AUDIT and ASSURANCE COMMITTEE TERMS OF REFERENCE

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1 AUDIT and ASSURANCE COMMITTEE TERMS OF REFERENCE P U R P O S E The Cmmittee is an perating Cmmittee f the Grup Bard and is charged with the respnsibility f gaining assurance fr the Grup Bard that the rganisatin is being managed in a safe manner and meets all legal and regulatry bligatins. M E M B E R S H I P Up t 5 Grup Bard Members + 1 Independent Member, appinted by the Grup Bard; C-ptees up t a maximum f tw Members/Officers: Grup Chair/ Grup Chief Executive / Grup Secretary / Executive Directr Crprate Services / Head f Risk and Assurance Term f Office: Tw terms f three years M E E T I N G S Serviced by: Deputy Grup Chief Executive/ Grup Secretary Meetings : Minimum f fur times per year Chair: a Grup Bard Member, appinted by the Grup Bard. Nt an Officer/nt the Grup Chair Qurum : a minimum f 3 Members Minutes: draft minutes t be prduced by the designated Minute Secretary and agreed by the Chair within 5 wrking days f the meeting. A P P R O V I N G / R E C E I V I N G Apprving: Audit fees within the apprved Grup budget The scpe f audits within the apprved Audit Plan; Officer actin plans in respnse t Internal Audit recmmendatins; Risk Management (cntrl) reprts each quarter; Six mnthly Risk Management Reprt; Actins fllwing self-assessment activity; Receiving: Duties delegated frm the Grup Bard. Reprts n Emerging Risks; Value fr Mney updates Reprts frm the Risk Management Grup. Update reprts n an annual basis frm the Health and Safety Officer n perfrmance utcmes fr the year; Plicies and Prcedures related t Health and Safety. R E C O M M E N D I N G T O G R O U P B O A R D Actins arising frm the activities abve Appintment f Auditrs Six mnthly Risk Assurance Reprt; Draft respnses t Internal r External Audits; Value fr Mney Reprts; Respnses t delegated duties frm the Grup Bard. R E P O R T I N G T O Grup Bard n its activities fllwing each meeting. A P P O I N T M E N T O F A D V I S E R S Respnsible fr the appintment f advisers as required in rder fr the Cmmittee t discharge its duties M O N I T O R I N G Current risks; Emerging risks and pprtunities; Cntrls and wrking practices; Cmpletin f actin against Audit/ recvery plans/ risk mitigatins; Cmpany registers including fraud insurance reprting. F I X E D A G E N D A I T E M S Risk Management Reprts: including Current and Emerging Risks, Cntrl Assurance and New Business Opprtunities; Internal and External Audit Reprts Reprts arising frm self- assessment activity ; Dcuments fr decisin/apprval; Items t reprt back t Grup Bard Fraud incidents External Auditrs Reprt and Management Letter In Camera Meeting with the Auditrs (at least annually) Annual review and appraisal f the Cmmittee 1

2 1.0 Purpse The Audit and Assurance Cmmittee is an perating Cmmittee f the Grup Bard and is charged with the respnsibility f prviding assurance t the Grup Bard as t the effectiveness f the Grup s risk Management and internal cntrl framewrks and that the Grup s activities are being managed in a safe manner and meet all legal bligatins. It is als required t prvide assurance t the Grup Bard that all regulatry standards are being met and t versee the External and internal Audit functins. 2.0 Meetings 2.1 Meetings f the Audit and Assurance Cmmittee shall be held at least fur times per year, but shall be called as required. They will nrmally last n mre than tw hurs. 2.2 A 12 mnth prgramme f meetings will be prduced fllwing the AGM and apprved by the Grup Bard. Additinal meetings may be called by the Grup Secretary, Chairman r tw Cmmittee Members by writing t the Grup Secretary, specifying the business t be transacted. 2.3 A meeting shall be cnvened by written ntice (r ) and the agenda sent t every Member f the Cmmittee nt less than seven days befre the date f the meeting. Only Members f the Cmmittee have the right t attend meetings, althugh thers may be invited t attend all r part f any meeting. 2.4 Agendas and assciated papers will be circulated t all Members electrnically unless, they have a medical exemptin. 2.5 Aplgies fr absence shuld be ntified t the Grup Secretary in advance f the meeting. In the event f a Cmmittee Member being absent fr tw cnsecutive meetings, withut prir agreement with the Chair, they will be deemed t have vacated their ffice and will be ntified in writing by the Grup Secretary. 2.6 Any Cmmittee Member may request special leave f absence, nt exceeding three meetings, ver a tw year perid. Special leave f absence may be agreed by the Chair and reprted t the next meeting f the Cmmittee. Member s attendance at meetings will be reprted annually t the Grup Bard as part f the annual review f Bard effectiveness. 2.7 The business f the meeting shall be limited t items n the agenda and any items accepted by the Chair under any ther business. In the absence f the Chair f any particular meeting, the Chair will be taken by any ther Member elected frm thse present excluding the Grup Chair and Officers. The prceedings f each Cmmittee shall be reprted t the Grup Bard. 2.8 The Chair f the Cmmittee shuld attend the AGM t answer any questins that may be raised by sharehlders n matters within the Cmmittee s areas f respnsibility. 3.0 Minutes 3.1 The Deputy Grup Chief Executive/ Grup Secretary shall be respnsible fr servicing the meetings and minutes, including the reasns fr decisins, will be taken by the Minute Secretary. Draft minutes will be prduced and agreed with the Chair, within 5 wrking days f the meeting. The minutes will be available t all Grup Bard Members. 2

3 4.0 Membership 4.1 The Cmmittee shall cmprise f up t 5 Members frm and appinted by the Grup Bard + 1 Independent Member. The Grup Chair shall nt be a Member f the Cmmittee. Chair: Qurum: Members/Officers: A Grup Bard Member appinted by the Grup Bard, nt an Officer and nt the Grup Chair. A minimum f 3 Cmmittee Members (t attend by invitatin): Grup Chair Grup Chief Executive Deputy Grup Chief Executive/ Grup Secretary Executive Directr Crprate Services Head f Risk and Assurance 4.2. Cmmittee Members shall be appinted fr a fixed perid f three years (subject t annual cnfirmatin f satisfactry perfrmance). N Cmmittee Member will be permitted t serve mre than tw terms f three years unless in exceptinal circumstances determined by the Grup Bard, where the term may be extended t a maximum f nine years. 5.0 Respnsibilities and Pwers 5.1 General The exercise f any pwers delegated by the Grup Bard t the Audit and Assurance Cmmittee, set ut in the Scheme f Delegatin within Grup Standing Orders and Financial Regulatins. Hwever, in the case f dispute, the Grup Bards decisin must verride that f the Cmmittee; In the event f a decisin by the Grup Bard verriding that f the Audit and Assurance Cmmittee, the Chair f the Audit and Assurance Cmmittee shall have the right t reprt any such decisin t the External Auditrs (after ntificatin at the Grup Bard f this prpsed curse f actin); Where apprpriate the Audit and Assurance Cmmittee shall reprt t External regulatry bdies withut recurse t the Grup Bard. If the Audit and Assurance Cmmittee takes this curse f actin, it shall infrm the Grup Bard as sn as practicable thereafter; Liaise as necessary with the ther Bards and Cmmittees within the Grup as instructed by the Grup Bard; If, at any time, the Audit and Assurance Cmmittee is unclear r in dubt abut any issues, it reserves the right t defer questins back t the relevant Grup Cmpany r Sciety fr clarificatin; The Audit and Assurance Cmmittee has the right f access t all infrmatin it cnsiders necessary t perfrm any f its functins; Review the Cmmittee s perfrmance annually, identifying any skills gaps which require filling, and reprting t Grup Bard; Understand the perating envirnment, needs f the business and link Audit and assurance activity t the Crprate Strategy; 3

4 Cntribute t the Annual Reprt n the Grup s activities; The Chair f the Cmmittee shuld attend the AGM t answer any questins that may be raised by sharehlders n matters within the Cmmittee s areas f respnsibility. 6.0 Specific Appintment f Advisers Appint independent advisers as necessary t assist in the delivery f any duties within the Terms f Reference. External Audit The Audit and Assurance Cmmittee shall: Tender External Audit services and make recmmendatins n appintment t the Grup Bard Agree the scpe f the External Audit and the prvisin f ther services by the External Auditr. The engagement letter shuld be reviewed at intervals f at least three years and apprpriate recmmendatins made t the Grup Bard; Cnsider the External Audit plan and discuss issues that are likely t affect the Audit and financial statements with the Auditrs; Discuss the External Auditrs Annual Management Reprt and receive bth frmal and infrmal feedback frm the External Auditr. At least part f ne meeting per year with the External Auditr must take place withut any Officers present (in Camera); Advise all Bards n the sundness f financial systems in the light f the External Audit; Cnsider the Management Letter and the draft respnse t it and advise the Grup Bard accrdingly; Cnfirm and determine the fee t be paid t the External Auditr within the agreed Grup budget; Review the perfrmance f the External Auditr and determine if value fr mney is being prvided and whether the External Auditr is independent and effective; Recmmend t the Grup's AGM the re-appintment f the External Auditr r recmmend that the service be re-tendered. Any perid f retendering shuld be in accrdance with the Regulatry Bdy guidelines and as agreed by the Grup Bard; Oversee the tendering and selectin f the External Auditr. Internal Audit The Audit and Assurance Cmmittee shall: Ensure that the Grup has apprpriate Internal Audit arrangements. This invlves making the key judgments abut the level f risks and, in the light f them, the level f resurces that are deplyed. The Internal Audit Prgramme must cver all systems and must invlve cmpliance testing; 4

5 Tender Audit services and make recmmendatins n the appintment f Auditrs t the Grup Bard Cnsider and apprve the Internal Audit Plan and Audit prgramme fr each perid; Cmmissin special studies and investigatins n matters relating t its duties and respnsibilities; Receive and review Internal Audit Reprts, take apprpriate actin and reprt t the Grup Bard n the adequacy and effectiveness f the Internal cntrls and risk Management Framewrk, including reviewing and making recmmendatins t the Grup Bard n the statements t be included in the annual reprt cncerning Internal cntrls and risk Management; Cnsider draft respnses and Internal Audit reprts and advise the Grup Bard accrdingly; Advise the Grup Bard n the sundness f financial, peratinal and cmpliance systems in the light f the Internal Audit; Cnfirm and determine the fee t be paid t any External prvider f Internal Audit service with the agreed Grup Budget;; Review the perfrmance f the Internal Auditr and determine if value fr mney is being prvided and whether the Internal Auditr is independent and effective. In particular the Audit and Assurance Cmmittee must ensure the Internal Auditr has n cnflicts f interest with the External Auditr. 7.0 Mnitring The Audit and Assurance Cmmittee shall mnitr: Current risks; Emerging risks; Cntrls and wrking practices acrss the Grup; Actins taken against Audit recmmendatins/ recvery plans/ risk mitigatin requirements; Grup registers including fraud; Insurance reprting including claims and cnsidering and reviewing the annual reprt n the insurance prtfli, and risks cvered and excluded. They shall apprve the creatin and implementatin f apprpriate cntrl dcuments and shall receive reprts that prvide assurance t the Grup Bard f apprpriate systems and prcesses including trend and thematic analysis and evidence f learning frm events (incidents, claims and cmplaints). They shall als challenge the rbustness f evidence prvided t them and request actins plans t address gaps and meet recmmendatins. This shall include: Internal Audit Plan and scpe f Audits within the Plan; Officer actin plans in respnse t Internal and External Audit recmmendatins; Risk Management Reprts ; Value fr Mney updates; Respnding t delegated duties frm the Grup Bard. 5

6 8.0 Gvernance, Regulatin and Cmpliance T receive reprts and self-assessments n cmpliance with gvernance and regulatry requirements; Review any value fr mney r best value exercises undertaken and any regulatry bdy evaluatins cmpleted; T prvide assurance t the Grup Bard n the effectiveness f Internal cntrls relating t gvernance and regulatin. 9.0 Risk Management T mnitr the adequacy f the Grup agreed framewrk fr identifying and managing key financial and nn-financial risks facing the Grup; T receive regular updates n the status f the Grup s Risk Register. T keep under review and reprt t r make recmmendatins t the Grup Bard in relatin t the adequacy and effectiveness f the Grup s Internal financial cntrls and Internal cntrl and risk Management systems, including reviewing the Strategic Risk Register and reprts n Risk Management and mapping and reviewing any significant legal actin being taken by r against the Grup; T ensure that apprpriate actin is taken by Officers t mitigate risk highlighted thrugh Internal Audit reviews; T receive reprts n the Management f risks thrugh plicy and prcedure review; Review and apprve the Anti-Mney Laundering and Whistleblwing Plicies and make recmmendatins n the Prbity Plicy, Risk Management Plicy and Scheme f Delegatin; T receive reprts frm the Risk Management grup Fraud and Crruptin T receive an update reprt n an annual basis frm the Grup Secretary cncerning any entries in the Grup s fraud register; T review any Plicies and Prcedures fr all wrk related t fraud and crruptin Health and Safety T receive an update reprt n an annual basis frm the Health and Safety Officer n perfrmance utcmes fr the year; T review any Plicies and Prcedures fr all wrk related t Health and Safety Half-Yearly Advisry Reprt t the Bards f Grup Members Every six mnths the Head f Risk Assurance will submit a reprt referring t the matters utlined belw t all f the Bards within the Grup. It will cver: The state f cntrl systems; 6

7 The state f reprting prcesses; The perfrmance f External Auditrs; The External Audit Management Letter; The perfrmance f Internal Auditrs; Fundamental matters arising frm Internal Audit Reprts; Any regulatry bdy audit r evaluatin; The cntents f the register f detected frauds and lsses; Arrangements fr prmting ecnmy, efficiency and effectiveness. This reprt shuld review the verall perfrmance f the Grup's External Auditrs nce a year and recmmend whether this functin shuld be put ut t tender Urgency Prcedures Where urgent decisins are needed between scheduled meetings, these will be dealt with by an Urgency Cmmittee cmprising f the Chair and at least tw Members f the Cmmittee, n the basis f a written reprt frm the Grup Secretary r, in his absence, ne f the ther Directrs. The business f the Urgency Cmmittee may be dealt with at a meeting r electrnically Only matters within the remit f the Audit and Assurance Cmmittee can be dealt with under this system with the Urgency Meeting cmprising f, at least tw Members f the Audit and Assurance Cmmittee plus the Chairman (three Members in ttal). The reprt shuld clearly state, amngst ther things, why the item cncerned culd nt be brught t a scheduled Cmmittee meeting. Any Urgency Cmmittee business shuld be reprted t the Cmmittee at the next meeting and any cnsequent decisin minuted accrdingly Other Matters The Cmmittee shall: Have access t sufficient resurces t carry ut its duties Be prvided with apprpriate and timely training 15.0 Terms f Reference Review The Terms f Reference will be reviewed at least annually at the February cycle f meetings. References NHF Cde f Gvernance 2015 Prmting Bard Excellence fr Husing Assciatins. Risk Management: a guide fr Husing Assciatin Bard Members, Natinal Husing Federatin, 2014 Understanding Assurance: a guide fr husing assciatin Bard Members. Natinal Husing Federatin, 2014 The ICSA Audit Cmmittee Guide 2013 NHF 2015 mdel dcuments Example frm anther husing prvider apprved by the HCA in 2017 Assurance Reviewed and cmmented n by Anthny Cllins Slicitrs 24 th July Reviewed and cmmented n by Internal Auditrs (Mazars) 25 th July Versin N Authr Purpse/Change Date: 3.1 Marina Banner (Executive Directr) Minr amendments t differentiate between the Grup Secretary and Minute Secretary and additin f a glssary f terms

8 Glssary f Terms Cmmittee - a Cmmittee f the Grup Bard Grup Bard the Bard f Management f the Cmmunity Husing Grup Limited. Grup Secretary - an Officer f the Grup respnsible fr keeping the legal affairs, accunts and admin in rder. Grup Standing Orders and Financial Regulatins - a set f guiding principles by which the Grup cnducts its business and finances. Minute Secretary - an Officer f the Grup respnsible fr taking the minutes f meetings. Officer Respnsible fr Servicing Meetings - an Officer f the Grup respnsible fr crdinating the preparatin f agendas, ensuring any queries are respnded t and agenda s and meetings are managed in accrdance with Grup plicy and prcedures. Sharehlding Membership an individual, grup, r rganizatin that wns ne r mre shares in the rganizatin and whse name in which the share certificate is issued. Urgency Cmmittee - Prcess fr dealing with urgent items f business that can t be dealt with at a scheduled Bard r Cmmittee meeting. 8