- The Audit and Risk Management Committee ("the Committee") is a sub- committee of NetComm Wireless Limited ("NetComm Wireless") Board ("the Board") and as such the Committee has no decision making powers except where expressly provided by the Board.
The Committee's role is to review and make recommendations to the Board. The primary objectives of this Committee is to assist the Board in the discharge of its responsibilities with regard to independently verifying and safe guarding the integrity and supporting controls of NetComm Wireless's financial reporting and the risk oversight and management of opportunities and threats. In delivering on these objectives the Committee will assist the Board in assessing the Company's risk appetite and risk tolerance, oversee the process for identification and mitigation of all material business and financial risks, including associated management plans and monitor the effectiveness of the risk management framework.
MEMBERSHIP AND TERM
- The Committee shall consist of a minimum of three suitably qualified non- executive directors.
- All members of the Committee must be independent directors.
- The Board may invite suitably qualified independent persons who are not directors of the company to serve on this Committee.
- Members of management may attend meetings of the Committee at the invitation of the Committee Chair, but must not be appointed members of the Committee.
- The term of appointment is for a period of no more than one year, with Committee members generally being eligible for re-appointment subject to the composition requirements of the Committee.
- The effect of ceasing to be a director of the Board is the automatic termination of appointment as a member of the Committee.
- The duties and responsibilities of a member of the Committee shall be in addition to those duties set out for a director of the Board.
- The membership and chairmanship of the Committee will be reviewed annually to ensure an appropriate balance of skills and experience and that the Committee membership includes appropriate financial expertise, with at least one member having relevant financial qualifications and experience, a diverse range of skills and experience as appropriate given the strategic, operational and financial risk profile of the Company. The review will ensure compliance with relevant legislation and regulatory requirements, including the Australian Securities Exchange.
- Committee members are appointed by the Board. Membership of the Committee is disclosed in the Annual Report.
- Attendees may not participate in deliberations of the Committee where the matter could affect his or her position or he or she has a personal interest in the matter. Notwithstanding the above, if, in the opinion of the Committee, their investigation or discussion will be assisted by hearing from the interested party, the Committee may invite that person to address the Committee. The Committee shall give fair consideration to that address. The party will not, however, be invited to take part in the deliberations following that address.
- The Committee may delegate its authority to sub-committees or to the Chair of the Committee from time to time.
- The Chairman of the Committee will be the person appointed as Chairman by the Board. The Chairman may not be an executive director or Chairman of the Board.
- The Chair shall be primarily responsible for the proper functioning of the Committee and shall be the main contact with the Board.
- Should the Chairman be absent from a meeting and no acting Chairman has been appointed, the members of the Committee present at the meeting shall choose one of the other members of the Committee to chair that particular meeting.
FREQUENCY OF MEETINGS
- The Committee may, with the approval of the Chairman, conduct meetings by telephone provided that all Committee members involved in the meeting are able to participate in discussion.
- As a minimum, the Committee shall meet two times per year, prior to Board meetings.
- The Committee will also meet at such additional times the Committee chair or any member of the Committee may request and deem necessary to fulfil their role.
- Any Committee member, the external auditor or the Chairman of the Board may convene a meeting of the Committee or request the Secretary to do so, provided the Chair and Secretary have been given reasonable notice.
ATTENDANCE AT MEETINGS AND QUORUM
- Any other non-executive director of the Board has a standing invitation to attend and participate in meetings.
- The Managing Director and the CFO have a standing invitation to attend each Committee meeting, subject to exclusion as deemed appropriate by the Committee Chair from time to time.
- Other NetComm Wireless executives and/or parties external to NetComm Wireless may be invited to attend any meeting of the Committee.
- The external audit engagement partner attends meetings of the Committee.
- The quorum for a meeting is two members or any greater number determined by the Committee from time to time.
- The Company Secretary of NetComm Wireless shall act as Secretary of the Committee.
RESPONSIBILITIES AND DUTIES
The duties of the Committee shall include reviewing and making recommendations/reporting to the Board on:
- Review, assess and approve the annual report, the half-year financial report and all other financial information to the extent directed by the Board which is published by the Company or released to the Australian Stock Exchange. In assessing the financial statements, the Committee relies on management attestation, and also considers reports from the internal and external auditors and other experts as required.
- Review the Company's accounting policies and make recommendations to the Board.
- Review procedures in place to ensure the Company is in compliance with corporate governance and ASX listing rules.
- Review procedures in place to ensure the Company is in compliance with accounting and taxation statutory requirements and other financial compliance obligations.
- Review updates provided by management, external and/ or internal audit regarding the Company's compliance with financial statutory requirements, and other financial compliance obligations.
- Direct actions, as appropriate, to remedy financial compliance risks or instances of financial non-compliance where these arise.
- Ensure the Managing Director and Chief Financial Officer ("CFO") state in writing to the Board that the Company's financial reports present a true and fair view, in all material respects, of the Company's financial condition, operational results and are in accordance with relevant accounting standards and that financial records have been properly maintained in accordance with relevant corporations laws.
INTERNAL CONTROL AND INTERNAL AUDIT
- Assist the Board in reviewing the effectiveness of the Company's internal control environment covering:
- Reliability of financial reporting.
- Appropriateness of the financial control environment.
- Compliance with applicable laws and regulations.
- This includes overseeing the various methods used to assist in reviewing the effectiveness of the internal control environment, including internal audit and external audit.
INTERNAL AUDITThe Committee will:
- Determine the role of internal audit (if any) within the Company.
- Review and approve the scope of services and the rolling three year risk-based internal audit plan.
- Review and approve the budget for internal audit activities.
- Monitor progress against the internal audit plan.
- Review internal audit reports and direct action as required.
- Support internal audit in gaining management agreement on required action plans and monitor the implementation of these plans.
- Monitor the coordination of internal and external audits, and other assurance activities, to ensure there is not duplication of effort or insufficient coverage of risk areas and to ensure the lowest effective combined fees
- Review the fraud prevention and detection strategies and monitor compliance against the procedures that support these strategies including appropriate reporting of fraudulent and improper acts.
EXTERNAL AUDITORSOn an annual basis review the performance of the External Auditor.
- Request applications for tender of external audit services as deemed appropriate, taking into consideration assessment of performance and value of the existing provider, and tender costs.
- Recommend to the Board the appointment, removal and remuneration of the External Auditor, and review their independence and competence on an ongoing basis.
- Review and approve the scope of the external audit, the terms of their engagement and audit fees.
- Review any reports provided by external audit and monitor the resolution of all significant audit findings.
- Resolve any significant disagreements between the External Auditor and management
- Review and approve the level of non-audit services provided by the External Auditor and ensure it does not adversely impact on auditor independence.
- Provide the External Auditor with a clear line of direct communication at any time to either the Chair of the Risk & Audit Committee or the Chairman of the Board.
- Assist the Board in reviewing the effectiveness of the Company's internal control environment covering:
- Review and approve the Company's risk management strategy, risk management framework, risk management policy, and supporting procedures, including any changes made to these documents.
- Promote awareness of a risk-based culture and the achievement of a balance between risk minimisation and reward for risks accepted.
- Review the Company's risk appetite and tolerance annually to ensure its ongoing alignment with the Company's strategies.
- Oversee management's actions in relation to the identification, assessment, management and monitoring of the Company's material risks by:
- Ensure material risks to achievement of the Company's strategies are identified and assessed.
- Review and direct action as appropriate on the Company's material risk report.
- Monitor the Company's internal and external environments to identify any new or emerging risks, to complement those identified and reported by management.
- Monitor the implementation and effectiveness of risk management plans for the Company's material risks.
- Review the business contingency planning process within the Company and be assured that appropriate contingency plans are in place for material risks.
- Review the performance of the Risk Management functions and recommend improvements to the Board where required.
- Review the effectiveness of the Risk Management Framework at least annually. This review should include consideration of the design of the Framework, including the risk management strategies, policies and procedures, as well as the operational effectiveness of the Framework, including whether it is understood and being consistently applied and documented across the Company.
- Require the Managing Director and the CFO, to state in writing to the Board that the Company's material risk report, and risk management framework review when conducted, presents a true and fair view, in all material respects, of the Company's system of risk management and internal control
(in line with Principle 7 of Corporate Governance Guidelines of August 2007 or any revised principles dealing with risk).
- Monitor, on an ongoing basis, the Company's financial risks, and approve any significant mitigation strategies and/ or provide risk acceptance where appropriate.
- Ensure compliance with the Risk Management Framework as it relates to areas within the Committee's responsibilities.
- Ensure the Board conducts a strategic review of key risks at least annually and that these risks are linked and integrated to the management annual formal risk review
- Oversee the effectiveness of the Company's risk management compliance approach.
- Review all significant instances of non-compliance and compliance risks that are identified and reported by management in relation to compliance matters.
- Review insurance and other risk transference arrangements, consider whether appropriate coverage is in place and make recommendations to the Board.
- Review and monitor the propriety of related party transactions.
- Review the Protected Disclosures Policy and monitor compliance with the procedures that support the policy including the reporting and investigating of reports of unlawful and unethical practices.
- Conduct or authorise investigations into any matters within the Committee's Charter.
- Perform other functions referred to the Committee by the Board.
- In fulfilling its responsibilities, the Committee will:
- Ensure it has sufficient information for informed decision-making.
- Meet with the external auditor and internal auditor at least twice a year or more frequently if necessary. In addition, meet separately with the external auditor and internal auditor at least twice a year without the presence of management.
- Agree an annual work plan of the Committee.
- Have authority, within the scope of its responsibilities, to seek any information it requires from any employee or external party.
SCOPE, ACCESS AND AUTHORITY
- The activities of the Committee are in relation to NetComm Wireless. As directed by the Board, the Committee may also provide advice to other entities related to NetComm Wireless.
- The Committee has direct access to NetComm Wireless's external auditor. It has the authority to seek any information it requires to carry out its duties from any officer or employee of NetComm Wireless and such officers or employees shall be instructed by the Board of the company employing them to cooperate fully in the provision of such information.
- The committee may seek information directly from any employee or external party, including the Internal Auditors and External Auditors.
- The Committee may engage and/or terminate, at the expense of the Company, any independent external adviser in relation to any Committee matter, as it determines are required to assist it in the full performance of its functions.
- In line with the "Conflict Escalation" procedures referred to in NetComm Wireless Code of Conduct, any officer or employee of NetComm Wireless has access to the Committee's Chairman.
- Proceedings of all meetings are to be minuted and signed by the Chairman or the chair of the Committee meeting. Minutes of all Committee meetings are to be circulated to the Board.
- The Committee, through its Chairman, reports to the Board at the earliest possible Board meeting after each Committee meeting. The Chairman will summarise the issues discussed at the meeting.
- In addition, each year, the Chairman of the Committee submits two summary reports to the Board. The relevant report is submitted to the respective Board meeting that approves the:
- half year financial statements, and
- the full year financial statements.
- The reports will summarise the Committee's activities during the period.
- Through the above mechanisms, all matters relevant to the Committee's role and responsibilities will be reported to the Board.
- The external auditor is required to attend the Company's Annual General Meeting and be available to answer shareholder questions about the conduct of the audit and the preparation and content of the audit report.
PERFORMANCE AND FEES
- The Committee's performance will be reviewed through the Board's annual performance appraisal process.
- Committee members are entitled to receive remuneration as determined from time to time by the Nomination and Remuneration Committee.
REVIEW OF CHARTER
- The Committee's charter is reviewed annually by the Committee to ensure it remains consistent with the Committee's authority, objectives and responsibilities.
- Changes to the charter are recommended by the Committee and approved by the Board.
PUBLICATION OF CHARTER
- Key features of the charter will be outlined in the Corporate Governance section of the annual report to shareholders. A copy of this charter is available at www.netcommwireless.com. This charter is to be made available to shareholders of NetComm Wireless upon request.