TERMS OF REFERENCE. Investec Limited Group Audit Committee

Transcription

1 TERMS OF REFERENCE Investec Limited Group Audit Committee Overview The Audit Committee (the Committee) of Investec Limited and subsidiaries, being the Investec Limited Group (the Group) is mandated by the Board of Directors of Investec Limited (the Board) to be the Audit Committee of the Group including specifically Investec Bank Limited and subsidiaries, as required and approved by the SA Reserve Bank in terms of section 64(4) of the Banks Act 94 of The composition of the Committee and these Terms of Reference ( TOR ) meet the requirements for Audit Committees under: The Banks Act 94 of 1990 (the Banks Act) The Companies Act 71 of 2008 (the Companies Act) King III Code - Principles of Corporate Governance and JSE Listings Requirements Membership The Committee shall at all times have at least 3 (three) members who are independent, nonexecutive directors of the Board, provided that the Chairman of any of the Group Boards will not be eligible to be appointed as a member of the Committee. At least 1 member shall be an independent, non-executive director of Investec Bank Limited (and who is permitted to be a Director of Investec Limited at the same time) Committee members and its Chairman shall be appointed, removed or replaced by the Board at any time. The Board may appoint a minimum of three directors. The Board of Investec Bank Limited may, within its discretion and following recommendation of the Nominations and Directors Affairs Committee, appoint two members, not also being Board members of the Board, to participate and fulfil the duties specifically relating to Investec Bank Limited Should a Committee member resign from or vacate his/her position as member for whatever reason, the Board shall fill the vacancy on the Committee within 40 business days after such vacancy arises Committee membership will automatically end at such time as a member ceases to be a member of the Board Committee members shall be identified in the Investec Annual Report, and if required, their attendance at Committee meetings during each year will be disclosed The Chairman of the Committee may at his discretion invite non-members to meetings as deemed necessary. There will be a standing ex officio invitation to members of the Investec plc Audit Committee The Committee s responsibility to oversee integrated reporting, requires that all members have a clear understanding of the International Financial Reporting Standards, SA Statements of Generally Accepted Accounting Practices, the guidelines of the Global Reporting Initiative and any other financial or sustainability reporting standards, regulations or guidelines applicable to the Company At least one-third of the members of the Committee, at any particular time, shall have academic qualifications, or experience, in economic, law, corporate governance, finance, accounting, commerce, industry, public affairs or human resources management. In addition, all Committee members should meet predetermined skills, competency and experience requirements. The Committee is free to consult with specialists or consultants to assist it with the performance of its functions, subject to a Board-approved process and All Committee members must keep up- to-date with developments affecting the required skill set

2 Composition The Chairman of the Committee shall be an independent non-executive Board member of Investec Limited and may not be the Chairman of any of the Group Boards and Current members are listed in Appendix I attached hereto Quorum A quorum shall be three members, including the Chairman. Secretary One of the Group s Company Secretaries or their nominee shall act as Secretary of the Committee. Notice of meetings Committee meetings will be called by the Secretary at the request of any of its members, other than the 4 pre-determined meetings per annum Unless otherwise agreed, notice of each meeting confirming the venue, time and date together with an agenda of the items to be discussed, shall be forwarded to each Committee member and any other person required to attend, no later than 7 days before the date of the meeting and The Committee Chairman and the Secretary will set the agenda of each meeting Frequency The Committee shall meet at least 4 (four) times annually before Board meetings in order to facilitate a report to each such meeting In addition the Committee, in conjunction with the plc Audit Committee, shall meet at least twice annually to consider the un-audited interim and audited final financial statements of Investec Limited and Investec plc and its subsidiaries, including the combined financial statements of Investec Limited and Investec plc and its subsidiaries (DLC Group) and The Committee may meet whenever required on an ad hoc basis Meetings other than in person Where deemed appropriate by the Committee Chairman, meetings and subsequent approvals and recommendations may occur via written resolution or conference call or other electronic means of audio or audio-visual communication. Voting A motion shall be passed by a simple majority of votes cast in favour thereof by Members present and eligible to vote, or by a resolution in writing signed by the majority of Committee members. There shall be no casting vote Minutes of meetings The Secretary shall minute the proceedings and resolutions of the Committee, which shall be tabled at the subsequent meeting for approval. Objectives The main objectives of the Committee will be to assist the Boards in respect of the following, for each of the geographies forming part of the Investec Limited and Investec Bank Limited business: Responsibility to comment on financial statements, accounting practises and internal financial control Oversee Integrated Reporting

3 Ensure the combined assurance model - being assurance coverage obtained from management, internal assurance providers and external assurance providers - is applied to provide a coordinated approach with regard to risk management Review the expertise, resources and experience of the finance function Oversee the Internal Audit function Review and ensure that the following specific areas of risk are addressed Financial reporting risks Internal financial controls Fraud risk as it relates to financial reporting and Information Technology risks as it relates to financial reporting On delegation by the Board, review the effectiveness of the Compliance Function Control Framework, Procedures and Processes Assist the Board in carrying out the Information Technology Governance responsibilities Recommend the appointment of the external auditor and oversee the external audit process and Maintaining open lines of communication between the boards and the Investec group s risk management, internal and external auditors and compliance officers. Specific duties In order to achieve the above objectives, the Committee will: Have responsibility to comment on financial statements, accounting practices and internal financial control Review of financial reports should include the annual financial statements, interim reports, any other intended release of price sensitive information and prospectuses, trading updates, interim management statements Be informed when there is a disagreement on auditing or accounting between management and the external auditors Review the consistency of accounting policies both on a year to year basis and across the Group Ensure compliance with financial reporting standards Develop processes to ensure that the financial statements comply with the financial reporting standards, the Companies Act and the JSE Listings Requirements. The annual financial statements must state clearly that they have been prepared according to the requirements of the Companies Act The Committee must ensure that financial reports prepared are not false / misleading Develop policies and procedures to respond to inquiries that may be directed to the company by the Financial Reporting Investigations Panel and To receive and deal appropriately with any concerns or complaints, whether from within or outside of the Group, or on its own initiative, relating to: o the accounting practices and internal audit of the group o the content or auditing of the annual financial statements o the internal financial controls of the company and o any related matter Oversee Integrated reporting Have regard to all factors and risks that may impact on the integrity of the integrated report Review and comment on the financial statements included in the integrated report The Audit Committee should review the disclosure of sustainability issues in the integrated report to ensure that it is reliable and does not conflict with the financial information Review the need to engage an external assurance provider on material sustainability issues and Review the content of the summarised integrated report and ensure it o Provides a concise but balanced view of the Company s integrated report o Provides key financial information o Provides sufficient commentary to the financial information to ensure an unbiased view

4 o o Provides the Company s key performance measures regarding sustainability information and Includes a statement to the effect that the information is derived from the underlying Integrated report The Audit Committee should engage the external auditors to provide assurance on the summarised financial information. Ensure the combined assurance model - being assurance coverage obtained from management, internal assurance providers and external assurance providers - is applied to provide a coordinated approach Identify the identity and nature of relationship of internal and external assurance providers Ensure the assurance received is appropriate to address all significant risks facing the Company and Monitor the relationship between external assurance providers and the Company Review the expertise, resources and experience of the finance function Conduct an annual review of the finance function and Conduct an annual review of the appropriateness of the experience and expertise of the finance director Oversee Internal Audit Responsible for the appointment, performance assessment and/or dismissal of the Head of Internal Audit Approve the internal audit plan and When deemed appropriate, ensure the internal audit function is subject to an independent quality review as and when the Committee determines it appropriate Review that the following areas of risk are addressed Financial reporting risks o Oversee and review financial risk management and controls (that embeds internal financial control in the business processes) Internal financial control risks o Monitor integrity of the financial information and comment on the effectiveness of internal financial controls by reviewing the results of an annual internal audit review of the design, implementation and effectiveness of the Company s system of internal financial controls o Evaluate the nature and extent of the formal review performed by Internal audit Fraud risk as it relates to financial reporting o Review the whistle-blow procedures o Review and approve the Company s Code of Conduct and processes to ensure compliance thereof o Consider matters that may result in material misstatements in the integrated report due to fraud and o Receive and deal with any complaints relating to the accounting practises and internal audit function, content of financial statements, internal financial controls or any related matter Review Information Technology ( IT ) risks as it relates to financial reporting o Identify the specific IT risks in this regard and review the procedures in place to manage the risks On delegation by the Board, review the effectiveness of the Compliance Function Control Framework, Procedures and Processes, to ensure Compliance with all applicable laws, regulations and codes of conduct and practices To monitor areas of non-compliance To monitor all regulatory risks Review the effectiveness of the procedures and control framework and Review the suitable structure and size of the Compliance Function

5 Assist the Board in carrying out the IT responsibilities Ensure that IT risks are adequately addressed Understand the Company s overall exposure to IT risks from a strategic and business perspective, and identify the areas of the business that are most dependent on IT for effective and continual operation Obtain appropriate assurance that the necessary controls in place are effective in addressing the risks in these areas and Review the impact of IT as it relates to financial reporting and the going concern of the Company Recommend the appointment of the external auditor and oversee the external audit process Recommend to shareholders the appointment, reappointment and removal of the external auditor and ensure compliance with the relevant Companies Act and Banks Act in this regard Approve the external auditor s terms of engagement and remuneration and ensure that the appointment of the auditor complies with the provisions of the Companies Act and other legislation relating to the appointment of auditors Review, monitor and report on the external auditor s independence and objectivity and should assess the effectiveness of the audit process annually Define a policy for Board approval, addressing the nature, extent and terms under which the external auditor may perform non-audit services to the Group Review concerns identified as a result of the internal or external audit and should ensure these are appropriately addressed by management At the end of each annual audit, the Committee should review the quality and effectiveness of the audit process and should assess whether the external auditors have performed the audit as planned Ensure that the appointed auditors do not contravene the restrictions as stated in the Code of Professional conduct under section 21 in the Auditing Professions Act and The Committee must meet with the auditor not more than one month before the Board meets to approve the financial statements. Maintaining open lines of communication between the boards and the Investec group s risk management, internal and external auditors and compliance officers Specific reporting responsibilities and recommendations to the Board The Secretary shall circulate the minutes of the Committee to its members and if requested to the Boards of Investec Limited and Investec Bank Limited The Committee will: Report its findings to the Board and to the DLC Audit Committee Keep the Board appraised on matters relating to the accounting practices and the internal financial controls of the Company Assist the Board in making a going concern statement Assist the Board in approving the disclosure of sustainability issues in the integrated report Recommend to the Board to engage an external assurance provider on material sustainability issues Recommend to the Board whether the external auditor should perform assurance procedures on interim results Evaluate the suitability of the expertise and experience of the Finance Director and recommend to the Board if changes are necessary Report on the results of the review of the Finance Function Conclude and report yearly to the Board on the effectiveness of the Company s internal financial controls and report on weaknesses in financial control, whether from design, implementation or execution that are considered material Report to the Board on how it has fulfilled its duties, in terms of the relevant companies Act and TOR during the financial year

6 Provide assurance to the Board on the effectiveness of the Compliance Function Control Framework, Procedures and Processes Provide assurance to the Board with regard to the controls in place to mitigate IT risks and Provide such other oversight functions as may be determined by the Board. Disclosure obligations The Committee will: Conclude and report yearly to stakeholders on the effectiveness of the Company s internal financial controls - and report on weaknesses in financial control, whether from design, implementation or execution that are considered material Prepare a report to be included in the annual financial statements for the financial year:- describing how the Committee carried out its functions; stating whether the Committee is satisfied that the auditor was independent of the company and commenting in any way the Committee considers appropriate on the financial statements, the accounting practices and the internal financial control of the Group Report to the shareholders at the AGM on how it has fulfilled its duties, in terms of the relevant Companies Act and TOR during the financial year. The Chairman must attend the AGM Provide a summary of its role and details of its composition, number of meetings and activities in the integrated report and Disclose the results of the review of the finance function in the integrated report. In particular, the Committee must state in the integrated report that it has considered and is satisfied that the financial director has the appropriate expertise and experience for the role Scope of duties The foregoing list of specific duties, reporting responsibilities and disclosure obligations is not intended to be either complete or exclusive, and the Committee shall, in addition, have such powers as may be necessary or appropriate for the performance of its duties in terms of these terms of reference. All interpretations and determinations of the Committee made in accordance with the authority granted to it herein shall be binding on all interested parties. Authority The Committee shall have the power to appoint/designate sub-committees in specific areas of business or specific locations to assist the Committee in the performance of its duties (including, but not limited to, the current Investec Limited sub-audit committees established). Such subcommittees may be the statutory audit committee for any company or location, but to the extent that they act as sub-committees, shall report their findings to the Committee. Members of the Committee have the right to attend all sub-committee meetings on a standing or ad hoc basis The Committee shall have the power to call a meeting of the Board of Directors of Investec Ltd and / or Investec Bank Limited The Committee shall have the power to require any executive officer or employee of Investec to furnish it with any information that it requires or to make an oral report to the Committee at a meeting The Committee shall have the power to require Internal Audit or Compliance to carry out specific tasks or reviews The Committee shall, at its discretion, be entitled to seek and rely on legal and accounting advice for which the Company will pay It is expressly provided that the Committee shall not have any executive powers and accordingly no executive duties with regard to its findings and recommendations and The Committee will meet with internal and external auditors at least once a year without management being present

7 Interface with the Board Risk and Capital Committee (BRCC) The Committee provides assurance to the Board that enterprise wide risks have been correctly identified and that appropriate controls are in place. Therefore, the Committee will rely on the output of the BRCC to give assurance as regards enterprise wide risk. For the sake of completeness, it is noted that Internal Audit should provide a written assessment of the effectiveness of the system of internal controls (excluding internal financial controls which is reported to the Committee) and risk management to the Audit Committee, who will report on these matters to the Board. It is however the duty of the Committee to agree a risk based audit programme with Internal Audit. The following matters and risks (excluding the approval of policies) will be reported directly to the Committee and not to the BRCC, unless specifically called upon to do so: Compliance Information Technology and Regulatory It is specifically recorded that the Committee will not repeat the work of the BRCC. Interface with the Nominations and Directors Affairs Committee (NOMDAC) As per the Banks Act, the NOMDAC has the responsibility of ensuring that the bank or controlling company is at all times in compliance with all applicable laws, regulations and codes of conduct and practices As the Compliance Function Framework, Procedures and Processes are reviewed by and overseen by the Committee, these functions will not also be reviewed by the NOMDAC and The Committee will therefore provide assurance to the NOMDAC that this requirement of the Banks Act is met Review of Terms of Reference The Committee will review the TOR on an annual basis.

8 Appendix 1 Membership D Friedland (Chairman) (Director of Investec Ltd & Investec Bank Limited) ZBM Bassa (Director of Investec Ltd & Investec Bank Limited) LC Bowden (Director of Investec Ltd) KL Shuenyane (Director of Investec Ltd & Investec Bank Limited) PRS Thomas (Director of Investec Ltd & Investec Bank Limited)