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Terms of Reference - Audit and Risk Management Committee Rule

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Section 1 - Authorisation

(1) The Council of Southern Cross University, as the Governing authority of Southern Cross University, by resolution makes the following Rule under section 30 (1) of the Southern Cross University Act 1993 ('Act'), pursuant to section 52 of the Southern Cross University By-Law 2005 (as amended).

(2) Dated: 31 March 2016

(3) Authorised: Council

Section 2 - Purpose and Scope

Purpose

(4) The purpose of this Rule is to define the terms of reference for the Audit and Risk Management Committee.

Scope

(5) This rule applies to the members and operation of Audit and Risk Management Committee.

Section 3 - Terms of Reference

Purpose

(6) The Southern Cross University Audit and Risk Management Committee assists the University Council in exercising due care, diligence and skill in discharging Council's oversight responsibilities for:

  1. the integrity of the University's financial reporting,
  2. the University's compliance with legal and regulatory requirements,
  3. the risk management and corruption resistance process,
  4. the independent auditor's qualifications and independence,
  5. the performance of the University's internal audit function, and
  6. providing an open avenue of communication between internal audit, the external auditors and the University Council.

Authority

(7) The Audit and Risk Management Committee has authority to conduct or authorise investigations into any matters within its scope of responsibility. It is empowered to:

  1. Oversee the work of the appointed External Auditor employed by the organisation to conduct the annual audit. The appointed External Auditor will report directly to the Audit and Risk Management Committee.
  2. Resolve any disagreements between management and the auditor regarding financial reporting.
  3. Pre-approve all auditing and permitted non-audit services performed by the University's appointed External Auditor.
  4. Retain independent counsel, accountants, or others to advise the committee or assist in the conduct of an investigation.
  5. Seek any information it requires from employees - all of whom are directed to cooperate with the committee's requests - or external parties.
  6. Oversee planning of the internal audit activity.
  7. Meet with University officers, external auditors, internal auditor or outside counsel, as necessary.

(8) The Audit and Risk Management Committee does not have delegated financial responsibility or any management functions. It has no executive powers.

Composition

(9) The Audit and Risk Management Committee will consist of at least three and no more than six members of the University Council. No member of the committee shall be an employee engaged in the operational activities of the University. A majority of members must be independent members.

(10) The Members, taken collectively, will have a broad range of skills and experience relevant to the operations of the University. At least one member of the Committee should have accounting or related financial management experience with an understanding of accounting and auditing standards in a public sector environment.

(11) The Chancellor invites members to the Committee and all appointments are endorsed by Council.

(12) Members will be appointed for an initial period of one year after which they will be eligible for extension or re-appointment.

Quorum

(13) A quorum shall consist of not less than half of the Committee members.

Meetings

(14) The committee will meet at least four times a year, with authority to convene additional meetings, as circumstances require.

Responsibilities

(15) The committee will carry out the following responsibilities:

Financial Reports

(16) Review significant accounting and reporting issues and understand their impact on the financial report. These issues include:

  1. Complex or unusual transactions and highly judgemental areas
  2. Major issues regarding accounting principles and financial statement presentations, including
  3. Any significant changes in the University's selection or application of accounting principles
  4. The effect of regulatory and accounting initiatives on the financial report of the University and its controlled or associated entities

(17) Review and approve all significant accounting policy changes.

(18) Review reports prepared by management and/or the independent auditor setting forth significant financial reporting issues and judgements made in connection with the preparation of the financial report of the University and its controlled entities.

(19) Review with management and the external auditor the results of the audit, including any difficulties encountered. This review will include any restrictions on the scope of the independent auditor's activities or on access to requested information, and any significant disagreements with management.

(20) Discuss the annual audited financial reports with management and the external auditors.

Internal Control

(21) Consider the effectiveness of the University's internal control system, including information technology security and control.

(22) Understand the scope of internal and external auditors' review of internal control over financial reporting, and obtain reports on significant findings and recommendations, together with management's responses.

Internal Audit

(23) Review with management the plans and activities of the Internal Audit function.

(24) Ensure there is a clear separation of operational management from the internal audit function.

(25) Ensure there are no unjustified restrictions or limitations, and review and concur with management in the appointment, replacement or dismissal of the Internal Auditor.

(26) Internal Audit is to have a dual reporting line to report administratively to the Head of Governance Services to facilitate day-to-day operations of the internal audit function and, functionally to the Audit and Risk Management Committee for strategic direction and accountability of the internal audit function.

(27) Review the effectiveness of the internal audit function, including compliance with The Institute of Internal Auditors' Standards for the Professional Practice of Internal Auditing.

External Audit

(28) Review the external auditors' proposed audit scope and approach, including coordination of audit effort with internal audit.

(29) Review the performance of the external auditors. In performing this review, the committee will:

  1. Take into account the opinions of management and internal audit.
  2. Review and evaluate the lead partner of the independent auditor.
  3. Present its conclusions with respect to the external auditor to the University Council.
Compliance

(30) Review the effectiveness of the system for monitoring compliance with laws and regulations and the results of management's investigation and follow-up (including disciplinary action) of any instances of non-compliance.

(31) Review the findings of any examinations by regulatory agencies, and any auditor observations.

(32) Review the process for communicating the University's code of conduct and other corruption resistance controls to personnel, and for monitoring compliance therewith.

(33) Obtain annual updates from management regarding compliance matters related to current and changed legislation.

Risk Management

(34) Ensure that the University and its controlled entities have an effective risk management system that is established and operated in accordance with Australian Standards.

(35) Ensure the University and its controlled entities have identified the principal strategic, operational and financial risks to which they are exposed.

(36) Ensure that systems are in place to facilitate the effective monitoring and management of the principal risks to which the University and its controlled entities are exposed.

(37) Ensure fraud and corruption risks have been included in the assessment of the risk profile of the University.

(38) Oversee the University's fraud and corruption prevention and detection framework and monitor actual and suspected instances of fraud.

(39) Oversee management's efforts to create and maintain a strong internal control environment, including the design and implementation of anti-fraud and corruption strategies and programmes.

(40) Develop and disseminate the University's risk management policy.

(41) Establish management accountability in relation to risk management.

(42) Monitor the impact of changes to the risk profile of the University and its controlled entities.

(43) Ensure that timely and accurate information is presented to Council, including any anticipated exposure to risk that could materially affect the reputation and/or operation of the University and/or its controlled entities.

(44) Review and advise on any matters in relation to risk management raised by Council, University staff or management.

(45) Receive regular reporting from University management on how risks are being managed and action plans to reduce high risk areas to a risk level that is acceptable to the Committee and Council.

Other Responsibilities

(46) Review the processes of accountability for any significant transaction which is not a part of the University's core business.

(47) Perform other activities related to this Terms of Reference as requested by the University Council.

(48) Institute and oversee any special projects or investigations as needed.

Dispute Resolution

(49) The Chair and members of the Audit and Risk Management Committee must seek to resolve differences or concerns with operational management by way of open negotiation.

(50) Where a disputed matter cannot be resolved, the Chair of the committee may make a request to either the Secretary of NSW Treasury or the Director General of the Department of Premier and Cabinet requesting access to a central agency arbiter to resolve the dispute.

Current Membership

(51) Mr John Shanahan (Chair)

(52) Dr Austin Curtin

(53) Ms Julie Granger

(54) Mr Anthony Matis