a. Members of the committee and the chairman of the committee shall be appointed by the Board. The committee shall be made up of at least three members.
b. All members of the committee shall be independent non-executive directors, at least one of whom shall have recent and relevant financial experience including competence in accounting or auditing and the committee as a whole shall have competence relevant to the sector in which Fidessa operates. The chairman of the Board shall not be a member of the committee.
c. Only members of the committee have the right to attend committee meetings. However, the external auditor and chief financial officer will be invited to attend meetings of the committee on a regular basis and other non-members may be invited to attend all or part of any meeting as and when appropriate and necessary.
d. Appointments to the committee shall be for a period of up to three years, which may be extended for further three year periods, provided the director remains independent.
e. In the absence of the committee chairman and/or an appointed deputy, the remaining members present shall elect one of themselves to chair the meeting.
The company secretary or his or her nominee shall act as the secretary of the committee and will ensure that the committee receives information and papers in a timely manner to enable full and proper consideration to be given to the issues.
The quorum for decisions of the committee shall be any 2 members.
i. Meetings of the committee shall be held as and when appropriate, but at least three times a year, at appropriate intervals in the financial reporting and audit cycle and otherwise as required.
ii. At least two meetings a year shall be held with the external auditor and at least one meeting a year with the internal auditor.
iii. At least five days’ notice of any meeting of the committee shall be given although such notice period may be waived or shortened with the consent of all the members of the committee for the time being. The notice of each meeting shall confirm the venue, time and date together with an agenda of items to be discussed, and shall be forwarded to each member of the committee, and any other person required to attend.
iv. The secretary shall minute the proceedings and resolutions of all meetings of the committee, including recording the names of those present and in attendance.
v. The secretary shall ascertain, at the beginning of each meeting, the existence of any conflicts of interest and minute them accordingly. Where there is a conflict of interest and the chairman of the committee determines that it is material, he or she shall have the power to exclude that committee member from discussions on that issue.
vi. Minutes of committee meetings shall be circulated promptly to all members of the committee and, once agreed, to all members of the board, unless a conflict of interest exists.
5. Annual General Meeting
The members of the committee should attend the annual general meeting and the chairman of the committee should assist in answering any shareholder questions on the committee’s activities.
6. Role and Responsibilities
The role and responsibilities of the committee are as follows:
i. Financial reporting
a) The committee shall monitor the integrity of the financial statements of the company, including its annual and half-yearly reports and any other formal announcement relating to its financial performance, reviewing and reporting to the board on significant financial reporting issues and judgements which they contain having regard to matters communicated to it by the external auditor.
b) the committee shall review and challenge where necessary
1. the consistency of, and any changes to, significant accounting policies both on a year on year basis and across the group;
2. the methods used to account for significant or unusual transactions where different approaches are possible;
3. whether the company has followed appropriate accounting standards and made appropriate estimates and judgements, taking into account the views of the external auditor;
4. the clarity and completeness of disclosure in the company’s financial reports and the context in which statements are made; and
5. all material information presented with the financial statements, such as the business review and the corporate governance statements relating to the audit and to risk management.
ii. Narrative reporting
Review the company’s strategic report and corporate governance statements and advising the Board on whether the annual report and accounts taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the company’s position and performance, business model and strategy
iii. Internal controls and risk management systems
The committee shall
a) keep under review the adequacy and effectiveness of the company’s internal financial controls and internal control and risk management systems; and
b) review and recommend for board approval statements in the annual report concerning internal controls and risk management.
iv. Whistleblowing and fraud
The committee shall
a) review the adequacy and security of the company’s arrangements for its employees and contractors to raise concerns, in confidence, about possible wrongdoing in financial reporting or other matters;
b) review the company’s procedures for detecting fraud; and
c) review the company’s systems and controls for the prevention of bribery.
v. Internal audit
The committee shall
a) approve the appointment or termination of appointment of key persons with internal audit responsibility;
b) consider and approve the remit of the internal audit function and ensure the function has the necessary resources and access to information to enable it to fulfil its mandate, and is equipped to perform in accordance with appropriate professional standards for internal auditors;
c) ensure the internal auditor has direct access to the board chairman and to the committee chairman, and is accountable to the committee;
d) review and assess the annual internal audit work plan;
e) receive a report on the results of the internal auditor’s work on a periodic basis;
f) review and monitor management’s responsiveness to the internal auditor’s findings and recommendations;
g) meet with the head of internal audit at least once a year without the presence of management; and
h) monitor and review the effectiveness of the company’s internal audit function, in the context of the company’s overall risk management system.
vi. External audit
The committee shall
a) consider and make recommendations to the board, to be put to shareholders for approval at the AGM, in relation to the appointment, re-appointment and removal of the company’s external auditor;
b) ensure that the audit services contract is put out to tender as frequently as required by current law to enable the committee to compare the quality and effectiveness of the services provided by the incumbent auditor with those of other audit firms; and in respect of such tender
1. oversee the selection process and ensure that all tendering firms have such access as is necessary to information and individuals during the duration of the tendering process;
2. ensure that the appointment or re-appointment of auditors following any such tender complies with EU regulations in relation to auditor rotation and that all necessary disclosures are made in the latest annual report regarding the tendering of external audit services.
c) oversee the relationship with the external auditor including (but not limited to):
1. recommendations on their remuneration, including both fees for audit and non-audit services, and that the level of fees is appropriate to enable an effective and high quality audit to be conducted and that the level of non-audit fees in relation to the audit fee complies with EU regulations;
2. approval of their terms of engagement, including any engagement letter issued at the start of each audit and the scope of the audit;
3. assessing annually their independence and objectivity taking into account relevant UK professional and regulatory requirements and the relationship with the auditor as a whole, including the provision of any non-audit services;
4. satisfying itself that there are no relationships (such as family, employment, investment, financial or business) between the auditor and the company (other than in the ordinary course of business) which could adversely affect the auditor’s independence and objectivity;
5. monitoring the auditor’s compliance with relevant ethical and professional guidance on the rotation of audit partner, the level of fees paid by the company compared to the overall fee income of the firm, office and partner and other related requirements;
6. assessing annually the qualifications, expertise and resources of the auditor and the effectiveness of the audit process, which shall include a report from the external auditor on their own internal quality procedures;
7. evaluating the risks to the quality and effectiveness of the financial reporting process and consideration of the need to include the risk of the withdrawal of their auditor from the market in that evaluation,
d) meet regularly with the external auditor (including once at the planning stage before the audit and once after the audit at the reporting stage) and at least once a year, without management being present, to discuss the auditor’s remit and any issues arising from the audit;
e) review and approve the annual audit plan and ensure that it is consistent with the scope of the audit engagement;
f) review the findings of the audit with the external auditor. This shall include but not be limited to, the following:
1. a discussion of any major issues which arose during the audit;
2. key accounting and audit judgements;
3. levels of errors identified during the audit; and
4. the effectiveness of the audit process,
g) review and approve any representation letters required by the company’s external auditor; and
h) review the management letter and management's response to the external auditor's findings and recommendations.
7. Reporting Responsibilities
i. The committee chairman shall report to the board on its proceedings after each meeting on all matters within its duties and responsibilities.
ii. The committee shall make whatever recommendations to the board it deems appropriate on any area within its remit.
iii. The committee shall compile a report on its activities to be included in the company’s annual report.
8. Other Matters
The committee shall:
i. Have access to sufficient resources in order to carry out its duties, including access to the company secretariat for assistance as required.
ii. Be provided with appropriate and timely training, both in the form of an induction programme for new members and on an on-going basis for all members.
iii. Give due consideration to laws, regulations and any published guidelines or recommendations including but not limited to the provisions of the UK Corporate Governance Code, the requirements of the UK Listing Authority’s Listing, Prospectus and Disclosure and Transparency Rules and other applicable rules, as appropriate.
iv. Be responsible for co-ordination of the internal and external auditors;
v. Oversee any investigation of activities which are within its terms of reference;
vi. Arrange for periodic reviews of its own performance and, at least annually, review its constitution and terms of reference to ensure it is operating at maximum effectiveness and recommend any changes it considers necessary to the board for approval.
The committee is authorised by the board to
i. obtain, at the company’s expense, outside legal, accounting or other professional advice on any matters within its terms of reference; and
ii. call any employee to be questioned at a meeting of the committee as and when required,