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Audit and Risk Committee Charter

This charter is used by the Office's Audit and Risk Committee. We have published it for transparency reasons and in case other agencies find it useful.

1   Introduction

1.1
The Audit and Risk Committee has been established within the Office of the Auditor-General and Audit New Zealand (the Office) by the Auditor-General to be an effective mechanism in the provision of independent advice on the quality of the activities of management, primarily through an internal and external audit function.

1.2
The Audit and Risk Committee provides independent advice to the Auditor‑General in the discharge of his responsibilities for maintaining systems of internal control, responsible resource management and in the management of risk.

1.3
The primary benefit of the Audit and Risk Committee is its independence and objectivity in relation to management.  The Audit and Risk Committee should not assume any management functions nor should management be allowed to exert inappropriate influence over the work of the Audit and Risk Committee.

1.4
The Audit and Risk Committee should seek to understand the key business activities of the Office and be able to advise the Auditor-General on information reported and policies and procedures adopted by the Office in relation to these activities.

2   Purpose

2.1
The Audit and Risk Committee (“the Committee”) is an independent committee of the Office, reporting directly to the Auditor-General.

2.2
The purpose of the committee is to oversee:

  • risk management and internal control;
  • audit functions for the Office itself;
  • financial and other external reporting;
  • the governance framework and processes; 
  • compliance with legislation, policies and procedures.

2.3
The Committee should not assume any management functions nor take any responsibility for review of the audit of others by the Office.

3   Duties and responsibilities

General Duties

3.1
The Committee shall:

  • seek to understand:
    • the strategic risks to and opportunities for the Office, and
    • its key business activities and the risks which relate to each of these;
  • scan and understand the Office’s current and future operating environment, and contribute to the Office’s strategic direction;
  • maintain an independent perspective in all their work;
  • report to the Auditor-General on any matter that it sees fit to do so.

Risk Management and Internal Control

3.2
The Committee shall:

  • satisfy itself that appropriate internal processes and procedures and risk management are in place and are operating effectively
  • review compliance with relevant regulatory and statutory requirements
  • review and monitor the Office’s policies and practices on sensitive issues, including sensitive expenditure.

3.3
The Chairperson shall review the travel and other reimbursed expenses of the Auditor‑General. This information will be provided to the Chairperson on a six-monthly basis.

Internal Audit

3.4
The Committee shall:

  • recommend for the Auditor-General’s endorsement, the structure of the internal audit programme and recommend adequate resource allocation;
  • monitor the effective implementation of the internal audit programme and the timely implementation of endorsed recommendations;
  • identify issues that ought to be subject to audit, and recommend audit where appropriate.

External Audit

3.5
The Committee shall:

  • discuss with the external auditors their audit plan and the nature and scope of the audit;
  • discuss issues arising from the interim and final audits, and any matters the external auditors may wish to discuss;
  • consider external auditors’ reports;
  • monitor the implementation of any recommendations made by the external auditors;
  • monitor and review the independence of the external auditor.

Public Accountability Documents Review

3.6
The Committee shall review the annual report prior to signing by the Auditor‑General, focusing particularly on:

  • any changes in accounting policies and practices;
  • major judgemental areas;
  • significant adjustments resulting from audit;
  • compliance with financial reporting and other applicable standards;
  • compliance with statutory requirements;
  • other reports prepared by management for release to stakeholders, such as any summary financial reports.

Governance Framework and Processes

3.7
The Committee shall:

  • maintain an understanding of the governance framework and processes of the Office, providing advice and recommendations to the Auditor-General as appropriate.

4   Membership

4.1
The Auditor-General will appoint the Chairperson and appoint other committee members in consultation with the Chairperson.

4.2
The Auditor-General may, after consulting the Chairperson, remove a Committee member.  In the event of the non-performance of the Chairperson, the Auditor-General will consult at least two other Committee members before replacing the Chairperson.

4.3
The Committee will have four Committee members, comprising three external independents, one of whom will be the Chairperson, and the Deputy Auditor-General.  Additional external independent Committee members may be appointed at the Auditor-General’s discretion. The independent Committee members will collectively have risk management, financial and broad public sector expertise and experience.  The Assistant Auditor-General (Corporate Services) will attend meetings as an observer.  The internal auditor and representatives from the external auditors will attend meetings as requiredThe Committee has the right to request that they do not attend certain meetings or parts thereof.

5   Terms of Appointment

5.1
Committee members will be appointed for a term of three years initially and may be reappointed for up to two further years. This is so as to enable continuity in membership of the Committee. In some cases, and at the discretion of the Auditor-General, a member may have their reappointment term extended to ensure sufficient balance of new and experienced Committee membership.

6   Meetings

Frequency

6.1
It is anticipated that the Committee will meet three or four times each year, but may hold additional meetings as determined by the Chairperson in order for the Committee to fulfil its duties and responsibilities.

Quorum

6.2
A quorum is two Committee members, who must be independent Committee members.

Additional Attendees

6.3
The Committee may invite various parties to attend its meetings.  These parties may include other members of senior management or line managers as appropriate.  When the Committee is considering a report, the manager responsible for the area under review will be given the opportunity to discuss the report with the Committee.

Decision Making and Voting

6.4
It is expected that decisions of the Committee shall be arrived at by consensus.

6.5
If it is not possible to arrive at a consensual decision, a vote may be taken at the meeting.  The matter will be decided by a majority vote.

Agenda

6.6
A draft agenda will be circulated to members for comment prior to the meeting, and the agenda will be agreed to by the Chairperson.  Agenda and papers will normally be prepared and distributed at least one week prior to meeting dates.

Meeting Minutes

6.7
All meetings will be minuted and minutes distributed to all Committee members.  Minutes will be reviewed by the Chairperson, prior to circulation, and endorsed by the Committee at the following meeting.

6.8
The minutes, excluding any parts that the Committee considers confidential, will be made available to the Office Board of Management following each meeting.  Relevant extracts of the minutes will be made available to Office employees as determined by the Committee.

7   Confidentiality

7.1
Committee members have a responsibility to treat all information with appropriate confidentiality.  This includes matters tabled and/or discussed at the Committee meetings, as well as any additional issues which are raised out of session.

8   Conflicts of Interest

8.1
Committee members are responsible for declaring a conflict of interest, whether pecuniary or non-pecuniary.  In all cases where a conflict of interest exists, or may be reasonably perceived to exist, the Chairperson will rule on whether the Member, having disclosed the interest:

  1. may participate in the discussion;
  2. may remain in the meeting room but not participate in the discussion;
  3. should leave the room and be excluded from any consideration.

9   Right of Access

9.1
The Committee shall, through the Chairperson, have access to all employees of the Office.  The Committee shall have the right to seek independent professional advice when considered necessary and the power to obtain information from management and to consult directly with the Director of Internal Audit and external auditors.

10  Monitoring Committee Performance

10.1
The Committee will ensure an assessment of its performance and charter is conducted annually, to ensure it continues to be focused, effective, and provides a quality service to the Auditor-General.

June 2017

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