This Charter describes the objectives, authority, composition, meetings, duties and responsibilities and reporting requirements of the Finance, Audit and Risk Management (FARM) Committee established by the Board of Australian Human Resources Institute (AHRI) Ltd.
Objectives
The primary objective of the Finance Audit and Risk Management (FARM) Committee is to assist the Board to discharge its responsibilities in respect of financial reporting, performance reporting, risk oversight and management, internal control and compliance with relevant laws and policies.
The Committee is not responsible for the executive management of these functions. The Committee will engage with management in a constructive and professional manner in discharging its responsibilities and formulating its advice to the Board.
In particular, the Committee will:
- review and assess AHRI’s Risk Framework, and recommend to the Board:
- the strategic risks to be controlled through AHRI management and Board action, and monitored closely by the Board
- the operational risks to be controlled by AHRI management and monitored by the Board
- review and advise the Board on all financial reports which require approval by the Board, including AHRI Ltd’s annual financial statements.
- recommend appointment of and oversee the work of any registered company auditor employed by AHRI Ltd.
- oversee and appraise the scope and quality of the audits conducted by both the internal and external auditors.
- assess policies and management’s procedures which deal with the adequacy and effectiveness of internal controls over AHRI Ltd’s business processes, and
- maintain open lines of communication between the Board, internal auditors and external auditors.
- oversee the capital management plan and the investment policy.
- review, establish and seek expert investment advise where appropriate, establish risk tolerances and monitor risk control framework for management and the External Manager.
- approve material business cases for investments in strategic directions where these draw from the corpus.
- monitor material changes to the asset allocation framework and investment strategies. This may include changes to the asset allocations, investment allocations or specific asset investment decisions.
- monitor adherence with the capital management plan.
- monitor the performance of the External Manager on a half yearly basis with reference to the asset allocation framework, agreed investment strategies and stated benchmarks; and
- receive and review relevant reports from the External Manager and custodial reporting.
Authority
The FARM Committee shall have the power to consult independent experts where it considers it necessary to execute its duties. The Committee shall also have unlimited direct access to, and cooperation from, the internal and external auditors, and company officers (including access to all documents and data held by AHRI Ltd).
The Committee may conduct or authorise investigations into any matters within its scope of responsibilities.
The Committee may invite any person to attend its meetings and arrange such presentations and inspections as it deems appropriate.
Composition
The Finance, Audit and Risk Management (FARM) Committee members, including a Chair, will be appointed by the Board for a term of three years, or until a member’s term as Director is due to expire, whichever is the lesser period. Committee members may be appointed for more than one term. The Committee will comprise at least three members, each of whom will be a non-executive director of AHRI Ltd, and free from any relationships which might in the opinion of the Board be construed as creating a conflict of interest.
Skills
Membership of The Committee shall be reviewed every three years by the Board with the aim of ensuring an appropriate balance between continuity of membership, the contribution of fresh perspectives and a suitable mix of qualifications, knowledge, skills and experience.
Training
The Committee along with the Board will maintain a program of training and awareness-raising for its members with the objective of keeping abreast of contemporary developments and leading practices especially in the areas of financial, governance, risks, and investments.
Appropriate qualificatios, knowledge, skills
The Committee members must have appropriate qualifications, and necessary knowledge skills or experience to carry out duties and obligations as determined under this charter. The Committee members should continually develop relevant skills and knowledge to assist the committee to perform its functions.
Collectively, the Committee should possess:
- At least one member with accredited accounting or financial qualifications from certified accounting body such as CPA or CA.
- Financial acumen, broad business knowledge and experience
- General understanding of the industry where AHRI operates
- Experience and knowledge on risk management, compliance, and governance
Meetings
The FARM Committee will hold at least two regular meetings per year. In addition, a special meeting may be called at any time at the request of any Committee member, the internal or external auditors or AHRI Ltd’s management. A quorum shall comprise a majority of Committee members. In the absence of the Committee Chair, the two remaining members will nominate one of their number as Chair for that meeting.
Any or all attendees at a meeting may attend by teleconference or video link. Out of session resolutions may, by agreement, be made by email.
Unless otherwise directed by the Chair, the AHRI Ltd CEO will be invited to attend FARM Committee meetings as an observer/adviser. The CEO shall not be a member of the Committee.
The Chief Financial Officer and/or Company Secretary will be the Secretary of the Committee and shall be responsible, in conjunction with the Chair, for drawing up the agenda and circulating it with any explanatory documentation to Committee Members before each meeting. The Committee Secretary will also be responsible for keeping and circulating as required the Minutes of each meeting.
Duties and Responsibilities
The duties and responsibilities of the Finance, Audit and Risk Management (FARM) Committee are as follows:
Financial Reporting
- Review the appropriateness of the entity’s financial reporting as a whole, with reference to any specific areas of concern or suggestions for improvement.
- Review and recommend to the Board for approval significant accounting changes.
- Review the budget and submit to the Board for approval.
External and Internal Audit
- Recommend to the Board the appointment, reappointment and if appropriate removal of AHRI Ltd’s external and internal auditors.
- Review the scope of the work and the work program to be undertaken by the external and the internal auditors.
- Monitor the overall effectiveness of internal and external audits, including reports submitted by internal and external auditors, the management responses to issues raised in the reports and progress of remedial actions.
System of risk oversight and management
- Oversee and review the company’s financial and risk management and compliance framework.
- Review whether AHRI’s management has in place a current and comprehensive risk management framework and associated procedures for effective risk identification and management of AHRI’s financial and business risks including fraud and corruption and approve AHRI’s risk management framework.
- Review the company’s risk profile to ensure that material business risks to the company are dealt with appropriately.
- Monitor the adequacy and effectiveness of the company’s risk management and compliance frameworks.
- Review the Annual Risk Management Plan.
- Determine whether a sound and effective approach has been followed by AHRI in managing its major risks including those associated with individual projects, program maintenance and activities as well as alignment of organisation’s and members purpose.
- Drive the development of a strong risk management and compliance culture and ensure risk and compliance management is dynamic and a continuous process of improvement.
Compliance
- Assess the effectiveness of AHRI Ltd’s system for monitoring compliance with laws and regulations.
- Having informed the company Chair of the Committee’s reasoning and intention, conduct or commission any special projects or investigations on issues influencing AHRI Ltd’s operational or financial integrity or probity; monitor progress of remedial actions.
- Monitor AHRI Ltd’s Corporate Governance practices for compliance with better practice and recommend changes to correct deficiencies.
- Be satisfied that no management restrictions on access to information or staff are placed upon the Board, the Committee, internal or external auditors, in the course of their legitimate work.
Capital Management
- Review and recommend to the Board for approval the capital management plan and the investment policy;
- In conjunction with the Board, agree on prioritised strategic directions (18 months – 5 years) that will best position AHRI for its 5-10 year horizon;
- Review and recommend to the Board for approval internal rates of return on capital invested internally;
- Review and recommend to the Board for approval material business cases that seek to draw on the corpus;
- Review and recommend to the Board for approval an External Manager to administer this plan and investment policy in conjunction with the CEO;
- Review and recommend to the Board for approval the overarching agreement with the External Manager, including fees and expected benchmarks and service levels;
- Review and recommend to the Board for approval AHRI’s asset allocation framework.
- Monitor performance of the External Manager with reference to the stated benchmarks and service levels.
Review
- Undertake an annual review of the Committee’s own performance, including review of any possible conflicts of interest members may have.
- Undertake a review of the Committee’s Charter at least every three years and recommend any appropriate changes to the Board.
- Review performance of the External Manager annually; and
- Review the capital management plan annually, in conjunction with the CEO.
- Review Directors remuneration on an annual basis for recommendation to the Board of Directors of any changes.
Reporting
The Chair of the FARM Committee will report regularly, and no less than six monthly, to the Board about the activities, issues and recommendations relating to the Committee’s duties and responsibilities. All Minutes of the Committee’s meetings will be circulated to the Board for information once agreed by the Committee.