Audit Committee

Purpose: The Audit Committee is a committee of the FSA Board and is responsible for ensuring, in a non-executive capacity, that all aspects of the Agency’s policies, procedures, internal controls and governance are effective and appropriate to deliver the Agency’s Statutory responsibilities and Strategic objectives.

Membership: A minimum of five Members of the FSA Board appointed by the FSA Chair under delegated powers following consultation with the Committee Chair. At least one of those appointed will be a Board Member for Scotland, Wales or Northern Ireland and one will be the Chair of the Agency’s Risk Committee. The term of appointment will normally be coterminous with an individual’s term of appointment to the FSA Board. At least one of the committee members should have recent and relevant financial experience.

Chairman: Appointed from the membership of the Committee by the Chair of the FSA under delegated powers. The term of appointment will normally be coterminous with an individual’s term of appointment to the FSA Board.

Quorum: Three.

Attendance: The Chief Executive, as Accounting Officer, the Finance Director, Head of Internal Audit and a representative of the External Auditors (National Audit Office) would normally be invited to attend.

The Committee has the right to call any member of the Agency to an Audit Committee meeting to provide advice, explanation, evidence or report.

Reporting: The Audit Committee Chair will provide the Chair of the FSA and, when appropriate, the Board and CEO with a verbal update on the key elements of Audit Committee meetings. The Audit Committee will report formally in writing to the Board annually to support the finalisation of the accounts and the Statement of Internal Control and to update the Board on the work of the Committee, Internal and External Audit and any areas requiring specific attention.

Meetings: The Audit Committee will meet at least four times a year. The Chair of the Audit Committee will convene additional meetings as necessary.

Additionally the members of the Audit Committee will meet with the Internal Auditor and, separately, the External Auditors, annually in closed meetings when the efficacy of the processes, trust, co-operation and any other issues can be discuss and future action agreed.

Responsibilities:
The Audit Committee will advise the FSA Board and Chief Executive on:
1. the strategic processes for risk management, control and governance and the contents of the Statement on Internal Control;

2. the accounting policies, the accounts, and the annual report of the FSA, including the process for review of the accounts prior to submission for audit, levels of error identified, and management’s letter of representation to the external auditors;

3. the planned activity and results of both internal and external audit;

4. the adequacy of the management response to issues identified by audit activity, including external audit management letters;

5. assurances relating to the corporate governance requirements for the organisation;

6. proposals for tendering for either Internal or External Audit services or for the purchase of non-audit services from contractors who provide audit services;

7. anti-fraud policies and whistle-blowing processes; and

8. the Committee’s effectiveness having reviewed its own performance, constitution and terms of reference and recommending any changes it considers necessary.

The Audit Committee will consider and, where appropriate, may agree:

1. any changes to the organisation’s Strategic Risk Registers that are relevant to the responsibilities of the Audit Committee;

2. progress reports from the Head of Internal Audit summarising:
a. work performed (and a comparison with work planned)
b. key issues emerging from Internal Audit work
c. management response to audit recommendations
d. changes to the Internal Audit Plans
e. any resourcing issues affecting the delivery of Internal Audit objectives

3. progress reports from the External Audit representatives summarising work done and emerging findings;

4. proposals for the terms of reference of Internal Audits;

5. Internal Audit Strategies and annual plans;

6. the Head of Internal Audit’s Annual Opinion and Report;

7. Quality Assurance reports on the internal audit function;

8. the draft accounts of the organisation;

9. any changes to accounting policies;

10. proposals to tender for audit functions;

11. summary of findings of every Internal Audit report; and

12. a report on cooperation between the FSA auditors and external auditors.

The Audit Committee will work with the Agency’s Risk Committee to ensure that the Board can be confident that processes, content, mitigating and recovery actions are appropriate and correctly resourced.

Notes:
1. The Chair of the Audit Committee will have free and confidential access to the Chair and CEO of the Agency whenever appropriate.

2. The Committee may ask any other officials to produce a report or attend all or part of a meeting to assist with discussions on specific issues.

3. The Head of Internal Audit and the representatives of External Audit will have free and confidential access to the Chair of the Audit Committee.

4. The Committee may procure specialist ad-hoc advice at the expense of the FSA, subject to the cost being agreed by the Chief Executive as Accounting Officer.

Michael Parker (Chair)
Tim Bennett
Margaret Gilmore
Clive Grundy
Jim Wildgoose

Observers:
Dean Parker – National Audit Office
Freedom Mpande – Internal Audit