Safeguard integrity in financial reporting

The Board has established an Audit, Risk and Compliance Committee (ARCC) and an Audit Committee. ARCC reports directly to the Board on all matters except the audit of Trust's financial statements, for which it reports to the Audit Committee. Details of ARCC are contained under Principle 7.

The Audit Committee consists solely of non-executive directors and is chaired by Mr Macarthur-Stanham, with the other Audit Committee members being Mr Corlett, Mr McLeland, Mr Davis and Mr King. All members of the Audit Committee are independent.

Details of the number of meetings the Committee held during the 2008 year and attendees are contained in the Directors’ Report in the 2008 Annual Report, including their respective skills, experience, relevant expertise and term of office.

The role of the Audit Committee is as follows.

Objectives
The primary objective of the Audit Committee is to assist the Board in fulfilling its responsibilities relating to accounting and reporting practices of Trust and each of its controlled entities. In addition, the Audit Committee:

  • Oversees and appraises the quality of the audits conducted by both Trust’s internal and external auditors.
  • Maintains open lines of communication among the Board, the internal auditors and the external auditors to exchange views and information, as well as confirm their respective authority and responsibilities.
  • Serves as an independent and objective party to review the financial information presented by management to shareholders, regulators and the general public.
  • Determines the adequacy of Trust’s administrative operating and accounting controls.

Composition
The Board annually confirms the membership of the Audit Committee, which consists of at least three Directors from the Board. Each Director on the Audit Committee is required to be a non-executive, and independent of senior management and operating executives of Trust – including any of its controlled entities – and free from any relationships that might, in the opinion of the Board, be construed as a conflict of interest. The Board appoints one of the members as Chairperson of the Audit Committee.

Term of membership
Members of the Audit Committee shall be appointed for an initial term of three years, after which they will be eligible for reappointment. The Chairperson shall be reappointed annually by the Board.

Meetings
The Audit Committee holds at least two regular meetings per year and such additional meetings as the Chairperson decides in order to fulfil its duties. In addition, the Chairperson is required to call a meeting of the Committee if requested to do so by any Committee member, the CEO, the internal auditor or the external auditors.

A quorum shall consist of two Audit Committee members.

Access
The Audit Committee has unlimited access to both the internal and external auditors and to senior management of Trust Group. The Audit Committee also has the ability to consult independent experts where it considers it necessary for carrying out its duties. The Audit Committee meets privately with the external auditor without management present.

Duties and responsibilities
The duties and responsibilities of the Audit Committee have been detailed comprehensively and were adopted by resolution of the Board.

Auditor independence policy
After careful consideration of the International Federation of Accountants (IFAC) guidelines, as well as the Australian government commissioned report on auditor independence, commonly known as the Ramsay Report (October 2001), the Audit Committee recommended, and the Board accepted and adopted, the following auditor independence policy:

1. Any statutory auditor of any entity in Trust Group (including funds for which we act as trustee) will not be used for the provision of the following services for the relevant entity:

  • Book-keeping services.
  • Complete outsourcing of the Internal Audit function.
  • Asset or liability valuation services that are material to the financial report.
  • Any service that requires the provider to act as an officer of Trust and/or be in a decision-making role.
  • Litigation services where the auditor would be required to act as an advocate of Trust or where the amounts involved are material to the financial statements.
  • Any service the Corporations Act prohibits the auditor providing.

2. In respect of the provision of any non-audit services by any statutory auditor of any entity in Trust Group (including funds for which we act as trustee) involving fees greater than $100,000, prior approval by the Audit Committee will be obtained.

3. This policy is consistent with the recommendations contained in the Ramsay Report on the Independence of Australian Company Auditors and exceeds the requirements of the IFAC rules.

4. The rotation of the senior auditor has been agreed. The senior auditor of Deloitte Touche Tohmatsu is rotated by agreement at least every five years. The senior auditor assigned to Trust Group was replaced in 2008.

In addition to the above measures, in accordance with section 307C of the Corporations Act, the Directors receive an independence declaration from the auditor at the time of the full and half-year financial reports which are considered by the Board.

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