Audit committee charter

The purpose of this charter is to outline the role, responsibilities, composition and operating guidelines of the Audit Committee (the committee) in accordance with the Financial Management Standard 1997.

The committee is a committee of the WorkCover Board, and is directly responsible to the Board. The committee shall have no executive powers with regard to its findings and recommendations.

Appointments
Composition
The committee will comprise a minimum of three members of the Board, with a chairperson (not the chairperson of the Board), and two other directors of suitable qualification.

Membership
Membership of the committee is to be determined by the chairperson of the Board, and ratified by the Board. The chairperson of the committee is to be determined by the chairperson of the Board. The committee members will be independent.

Term of office
Committee members are appointed for a one year term after which their appointment is subject to annual review. Members may resign at any time, by providing written notice to the chairperson of the Board.

Duties and Responsibilities
The committee is directly responsible and accountable to the WorkCover Board for the exercise of its duties and responsibilities. In carrying out its duties and responsibilities, the committee must acknowledge that primary responsibility for the operational management of WorkCover has been delegated by the Board to the Chief Executive Officer (CEO).

The committee is to consider any matters relating to the financial affairs and risk management of WorkCover and from internal and external audit that it considers necessary. In addition, the Audit Committee is to examine any other matters referred to it by the Board.

The duties and responsibilities of the Audit Committee are to:

• Financial oversight
  • review the integrity of WorkCover’s financial reporting and assessment of management processes supporting external reporting
  • review financial statements and other relevant financial information, and recommend approval of such to the Board
  • review significant or unusual transactions, or trends or variations from budget, which are not a normal part of WorkCover’s business
  • review the appropriateness of accounting policies
  • review the financial statements for compliance with prescribed accounting and other requirements
  • ensure that assurance with respect to the accuracy and completeness of the financial statements is given by management.
• Internal Control
  • monitor the establishment of an appropriate internal control and risk management frameworks and systems, including information systems, and consider enhancements
  • review, through internal and external audit functions, whether relevant policies and procedures are in place and current, including those for the management and exercise of delegations, and whether they are complied with
• Internal Audit
  • monitor the activities of internal audit, including assessment of performance and objectivity of internal audit function
  • review and approve the internal audit plan, its scope and progress, and any significant changes to it, including any difficulties or restriction on scope of activities, or significant disagreements with management
  • review the proposed internal audit plan to ensure it covers key risks and there is appropriate co-ordination with the external auditor
  • approve the extension of timeframes for implementation of audit recommendations by management
  • review internal audit reports to ensure that where major breakdowns in controls or procedures have been identified, appropriate and prompt remedial action is taken by management
  • review the nomination, performance and fees charged by the internal auditors
  • review procedures for selection and appointment of internal auditors.
• External Audit
  • oversee the independence of external auditors
  • consult with external audit on the function’s proposed audit strategy, audit plan and fees for the year, and ensure there is no material overlap between the internal and external audit functions
  • review external audit reports to ensure that where major breakdowns in controls or procedures have been dentified, appropriate and prompt remedial action is taken by management
  • review the nomination, performance and fees charged by the external auditors
  • liaising with the external auditors and ensuring that the annual audits are conducted in an effective manner.
• Compliance
  • determine whether management has considered legal and compliance risks as part of the risk assessment and management arrangements
  • monitor the procedures in place to ensure that the entity is in compliance with the relevant legislative and reporting requirements
  • review reports on any major defalcations, frauds and thefts from the entity and monitoring procedures to ensure that the required procedures are adhered to
  • review compliance with statutory responsibilities
  • ensure that a corporate Code of Ethics is established, periodically reviewed, and recommended to the Board for approval
  • initiate and supervise special investigations.
• Reporting
  The chairperson of the committee is to report relevant matters that have been considered by it as well as the committee’s opinions, decisions and recommendations to the Board after each committee meeting. The minutes of all committee meetings shall be circulated to members of the Board, and invited guests as appropriate.

The committee will submit a summary of its activities for inclusion in the WorkCover Annual Report.

Relationships

Internal Audit
The committee will oversee the planning, monitoring and reporting processes of internal audit. This forms part of the governance processes that ensure that WorkCover’s internal audit function operates efficiently, effectively and economically.

The internal audit function is outsourced to an independent provider, through public tender. The committee will make a recommendation to the Board regarding the appointment of the internal auditors, as and when contractual arrangements fall due.

The internal auditor will have a standing invitation to attend committee meetings.

The chairperson and other interested committee members will hold private meetings with the internal auditor at the discretion of the chairperson, but usually prior to every committee meeting.

The committee will review the performance of the internal auditors on an annual basis and be the conduit for executive management feedback on auditor performance.

External Audit
The committee has no power of direction over external audit or the manner in which external audits are planned or undertaken. The committee will act as a forum for consideration of external audit findings, and ensure they are balanced with the views of management.

The external audit function is outsourced by the Audit Office. The external audit provider will have a standing invitation to attend committee meetings.

The chairperson and other interested committee members will hold private meetings with the external auditor at the discretion of the chairperson, but usually prior to every committee meeting.

Authority and independence
The committee has the authority to conduct or direct any investigation required to fulfill its responsibilities and has the ability to retain, at WorkCover’s expense, such independent professional, legal, accounting or other advisers, consultants, experts as it considers necessary from time to time to perform its duties.

In relation to their duties as committee members, each Director has the right to seek independent professional advice at WorkCover’s expense, subject to prior approval of the Board chairperson.

Directors shall have full access to the documents, records, personnel and any other resources of WorkCover within the scope of its responsibility. All WorkCover staff, including executive management are required to provide full assistance to the committee, and to provide frank, truthful and meaningful answers to relevant committee questions.

Ethical Conduct
The Australian Institute of Company Directors’ Code of Conduct has been adopted by the Board, for the use of the Directors.

Sections 415-416 of the Act set out the statutory requirements in relation to disclosure of interests by a Director and voting by an interested Director.

Declarations must be made on appointment to the committee, and in relation to any specific agenda items at the outset of each committee meeting, and be updated as necessary.

All directors are required to disclose interests as they arise, and formally and jointly declare their interests annually in June.

Secretarial and meetings
The secretary to the Board shall be appointed secretary of the committee. The secretary will facilitate the committee’s meetings and reporting duties. The secretary, in conjunction with the chairperson, shall draw up an agenda, which shall be circulated to committee members, and the internal and external auditors, with any associated papers at least 7 calendar days prior to each meeting. Draft meeting minutes will be prepared by the secretary and approved by the chairperson, within one week of meetings, and will be presented by the committee chairperson at the subsequent Board meeting.

Meetings shall be held four times a year, unless determined otherwise by the Chairperson. The schedule of meetings will be agreed in advance.

A quorum will be two. Any member of the Board may attend the meeting as an observer.

The chairperson is to call a meeting of the Committee if so requested by any Committee member, the Board, the CEO, CFO or the internal or external auditors.

The CEO, CFO, internal auditors and external auditors would generally attend all meetings. Other board members and senior management will be invited as required.

Declaration of Interests
Sections 415-416 of the Act set out the statutory requirements in relation to disclosure of interests by a Director and voting by an interested Director.

All directors are required to disclose interests as they arise, and formally and jointly declare their interests annually in June.

In addition, disclosures of interests made by Directors at the time of their appointment or during the course of their term with WorkCover are included in the committee papers and are considered at the commencement of each committee meeting so as to ensure that Directors’ advise of any conflicts or potential conflicts prior to the consideration of committee papers.

Performance review
With the aim of achieving and maintaining corporate governance best practice, the committee shall self-assess it’s collective performance on an annual basis, using tools of the committee’s choosing. The chairperson and individual directors shall monitor individual director performance on an annual basis, using tools of the committee’s choosing.
The committee will conduct an ongoing review of it’s performance against its charter, and report annually to the Board on such performance.

Review
This charter will be reviewed and where necessary updated by the committee on an annual basis, to ensure it remains consistent with the committees’ authority, objectives and responsibilities. The Board will approve the charter annually.
A copy of the Board Charter and the Audit Committee Charter are available on WorkCover’s internet site.

Last approved July 2008