Terms of Reference
Development Bank of Wales Group (“the Group”)
Audit and Risk Committee
Constitution
1.) The Board of Directors of Development Bank of Wales plc (“the Board”) hereby resolves to establish a committee of the Board to be known as the Development Bank of Wales Group Audit and Risk Committee (‘the committee’).
Purpose
2.) To ensure that any assurance provided by the Board to outside stakeholders is sufficient, reliable, valid and is supported by appropriate assurance received by the Board from the management of the organisation including the Chief Executive’s responsibility for ensuring regularity, propriety and value for money for the use of public money provided by the Welsh Government.
Membership and attendance
3.) The membership of the committee shall be decided by the Board and shall consist of at least two non-executive members. All members shall be non-executive directors. At least one member shall have recent and relevant financial sector or accounting experience.
4.) Neither the Chair nor the Chief Executive of the Development Bank of Wales plc shall be members of the committee.
5.) Unless a private meeting is called by a member of the committee, the Chief Executive, the Director of Finance and Administration, a representative of the Welsh Government and the group’s Internal and External Auditors will attend meetings of the committee.
6.) The Board shall appoint the Committee Chair. In the absence of the Committee Chair the members present shall elect one of themselves to chair the meeting.
7.) The Company Secretary or their nominee shall act as the secretary of the committee.
Quorum
8.) The quorum necessary for the transaction of business shall be two members. A duly convened meeting at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions vested in the committee.
Frequency of meetings
9.) The committee shall meet at least three times per year. The Internal or External Auditors may request a meeting if they think it necessary.
Minutes of meetings
10.) The secretary shall minute the proceedings of all meetings of the committee including the names of those present and in attendance.
11.) Minutes of the meetings shall be circulated promptly to all members of the committee and attendees.
Duties
12.) The committee shall carry out the duties below for the parent company, subsidiary undertakings and the group as a whole as appropriate:
Financial Reporting
13.) Review the consistency of and any changes to accounting policies both on a year on year basis and across the Development Bank of Wales Group.
14.) Review the accounting methods used and estimates made by management, particularly where different approaches are possible.
15.) Review whether the management have followed appropriate accounting standards and made appropriate assumptions and judgements including going concern considerations taking into account the views of the external auditor.
16.) The committee shall review the annual report and financial statements where appropriate recommend changes in advance of them being recommended to the Board for approval.
Governance, internal controls and risk management systems
17.) Keep under review the effectiveness of the Development Bank of Wales Group internal controls and risk management systems.
18.) Review Compliance and Quality Assurance work plans and receive an annual report relating to their adequacy of resources and effectiveness of operation.
19.) Review Financial Conduct Authority correspondence and any assurance statements sent to Welsh Government.
20.) Receive annual reports relating to the review of the Gifts & Hospitality Register, declarations of interest and personal dealings as well as senior executive and board member expense claims.
21.) Review all policies at least annually.
22.) Receive copies of any special reports, investigations, mandated reports or internal control reports.
23.) Review and recommend to the Board the content of the Strategic Report, Principal Risk information, Corporate Social Responsibility report and Corporate Governance Statement included in the annual report and accounts.
24.) Review and discuss any reports from the external auditors on critical judgements and accounting policies including management’s response.
Whistleblowing and fraud
29.) Review promptly all internal audit reviews prepared by the internal auditors and monitor management’s responsiveness to the findings and recommendations.
30.) Meet the internal auditors at least once a year without management being present to discuss the terms of their engagement, and any issues arising from the internal audit reviews carried out.
31.) Review the tender specification for the procurement of internal audit services including the fees charged taking into account other services which may be provided by the relevant firm ensuring that these do not affect their objectivity.
32.) Approve the appointment and removal of the Internal Auditors in accordance with their terms of engagement or as recommended by the Chief Executive.
External audit
33.) Oversee the relationship of the external auditors including by not limited to:
Assessing their independence and objectivity taking into account relevant professional and regulatory requirements and the relationship with the audit firm as a whole including the provision of non-audit work.
Review the annual audit plan and terms of engagement including the fees charged.
Recommend their reappointment in advance of the Annual General Meeting.
Monitoring the auditor’s compliance with relevant ethical and professional guidance on the rotation of audit partners, the level of fees paid by the Development Bank of Wales Group compared to the overall fee income of the firm.
Assessing the effectiveness of the audit process.
Ensuring the activities of the internal auditors are co-ordinated with those performed by the external audit firm.
34.) The committee shall meet the external auditors at least once a year without management being present to discuss their remit and any issues arising from the audit.
35.) The committee shall review and approve the annual audit plan and ensure that it is consistent with the scope of the audit engagement.
36.) The committee shall review the findings of the audit with the external auditors including but not limited to a discussion of any major issues arising from the audit, any accounting and audit judgements as well as the level of errors identified during the audit.
37.) The committee shall also review any representation letter required by the external auditors before they are approved for signing by the Board of Development Bank of Wales plc.
38.) The committee shall review the management’s responses to the auditor’s findings and recommendations.
Reporting
39.) The committee chair will provide feedback to the Board of the Development Bank of Wales plc on all matters within its duties and responsibilities.
40.) The committee shall make whatever recommendations to the Board it deems appropriate on any area within its remit.
41.) The committee shall report to the Corporate Governance Committee of the Economy & Infrastructure Department at least once a year on the discharge of its duties.
Other matters
42.) The committee shall have access to sufficient resources in order to carry out its duties including access to the company secretariat for assistance as required.
43.) The committee shall be provided with appropriate information and training both in the form of an induction programme for new members and on an ongoing basis for all members.
44.) The committee shall at least once a year review its constitution and terms of reference to ensure it is operating at maximum effectiveness and recommend any changes it considers necessary to the Board for approval.
Authority
45.) The committee is authorised by the Board to investigate any activity within these terms of reference and to seek any information it requires from staff, who are required to co-operate with the committee, in the conduct of its enquiries. The committee is authorised to obtain independent professional advice if it considers this necessary. Procurement of these professional services should be channelled through the Company Secretary.
46.) The committee is authorised to consider any other matters requested by the Board.
