Risk and Audit Commitee Terms of Reference

1 Constitution and purpose

1.1 The partnership committee has resolved to establish a committee to be known as the Risk and Audit Committee.

1.2 The purpose of the Committee is to act as an oversight over the firms risk management and internal audit functions and to review the external audit process.

2 Membership

2.1 The committee shall be appointed by the partnership committee. The committee shall consist of between three and five members including the chairman of the partnership committee. A quorum shall be two thirds of the voting members.

2.2 The chairman of the committee shall be appointed by the partnership committee.

2.3 The Chairman of the Risk and Audit Committee will ensure there will be an induction programme for new members.

3 Attendance at meetings

3.1 Other partners and non-partners of Grant Thornton shall attend meetings at the invitation of the committee.

3.2 There shall be at least one meeting a year, or part thereof, where the external auditors attend without management present.

3.3 The partnership secretary shall be secretary of the committee.

4 Frequency of meetings

4.1 Meetings shall be held not less than three times a year, and where appropriate should coincide with key dates in the partnership's financial reporting cycle.

4.2 External auditors or the head of the internal assurance unit may request a meeting if they consider one is necessary.

5 Authority

5.1 The committee is authorised by the partnership committee to:

i investigate any activity within it terms of reference

ii seek any information that is requires from any partner employee of the partnership and all partners and employees are directed to cooperate with any request made by the committee; and

iii obtain outside legal or independent professional advice and such advisors may attend meetings as necessary.

6 Responsibilities

Internal audit and corporate governance

6.1 Reviewing the National Management Board's internal control systems prior to endorsement by the partnership committee and to review the policies and process for identifying and assessing business risks and the management of those risks by the partnership.

6.2 To ensure management have adequately considered the key risks to the business and have developed appropriate alternative strategies including:

i response to macro economic/political conditions

ii response to pressures in the labour market

6.3 To review the internal audit unit's programme and ensure that, if it is felt necessary to have an internal audit function, that it is adequately resourced and has appropriate standing within the partnership.

6.4 To review management's and the internal auditor unit's reports (if any) on the effectiveness of systems for internal financial control, financial reporting and risk management.

6.5 To consider management's response to any major external or internal audit recommendations.

6.6 To consider periodically the effectiveness of the internal audit unit, report findings and recommendations for improvement to the Leadership Team and feeding back the results to the Head of the internal audit unit.

6.7 To ensure management have robust processes in place for PI cover including:

i adequacy of cover

ii cost
 
iii use of captives

iv monitoring of claims

v agree reporting to PC

6.8 To review the partnership's procedures for handling allegations from whistleblowers.

6.9 Consider other topics as defined by the partnership committee

External audit

6.10 To oversee and consider the appointment of external auditors, and assess independence of the external auditors.

6.11 To recommend the audit fee to the partnership committee and pre-approve any fees in respect of non audit services provided by the external auditor and to ensure that the provisions of non audit services does not impair the external auditor's independence or objectivity.

6.12 To discuss with the external auditor, before the audit commences, the nature and scope of the audit and to review the auditor's quality control procedures and steps taken by the auditor to respond to changes in regulatory and other requirements.

6.13 To discuss with the external auditor issues such as compliance with accounting standards and proposals by the external auditor regarding the internal auditing standards

6.14 To review with the external auditors the findings of their work, including:

i discussing the major issues that arose during the course of the audit and have subsequently been resolved and those issues that have been left unresolved

ii reviewing key accounting and audit judgements

iii reviewing levels of errors identified during the audit, obtaining explanations from management and, where necessary the external auditors, as to why certain errors might remain unadjusted

6.15 To review the external auditor's management letter and management response

6.16 To meet with the external auditors at the reporting stage post audit to discuss the audit, including problems and reservations arising and any matters the auditor may wish to discuss

6.17 At the end of the audit cycle review the performance of the external auditors. In the course of doing so, the Committee should assess the effectiveness of the external audit process by:

i reviewing whether the auditor has met the agreed audit plan and understand the reasons for any changes, including changes in perceived audit risks and the work undertaken by the external auditors to address those risks

ii considering the robustness and perceptiveness of the auditors in their handling of the key accounting and audit judgements identified and in responding to questions from the Committee, and in their commentary where appropriate on the systems of internal control

iii obtaining feedback on the audit from the key people involved, eg the Finance Partner

iv reviewing and monitoring the content of the management letter, in order to assess whether it is based on a good understanding of the business and establish whether recommendations have been acted upon and, if not, the reasons why they have not been acted upon.

Annual Statements

6.18 To review, and challenge where necessary, the actions and judgements of management, in relation to the annual financial statements before submission to the partners, paying particular attention to:

i critical accounting policies and practices, and any changes in them

ii decisions requiring a major element of judgement

iii the extent to which the financial statements are affected by any unusual transactions in the year and how they are disclosed.

iv the clarity of disclosures

v significant adjustments resulting from the audit i.e. the going concern assumption

vi compliance with accounting standards/GAAP/SORP

vii compliance with other legal requirements

6.19 To review the external audit representation letters before signature by management and give particular consideration to matters where representation has been requested that relate to non-standard issues.

6.20 The chairman of the committee or, as a minimum, another member of the committee, shall attend the meeting at which the accounts are approved.

7 Reporting procedures

7.1 The secretary shall circulate the minutes of meetings of the committee to all members of the partnership committee and National Management Board.

7.2 The Chairman of the Committee shall report to the Partnership Committee on all meetings of the Committee any matters in respect of which it considers that action or improvement is needed, and making recommendations as to the steps to be taken.

7.3 The Chairman of the committee shall report quarterly on adequacy of PI cover

7.4 The committee members shall conduct an annual review of their work and these terms of reference and make recommendations to the partnership committee.

7.5 The committee's duties and activities during the year shall be disclosed in the annual financial statements.

7.6 The chairman shall attend the AGM and shall answer questions through the chairman of the board, on the Committee's activities and their responsibilities.

   

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