Board Audit Committee

24. An RSE licensee must have a Board Audit Committee, which assists the Board by providing an objective non-executive review of the effectiveness of the RSE licensee’s financial reporting and risk management framework unless, with respect to risk management, there is another Board Committee which carries out this function.

25. The Board Audit Committee must have sufficient powers to enable it to obtain all information necessary for the performance of its functions.

26. The Board Audit Committee must have at least three members. All members of the Committee must be non-executive directors.[13]

27. The chairperson of the Board may sit on the Board Audit Committee, but may not chair the Committee except where the chairperson of the Board is the only independent director (within the definition of section 10 of the SIS Act) on the Board.

28. The Board Audit Committee must have a charter that includes a reference to the fact that the Committee is responsible for the oversight of:

(a) all APRA statutory reporting requirements;

(b) other financial reporting requirements;

(c) professional accounting requirements;

(d) internal and external audit; and

(e) the appointment of both the RSE auditor and internal audit function.

29. The Board Audit Committee must review the engagement of the RSE auditor at least annually, including making an assessment of whether the RSE auditor meets the Audit Independence tests set out in APES 110 Code of Ethics for Professional Accountants[14], as well as the additional auditor independence requirements set out in the Corporations Act 2001 (Corporations Act) (if applicable) and in this Prudential Standard.

30. The Board Audit Committee must regularly review the internal and external audit plans, ensuring that they cover all material risks and financial reporting requirements of the RSE licensee. It must also regularly review the findings of audits, and ensure that issues are being managed and rectified in an appropriate and timely manner.

31. The Board Audit Committee must ensure the adequacy and independence of both the internal and external audit functions.

32. The members of the Board Audit Committee must, at all times, have free and unfettered access to senior management, the internal audit function, the heads of all risk management functions, the RSE auditor and the RSE actuary, as applicable, and vice versa.