WFD, Audit and Risk Assurance Committee - Terms of Reference

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Governance document

WFD, Audit and Risk Assurance Committee - Terms of Reference

The WFD Audit & Risk Assurance Committee reviews its Terms of Reference periodically.

Below are the revised terms that were approved by the ARC at its meeting on 8 September 2022 and annexed to the revised Governance Handbook approved by the Board in September 2022.

In reviewing the Terms of Reference, the committee used guidance provided by the HM Treasury who produce the Audit and Risk Assurance Committee Handbook (latest version March 2016) to help Audit Committees review the appropriateness and fitness for purpose of their constitution, membership and activities. The handbook sets out example terms of reference (annex D in the handbook) and these were identical in form to the previous version (April 2013) that was applied to the 2016 review.

The UK Corporate Governance Code, which was most recently updated in April 2016, sets out Guidance on Audit Committees. It suggests that best practice requires that every board should consider in detail those audit committee arrangements most suited for its particular circumstances.

Audit and risk assurance committee terms of reference

Role

The Audit and Risk Assurance Committee (“the Committee”) is constituted by the WFD Board of Governors (“the Board”) to support the Board to discharge its fiduciary, risk control and governance responsibilities. The Committee carries out this role by:

  • Monitoring and giving advice to the Accounting Officer in the exercise of his/her duties
  • Promoting a climate of financial discipline and control within the organisation, and
  • Reviewing the overall provision of assurances to the Board and Accounting Officer, constructively challenging that the nature and scope of assurance providers’ activity meets the Board and Accounting Officer’s assurance needs and reviewing the reliability and integrity of these assurances.

Responsibilities

The Committee will advise the Board and Accounting Officer on:

  • Risk and assurance strategies, including the adequacy of internal and external audit arrangements; the planned activity and results of both internal and external audits.
  • Where appropriate, proposals for tendering for Internal Audit services, the appointment of auditors, and for the purchase of non-audit services from contractors who provide audit services.
  • The remuneration of the auditors.
  • Receipt of the Letter of Engagement from the auditors.
  • The adequacy of management response to issues identified by audit activity, including external audit’s management letter.
  • Assurances received by the committee relating to the effectiveness of risk management, internal control, and corporate governance arrangements for the organisation.
  • Key compliance policies such as anti-fraud, bribery and corruption, anti-terrorism, and data protection policies; reporting processes; arrangements for responding and/or investigating reported concerns and learning and continuous improvement; and reviewing reports on actual or suspected incidents.
  • The adequacy and effectiveness of strategic and operational processes for risk management, internal control framework, and governance, and the efficacy of WFD’s key systems and processes, including in relation to programme management.
  • The accounting policies and the annual report and accounts, including the process for review of the accounts prior to submission for audit, levels of error identified, and management’s letter of representation to the external auditors.
  • Reserves policy and approach to longer term sustainability.
  • The adequacy of management reporting on financial and non-financial performance, and the arrangements the organisation has in place for monitoring strategic progress, operational delivery, and ensuring value for money.

The Committee will also periodically review its own effectiveness and report the results of that review to the Board.

Membership

Members of the Committee are appointed by the Board and will consist of the Chair of the Committee and at least one further Board member and/or co-opted members. Only non-executive Board members can be appointed to the Committee. At least one member of the Committee should have recent and relevant financial experience.

The Committee will be provided with a secretariat function by WFD’s Director of Operations, assisted by the Corporate Affairs Manager.

Rights

When it considers it necessary, the Committee is authorised to obtain independent professional advice and to secure the attendance of personnel external to WFD. The Committee may, with prior approval of the Board, co-opt additional members to provide specialist skills, knowledge and experience. The Committee may procure specialist ad hoc advice at the expense of the organisation, subject to budgets agreed by the Board.

The Committee may ask any other officials of WFD to attend, request written reports or other information and such requests should be channelled through the Accounting Officer.

WFD members of staff are obliged to cooperate with the Committee and the external and internal auditors. As necessary, they will provide reports (and other information) requested by the Committee to allow the members to carry out the responsibilities set out above.

Access

The representative of the Internal Audit provider and the representative of External Audit will have free and confidential access to the Chair of the Committee and to each other. At the discretion of the Chair, the Committee may consult in private with the representatives of Internal Audit and/or External Audit as part of any Committee meeting and Management will be excused from participating in any closed session.

Meeting Frequency and attendance

  1. The Committee will meet at least four times during each financial year. The Chair may, where it is deemed necessary, hold private sessions. The Board or the Accounting Officer may ask the Committee to convene further meetings to discuss particular issues on which they want the Committee’s advice. A minimum of two members of the Committee will be present for the meeting to be deemed quorate.
  2. The Accounting Officer, Finance Director, Director of Operations/Company Secretary, National Audit Office, and the Internal Audit service provider will normally attend Committee meetings, although they will not be members.
  3. Staff of political party offices will only attend the Committee if either (i) they want to discuss a specific agenda item or (ii) the Committee want them to be present for a specific reason.  In either case, the Chair and Secretary of the Committee will agree what items the party officers will attend.  The Secretary will send copies of the agenda to the party offices in advance of the meeting.  The Chair can also invite other WFD staff members to attend.
  4. The Committee may ask any or all of those who normally attend but who are not members to withdraw to facilitate open and frank discussion of particular matters.

Reporting

The Chair of the Committee should report formally to the Board and Accounting Officer after each meeting of the committee.

Committee minutes will be made available to all Committee members prior to the next Committee meeting and, upon request, to any other Board member. All agenda papers and minutes will also be copied to the FCDO Head of Internal Audit.

Information requirements

For each meeting the Committee will be provided with:

  • A report summarising any significant changes to the organisation’s strategic risks and a copy of the corporate risk register.
  • A progress report from the Internal Audit provider summarising work performed, key issues emerging from the work of internal audit, management response to audit recommendations, changes to the agreed internal audit plan, and any resourcing issues affecting the delivery of the objectives of internal audit.
  • A progress report from the External Audit representative summarising work done and emerging findings.
  • A report describing progress against strategy and organisational performance, both financial and non-financial, supporting by relevant management information.