Public Financial Holdings Limited

Terms of Reference

 

 

 

Audit Committee of the Board

 

 

Objectives of the Committee

 

1.       To assist the Board of Directors in providing an independent review of the effectiveness of the financial reporting process and internal control system of the Company and its subsidiaries (together “the Group”).

 

2.       To report and make recommendations in connection with the financial reporting process and internal control system of the Group to the Board of Directors.

 

 

Composition

 

1.       The Committee shall be appointed by the Board of Directors from amongst the Non-Executive Directors of the Company and shall consist of not less than three members.  A majority of the Committee members shall be Independent Non-Executive Directors and at least one of whom is an Independent Non-Executive Director with appropriate professional qualifications or accounting or related financial management expertise as required under Rule 3.10(2) of the Listing Rules.

 

          A Non-Executive Director may from time to time appoint another Non-Executive Director who is not a member of the Committee to be his alternate to act in his place during his absence.

 

2.       The Chairman of the Committee shall be appointed by the Board of Directors and must be an Independent Non-Executive Director.

 

3.       The Company Secretary shall be the secretary of the Committee.

 

4.       Where there is a specific need for information or clarification on any matters, the relevant staff may be invited to attend the specific part(s) of the Committee’s meeting(s).

 

 

Authority

 

1.       The Committee is authorised by the Board of Directors to investigate any activity within its terms of reference.  It is authorised to seek any information it requires from any employee and all employees are directed to co-operate with any request made by the Committee.

 

2.       The Committee is authorised by the Board of Directors to obtain legal or other independent professional advice and to secure the attendance of outsiders with relevant experience and expertise if it considers this necessary.

 

 

Functions

 

1.       To consider the appointment of the external auditors, the audit fees, and any questions of resignation or dismissal of the external auditors in the Group;

 

2.       To discuss with the external auditors, where necessary, before the audit commences, the nature and scope of the audit, and ensure co-ordination where more than one audit firm is involved;

 

3.       To review the interim and annual financial statements before submission to the Board of Directors, focusing particularly on:

 

(a)      any changes in accounting policies and practices;

(b)     major judgemental areas;

(c)     significant adjustments resulting from the audit;

(d)     the going concern assumption;

(e)      compliance with accounting standards; and

(f)      compliance with stock exchange and legal requirements.

 

4.       To discuss problems and reservations arising from the interim and final audits, and any matters the auditors may wish to discuss (in the absence of management where necessary);

 

5.       To review the external auditors’ management letters and management’s response;

 

6.       To review the Group companies’ statements on internal control systems (where one is included in the annual report) prior to endorsement by the respective Board of Directors;

 

7.       To review the internal audit programme, ensure co-ordination between the internal and external auditors, and ensure that the internal audit function is adequately resourced and has appropriate standing within the Group;

 

8.       To consider the major findings of internal investigations and management’s response;

 

9.       To review arrangements by which employees of the Company and the Group may, in confidence, raise concerns about possible improprieties in financial reporting, internal control or other matters and to ensure that proper arrangements are in place for the fair and independent investigation of such matters and for appropriate follow-up action;

 

10.     To act as the key representative body for overseeing the Company’s relation with the external auditor; and

 

11.     To consider other topics, as defined by the Board of Directors.

 

 

Quorum

 

To constitute a quorum, at least two members must be present.

 

 

Minutes

 

Minutes must be prepared to record fully all decisions and matters dealt with by the Committee and tabled to the Board of Directors for noting.  A record of the attendance at each meeting should be maintained.

 

 

Frequency of Meetings

 

Meetings shall be held not less than twice a year.  The external auditors may request a meeting if they consider that one is necessary.

 

 

Attendance at Meetings

 

The Chief Executive, the Head of Internal Audit, and a representative of the external auditors shall normally attend meetings.  Other Board members shall also have the right of attendance.  When necessary, the Committee shall meet with the external and/or internal auditors without executive Board members present.