Meridian Minerals : Audit Committee Charter

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Corporate Governance

Audit Committee Charter

Introductions and objectives
1. This Charter governs the composition, membership, roles and responsibilities of the Audit Committee (Audit Committee) and management of the Company, subject always to the Company's constitution.
2. The purpose of the Audit Committee is to independently verify and safeguard the integrity of financial reporting by the Company and to oversee the independence of external auditors.
Composition
1. If the circumstances of the Company allow, the Audit Committee must consist of a minimum of three members, a majority of whom are independent directors and all of whom are non-executive directors (Members).
2. The Audit Committee will appoint a secretary and a chairperson from among its members. The chairperson may not be the chairperson of the Company's board (Board) and if the circumstances allow, must be an independent director.
Meetings
1. The Audit Committee will meet as often as it considers necessary, but must, at a minimum, meet twice a year.
2. The secretary must call a meeting of the Audit Committee at the request of any Member and must:
  1. together with the chairperson, draw up and circulate an agenda and any supporting documentation to Members prior to each meeting; and
  2. notify the Members of the date, time and location of the meeting as far in advance as possible, but not less than five business days before the meeting.
3. A quorum for an Audit Committee meeting will be at least two Members, one of whom must be an independent director.
4. The Audit Committee may invite any person to attend part or all of any meeting as it considers appropriate to assist it in discharging its functions. A person invited to attend a meeting, other than as a Member, not vote on any matter.
Minutes and reporting
1. The secretary must take minutes of each meeting and must:
  1. distribute them to Members as soon as practicable after approval by the chairperson;
  2. ensure that they are included in the papers for the next full Board meeting to occur after the Audit Committee meeting; and
  3. ensure that the minutes, agenda and supporting papers are available to the Board upon request, except if there is a conflict of interest.
2. The Audit Committee must report the Audit Committee's findings and recommendations to the Board at the first Board meeting subsequent to each Audit Committee meeting.
Roles and responsibilities
1. The Audit Committee is responsible for:
  1. providing the Board with advice and recommendations regarding the ongoing development of risk oversight and management policies (covering oversight, risk profile, risk management, compliance and control) that set out the roles and respective accountabilities of the Board, the Audit Committee, management and the internal audit function (if any);
  2. providing the Board with advice and recommendations regarding the establishment and implementation of:
    1. a risk management system; and
    2. a risk profile for the Company that describes the material risks (including financial and non-financial risks) which the Company faces;
  3. reviewing, at least annually, the effectiveness of the Company's implementation of the risk management system;
  4. regularly reviewing and updating the Company's risk profile (having regard to key financial risk, legal and regulatory risk and disclosure and reporting);
  5. if appropriate, establishing an internal audit function and appointing a chief internal audit executive, whose purpose is to analyse the effectiveness and implementation of the Company's risk management, internal compliance and control systems;
  6. review the results and effectives of the internal audit programs (if any);
  7. reviewing financial statements for:
    1. accuracy, adequacy and clarity and to ensure that they give a true and fair view of the Company's financial position as a basis for recommending adoption by the Board;
    2. adherence to accounting standards and policies and the requirements of the Corporations Act 2001 (Cth)(Corporations Act);
  8. reviewing the appropriateness and application of accounting policies and principles adopted and changes made to them, and seeking the independent judgment from the external auditor regarding the same;
  9. reviewing management processes supporting external reporting;
  10. discussing any significant matters arising from the audit, management judgments and accounting estimates with management and internal auditors (if any) and external auditors;
  11. reviewing, and where necessary, challenging the actions and judgment of management in relation to financial reports;
  12. with respect to the external auditor, approving and recommending for adoption by the Board:
    1. policies and procedures for appointing or removing an external auditor and the appointment or removal of the external auditor in accordance with those procedures (an example policy is given at Attachment A to this Charter);
    2. the terms of engagement of the external auditor at the beginning of each year;
  13. regularly reviewing and assessing the compliance of the external auditor with set policies and procedures and the effectiveness and independence of the external auditor;
  14. receiving and reviewing reports of the external auditor and reviewing the results and effectiveness of the external audit function; and
  15. monitoring the relationship between management, with respect to responsiveness to auditor's investigations or findings and reporting to the Board on any disagreements with the auditor.
Audit Committee's powers and resources
1. The Audit Committee has unrestricted access to management, the right to seek explanations, conduct investigations and seek additional information and access to both external auditors and internal auditors without the presence of management, to discharge its responsibilities under this Charter.
2. The Audit Committee may engage independent experts at the Company's expense to assist it in fulfilling its duties.
3. The Audit Committee will meet with the Company's external auditors as often as it considers necessary and at a minimum, once a year.

External Audit Policy

Introduction
This policy provides guidance on the application of the ASX Corporate Governance Council — Corporate Governance Principles and Recommendations, in relation to the provision of external audit services for the Company. This policy should be read in conjunction with the Audit Committee Charter that outlines the responsibilities of the Audit Committee in regards to the provision of audit services.
Definitions
1. Audit Independence — Independence requires a freedom from bias, personal interest, prior commitment to an interest, or susceptibility to undue influence or pressure, any of which could lead to a belief that the audit opinion was determined other than by reference to the facts of the audit alone.
Policy
1. External audit is one form of assurance obtained by the Company's board (Board) to ensure annual accounts are free from material misstatement. This policy outlines the factors which should be considered by the Audit Committee in relation to the external audit function:
  1. proposed fees and engagement of external auditors;
  2. auditor Independence;
  3. scope of external audit; and
  4. external audit plan.
Performance of external auditors
1. The Audit Committee, in accordance with its charter, will review the performance of the external auditor on an annual basis. In reviewing the performance of the external auditors the Audit Committee will focus on:
  1. quality and rigour of the audit;
  2. quality of service provided;
  3. the audit firm's internal quality control procedures;
  4. independence of the auditor.
2. Where the performance of the external auditor is assessed as being unsatisfactory, the Audit Committee will determine the course of action, which may include:
  1. discussion with the external audit firm to resolve performance issues;
  2. replacement of members within the external audit team; and
  3. commencement of a competitive tender process in order to select a new service provider.
Auditor Independence
1. The external auditor must be independent so as to ensure that the following are achieved:
  1. "actual independence" — the achievement of actual freedom from bias, personal interest, prior commitment to an interest, or susceptibility to undue influence or pressure; and
  2. "perceived independence" — the belief of financial report users that actual independence has been achieved.
2. The Audit Committee shall review and assess the independence of the external auditor, including but not limited to any relationships with the Company or any other entity that may impair the external auditor's judgement or independence in respect of the Company. Furthermore, the Audit Committee will request an annual confirmation of independence from the external auditor.
3. To ensure that the auditors maintain their independence there are strict controls in place in relation to non-audit work performed by the external auditors. That is, any non-audit assignments performed by the external auditors for the Company will require the prior approval of the Audit Committee.
4. As part of the independence process the Audit Committee will require the rotation of the audit signing partner and the independent review partner every five years
External audit scope and materiality
1. The external audit aims to provide reasonable assurance that the consolidated financial report of the Company and its controlled entities is free from material error. The external auditor must use their understanding of the Company and the major processes by which it conducts its business to identify and address any key business and financial statement risk areas.
2. Each year a materiality level which determines the scope of external audit procedures, is communicated by the external auditors to the Audit Committee. This figure is intended to serve as a threshold for considering the individual and cumulative effect of potential adjustments and accounting issues.
3. Materiality is used to assist in determining when the external auditors would expect to involve the Audit Committee, should it become necessary, in order to resolve an audit or accounting issue. It also affects the extent to which the external auditors perform detailed procedures on smaller account balances in the financial records. As a matter of course, all audit differences in excess of a set limit each year are to be brought to the attention of management for further consideration and action as appropriate. The external auditors will communicate to the Audit Committee any of these audit differences that are not adjusted by management before the close of the accounts.
External audit plan
1. Each year as part of the external audit assignment, the external auditors, after discussions with management will issue an external audit plan for review and discussion with the Audit Committee. The audit plan should outline the standard combination of control and substantive procedures to be completed. The plan should also include additional audit procedures, based on the external auditor's analysis and understanding of developments during recent months, which require additional emphasis during the audit.
2. On completion of the audit the Company will require from the auditors a Closing Report, a statement of independence and an audit opinion. The first of these reports, the Closing Report, will confirm the auditor's findings and is to be addressed to the Audit Committee. The statement of independence will be provided to the Audit Committee, while the audit opinion is required for inclusion in the Company's published accounts.