oversight
The Committee shall:
monitor and review the effectiveness of the Compliance Oversight function in the context of the Group's overall risk management system;
review and note the Compliance Oversight annual plan; and
review promptly all reports to the Audit Committee from the Compliance Oversight function;
1.4. Whistleblowing, Fraud and Bribery Prevention
The Committee shall:
review the adequacy and security of arrangements for employees and contractors to raise concerns, in confidence, about possible wrongdoing in financial reporting or other matters. The Committee shall ensure that these arrangements allow proportionate and independent investigation of such matters and appropriate follow up action; and
review the adequacy of the Group’s procedures for detecting fraud and its systems and controls for the prevention of bribery.
1.5. Internal Audit
The Committee shall:
monitor and review the effectiveness of the internal audit function in the context of the Group's overall risk management system;
approve the appointment and removal of the Chief Internal Auditor;
Consider and approve the remit of the internal audit function and ensure it has adequate resources and appropriate access to information to enable it to perform its function effectively and in accordance with the relevant professional standards. The Committee shall also ensure the function has adequate standing and is free from management or other restrictions;
review and approve the annual internal audit plan;
review promptly all reports to the Audit Committee from the internal auditors;
review and monitor management's responsiveness to the findings and recommendations of the internal auditor; and
meet the Chief Internal Auditor at least once a year, without management being present, to discuss their remit and any issues arising from the internal audits carried out. In addition, the Chief Internal Auditor shall be given the right of direct access to the Chairman of the Board and to the Committee.
1.6. External Audit
The Committee shall oversee the relationship with the external auditor including, but not limited to:
1.6.1 Engagement Terms and Fees
considering and making recommendations to the Board, to be put to members for approval at the AGM, in relation to the appointment, re-appointment and removal of the Group's external auditors, which may include consideration of the risk of auditor withdrawal from the market.
overseeing the selection process for new auditors and if an auditor resigns investigating the issues leading to this and decide whether any action is required. The Committee shall also oversee the putting out to tender of the external audit contract at least every 10 years, and the rotation of the audit firm in accordance with regulatory requirements;
approval of the auditor’s remuneration, whether fees for audit or non audit services, and ensuring that the level of fees is appropriate to enable an adequate audit to be conducted;
approval of the auditor’s engagement letter.
1.6.2 Independence and Quality Control
assessing annually the auditor’s independence and objectivity taking into account relevant professional and regulatory requirements and the relationship with the auditor as a whole, including the provision of any non audit services;
satisfying itself that there are no relationships (such as family, employment, investment, financial or business) between the auditor and the Group (other than in the ordinary course of business);
agreeing with the Board a policy on the employment of former employees of the Group's auditor, and monitoring the implementation of this policy;
developing and implementing a policy on the supply of non audit services by the external auditor, taking into account any relevant ethical guidance on the matter;
assessing annually the external auditor’s qualifications, expertise and resources and the effectiveness of the audit process which shall include a report from the external auditor on their own internal quality procedures;
undertaking an annual review of the effectiveness of the external audit process;
monitoring the auditor's compliance with relevant ethical and professional guidance on the rotation of audit partners, the level of fees paid by the Group compared to the overall fee income of the firm, office and partner and other related requirements;
meeting regularly with the external auditor, including once at the planning stage before the audit and once after the audit at the reporting stage. The Committee shall meet the external auditor at least once a year, without management being present, to discuss their remit and any issues arising from the audit;
1.6.3 Conduct and Results of Audit
reviewing the annual audit plan and ensuring that it is consistent with the scope of the audit engagement;
reviewing the findings of the audit with the external auditor. This shall include but not be limited to:
a discussion of any major issues which arose during the audit,
any accounting and audit judgements, and
levels of errors identified during the audit;
reviewing any representation letter(s) requested by the external auditor before they are signed by management; and
reviewing the management letter and management's response to the auditor's findings and recommendations.
1.7. Reporting Responsibilities
The Committee shall report formally to the Board on how it has discharged its responsibilities including:
- the significant issues that it considered in relation to the financial statements and how these issues were addressed;
- its assessment of the effectiveness of the external audit process; and
- any other issues on which the board has requested the Committee’s opinion.
The Committee shall make whatever recommendations to the Board it deems appropriate on any area within its remit where action or improvement is needed.
A report to members on the Committee's activities is to be included within the Group's Annual Report.
The Committee shall, where requested by the Board, provide advice on whether the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides information necessary for members to assess Rafidain Bank’s position and performance, business model and strategy.
Where any disagreements between the Board and Audit Committee cannot be resolved, the Audit Committee has the right to report the issue to members as part of its activities in the annual report.
The Audit Committee section of the annual report will include statements on relevant statutory requirements, including external audit effectiveness, appointment of the external auditor, and safeguarding auditor objectivity and independence when auditor provides non audit services.
1.8. Other Matters
The Committee shall:
have access to sufficient resources in order to carry out its duties, including access to the Group’s Secretariat for assistance as required.
The Committee shall receive appropriate and timely training relevant to its activities, both in the form of induction training for new members and on an ongoing basis for all members.
be responsible for the co-ordination of the internal audit function and the external auditors;
give due consideration to applicable laws and regulations and to the provisions of the UK Corporate Governance Code, as appropriate;
oversee any investigation of activities which are within its terms of reference; and
at least once a year, review its own performance, constitution and terms of reference to ensure it is operating effectively and report the results of this review to the Board for approval.
1.9 Authority
The Committee is authorised by the Board to:
seek any information it requires from any employee of the Group in order to perform its duties;
obtain, at the Group's expense, external legal or other professional advice on any matter within its terms of reference; and
call any employee to be questioned at a meeting of the Committee as and when required.