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AUDIT COMMITTEE

Membership

Chair: Robert Scruton (to. 31.7.2014)

Members: At least five members appointed by the Council (at least one with requisite experience in finance):
Colin Carmichael (to 31.7.2014);
Mike Forder (to 31.7.2014);
Neil Davies (to 31.7.2014);
Grahame Ward (to 31.7.2015);
Ashley West (to 31.7.2015).

In attendance:
Denise Everitt, Deputy Vice-Chancellor (Finance and Commercial Services);
Anthony Woodhouse, Head of Internal Audit;
Carol Rudge (Grant Thornton UK LLP);
Karen Goffin, Secretary of the Council;
Frank Richardson, Deputy Director of Finance.

Secretary: Karen Goffin, Secretary of the Council (K.R.Goffin@kent.ac.uk)

Frequency of meetings: At least 3 each financial year.

Quorum: At least one third of the membership (2 members).

Papers: There is a SharePoint site that provides an online resource for members.

Terms of Reference

Note:   These follow the Model Terms of Reference set out in HEFCE’s Code of Practice on Accountability and Audit (June 2004/27):

Constitution

1.        The governing body has established a committee of the governing body known as the audit committee.

Membership

2.         The committee and its chair shall be appointed by the governing body and must consist of members with no executive responsibility for the management of the institution.  There shall be no fewer than three members; a quorum shall be at least two members.  The chair of the governing body should not be a member of the committee.  Members should not have significant interests in the institution.

3.         At least one member should have recent and relevant experience in finance, accounting or auditing.  The committee may, if it considers it necessary or desirable, co-opt members with particular expertise.  No member of the committee may also be a member of the finance committee (or equivalent) unless specifically authorised by the Higher Education Funding Council for England (HEFCE) under the terms of paragraph 73 of the Code.

Attendance at meetings

4.         The head of finance (or equivalent), the head of internal audit, and a representative of the external auditors shall normally attend meetings where business relevant to them is to be discussed.  However, at least once a year the committee should meet with the external and internal auditors without any officers present.

Frequency of meetings

5.         Meetings shall normally be held at least three times each financial year.  The external auditors or head of internal audit may request a meeting if they consider it necessary.

Authority

6.         The committee is authorised by the governing body 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.

7.         The committee is authorised by the governing body to obtain outside legal or other independent professional advice and to secure the attendance of non-members with relevant experience and expertise if it considers this necessary, normally in consultation with the designated officer and/or chairman of the governing body.  However, it may not incur direct expenditure in this respect in excess of £5000, without the prior approval of the governing body.

8.         The audit committee will review the audit aspects of the draft annual financial statements.  These aspects will include the external audit opinion, the statement of members’ responsibilities, the statement of internal control and any relevant issue raised in the external auditors’ management letter.  The committee should, where appropriate, confirm with the internal and external auditors that the effectiveness of the internal control system has been reviewed, and comment on this in its annual report to the governing body.

Duties

9.         The duties of the committee shall be:

1. To advise the governing body on the appointment of the external auditors, the audit fee, the provision of any non-audit services by the external auditors and any questions of resignation or dismissal of the external auditors.
2. To discuss if necessary with the external auditors, before the audit begins, the nature and scope of the audit.
3. To discuss with the external auditors problems and reservations arising from the interim and final audits, including a review of the management letter incorporating management responses, and any other matters the external auditors may wish to discuss (in the absence of management where necessary).
4. To consider and advise the governing body on the appointment and terms of engagement of the internal audit service (and the head of internal audit, if applicable), the audit fee, the provision of any non-audit services by the internal auditors and any questions of resignation or dismissal of the internal auditors.
5. To review the internal auditors' audit risk assessment and strategy; to consider major findings of internal audit investigations and management's response; and to promote co-ordination between the internal and external auditors. The committee will ensure that the resources made available for internal audit are sufficient to meet the institution's needs (or make a recommendation to the governing body as appropriate).
6. To keep under review the effectiveness of the risk management, control and governance arrangements, and in particular to review the external auditors' management letter, the internal auditors' annual report, and management responses.
7. To monitor the implementation of agreed audit-based recommendations, from whatever source.
8. To ensure that all significant losses have been properly investigated and that the internal and external auditors, and where appropriate the HEFCE accounting officer, have been informed.
9. To oversee the institution's policy on fraud and irregularity, including being notified of any action taken under that policy.
10. To satisfy itself that satisfactory arrangements are in place to promote economy, efficiency and effectiveness.
11. To receive any relevant reports from the National Audit Office, HEFCE and other organisations.
12. To monitor annually the performance and effectiveness of external and internal auditors, including any matters affecting their objectivity, and to make recommendations to the governing body concerning their reappointment, where appropriate.
13. To consider elements of the annual financial statements in the presence of the external auditors, including the auditors' formal opinion, the statement of members' responsibilities and the statement of internal control, in accordance with HEFCE's Accounts Directions.
    
    

In the event of the merger or dissolution of the institution, to ensure that the necessary actions are completed, including arranging for a final set of financial statements to be completed and signed.

The above terms of reference and membership were approved by Council on 15 December 2004.