The Audit and Risk Assurance Committee is a Committee of the FSA Board and is responsible for reviewing, in a non-executive capacity, the comprehensiveness and reliability of assurances on governance, risk management and the control environment. It is also responsible for reviewing the integrity of financial statements and the annual report.
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 Wales or Northern Ireland. The term of appointment will normally be coterminous with an individual’s term of appointment to the FSA Board and will automatically cease if an individual ceases to be a Board Member. At least one of the Committee members should have recent and relevant financial experience.
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.
The Committee may co-opt additional members (whether members of the FSA Board or not) for a period of up to one year to provide specialist skills, knowledge or experience. Co-opted members will have a right to speak, but not vote. Co-opted members will not be included in any calculation of the quorum.
Three Non-Executive Board Members.
The Chief Executive, as Accounting Officer, the Director of Finance and Strategic Planning, the Head of Planning, Performance & Change and the Head of Internal Audit, and a representative of the External Auditors (National Audit Office) would normally be invited to attend.
Directors and other officials will be invited to attend as required.
The Audit & Risk Assurance Committee Chair will provide the Chair of the FSA and the Board with an oral update on the key elements of Committee meetings. The Audit & Risk Assurance Committee will report formally in writing to the Board, annually, to support the finalisation of the accounts and the Governance Statement and to update the Board on the work of the Committee, Internal and External Audit and any areas requiring specific attention.
The Audit & Risk Assurance Committee will meet at least four times a year. The Chair of the Committee will convene additional meetings as necessary. The Committee has the right to sit privately without any non-members present for all or part of a meeting.
Additionally the members of the Committee will meet with the Head of Internal Audit and, separately, the External Auditors, annually, in closed meetings when the efficacy of the processes, trust, co-operation and any other issues can be discussed and future action agreed.
The FSA Chair, the Board or the Accounting Officer may ask the Audit and Risk Assurance Committee to convene further meetings to discuss particular issues on which they want the Committee’s advice.
The Audit & Risk Assurance Committee will advise the FSA Board and Chief Executive on:
1. the strategic processes for risk management, including reviewing the risk profile and register and considering the Agency’s risk appetite;
2. the high level control and governance framework and the effectiveness of its operation in practice;
3. the contents of the Governance Statement;
4. the accounting policies, the accounts, and the annual report of the FSA, including the judgements used in producing the accounts, the adequacy of disclosures, 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;
5. the effectiveness of the design and operation of financial systems and controls;
6. the planned activity and results of both internal and external audit;
7. the resourcing and effectiveness of the Internal Audit function;
8. the adequacy of the management response to issues identified by audit activity, including external audit management letters;
9. assurances relating to the corporate governance requirements for the organisation;
10. proposals for tendering for either Internal or External Audit services or for the purchase of non-audit services from contractors who provide audit services;
11. anti-fraud policies and whistle-blowing processes, and arrangements for special investigations; and
12. the Committee’s effectiveness having reviewed its own performance, constitution and terms of reference and recommending any changes it considers necessary.
The Audit & Risk Assurance Committee will be provided with, where appropriate:
1. any changes to the organisation’s Corporate Risk Register that are relevant to the responsibilities of the Committee;
2. The risk management strategy
3. Management assurance reports, and report on the management of major incidents, ‘near misses’ and lessons learned;
4. 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 action in response to issues identified and agreed
d. changes to the Internal Audit Plans
e. any resourcing issues affecting the delivery of Internal Audit objectives
5. progress reports from the External Audit representatives summarising work done and emerging findings;
6. external assurance and compliance reports in relation to the FSA’s activities;
7. Internal Audit Strategies and annual plans;
8. the Head of Internal Audit’s Annual Opinion and Report;
9. Quality Assurance reports on the internal audit function;
10. the draft accounts of the organisation;
11. the draft Governance Statement
12. any changes to accounting policies;
13. proposals to tender for audit functions;
14. summary of findings of every Internal Audit report;
15. external audit’s management letter; and
16. a report on cooperation between the FSA auditors and external auditors.
The Audit & Risk Assurance Committee will work with the FSA’s Executive Management Team to ensure that the Board can be confident that risk management processes, content, mitigating and recovery actions are appropriate and correctly resourced.
1. The Chair of the Audit & Risk Assurance Committee will have free and confidential access to the Chair and Chief Executive of the FSA whenever appropriate.
2. The Head of Internal Audit and the representatives of External Audit will have free and confidential access to the Chair of the Committee.
3. 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.