BAHRAIN TELECOMMUNICATIONS COMPANY B.S.C. AUDIT COMMITTEE CHARTER

Transcription

1 BAHRAIN TELECOMMUNICATIONS COMPANY B.S.C. AUDIT COMMITTEE CHARTER

2 Contents I. Audit Committee Purpose and Mission Authority Membership Secretary Quorum Decisions Meetings Notice of Meetings Minutes of Meetings Responsibilities Reporting Responsibilities Resources and Authority Committee Performance Evaluation Other Matters... 9

3 I. Audit Committee 1. Purpose and Mission 1.1 The Audit Committee (the Committee ) is appointed by the Board of Directors (the Board ) of Batelco BSC ( BATELCO or the Company ) to assist the Board in discharging its oversight duties relating to: The integrity of the Company s financial statements and financial reporting process and the Company s systems of internal accounting and financial controls; The annual independent audit of the Company s financial statements, the engagement of the external auditors and the evaluation of the external auditors qualifications, remuneration, independence and performance; The appointment of Head of Internal Audit and the regular review of the activities and performance of internal audit function; Compliance by the Company with legal and regulatory requirements, including the Company s disclosure of controls and procedures; and Compliance with the Company s Corporate Governance processes. 1.2 In performing its duties, the Committee will maintain effective working relationships with the Board, management the external and the internal auditors. To perform his/her role effectively, each Committee member will continue to develop and maintain his/her skills and knowledge, including an understanding of the Company s business, operations and risks. 2. Authority 2.1 The Board authorizes the Committee within the scope of its responsibilities to: Perform activities within the scope of its Charter; Engage independent counsel and other advisors, as it deems necessary to carry out its duties, provided such engagements are justifiable; Have unrestricted access to the Company s management, employees and relevant information; Establish procedures for dealing with concerns of employees regarding accounting, internal controls or auditing matters; Establish procedures for receipt, retention and treatment of complaints received by the Company regarding accounting, internal controls or auditing matters; Be directly responsible for the appointment, retention and oversight of the external auditors; Recommend the selection and compensation of the external auditors for appointment and approval at the shareholder s meeting including the performance 1

4 3. Membership of external auditors and the non-audit services provided by the external auditors; and Investigate any activity within its Charter and in the context of investigation: Seek any information that it requires from any employee of the Company. All employees are directed to cooperate with any request made by the Committee; and Obtain outside legal or independent professional advice and such advisors may attend meetings as necessary. 3.1 The Board shall appoint members of the Committee. Majority of the members of the Committee including the Chairman shall be independent directors of the Company. 3.2 The Committee shall consist of at least three members. Such members must have no conflict of interest with any other duties other than for the Company. 3.3 The CEO must not be a member of the Audit Committee. 3.4 Members of the Audit committee cannot be members of any other committee of the Board if it is in conflict with work of Audit Committee. 3.5 Appointments to the Committee shall be for a period of three years, which may be extended for another three year term, provided the members of the Committee remain independent. 3.6 Members of the Committee shall elect a Chairman and a Deputy Chairman for the Committee. The members of the Committee shall be appointed by, and may be removed by, the Board. In the absence of the Chairman, the Deputy Chairman shall chair the meeting. 3.7 Committee members and the Chairman shall be rotated periodically, at the recommendation of the Board. 3.8 A majority of the Committee members must be financially literate and there must be at least one qualified and appropriately experienced accountant in the Committee and at least one member must have experience relevant to the Company s business model and operations. The committee members should have: an ability to read and understand financial statements including Company s balance sheet, income statement and cash flow statement and changes in shareholders equity; an understanding of the accounting principles which are applicable to the Company s financial statements; experience in evaluating financial statements that have a level of accounting complexity comparable to that which can be expected in the Company; an understanding of internal controls and procedures for financial reporting; and an understanding of the audit committee s controls and procedures for financial reporting. 2

5 4. Secretary 4.1 The Board secretary shall act as the Secretary of the Committee. In his absence the Head of Internal Audit shall act as the Secretary. 4.2 The Secretary to the Audit Committee shall perform the following responsibilities: 5. Quorum Prepare and submit for approval the contents of the agenda for all meetings of the Audit Committee, which are convened. Prepare and submit for approval of the minutes of each meeting held by the Audit Committee. 5.1 Only members of the Committee and the Secretary of the Committee shall be entitled to attend Committee meetings. However, members of management, representatives of internal and external auditors and other specialists may be invited to attend meetings at the request of the Committee. 5.2 A meeting of the Committee will not be valid unless attended by not less than half of the members. However, members of the Committee may also convene a meeting through a conference call. 5.3 A duly convened meeting of the Committee at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions vested in or exercisable by the Committee as specifically delegated by the Board. 5.4 The Chairman is responsible for maintaining the quorum of the Committee s meetings. 6. Decisions 6.1 The Committee s decisions shall be considered by a vote of the majority of the attending members. In case of equality of votes, the Chairman of the Committee shall have the casting vote. 6.2 Decisions of the Committee may be made through circulation. In all such cases: 7. Meetings The Secretary of the Committee shall ensure and confirm circulation of necessary information and documentation. A decision through circulation will not be valid unless approved by a majority of the voting members, including the Chairman and the Deputy Chairman of the Committee.. In case of disagreement, a meeting of the Committee shall be called by the Secretary. 7.1 Meetings shall be held at least four times a year, and where appropriate, should coincide with key dates in the Company s financial reporting cycle. Meetings of the Committee will preferably be held one day prior to meetings of the full Board. 7.2 Formal meetings of the Committee are the heart of its work. However, they will rarely be sufficient. It is expected that the Committee Chairman, and to a lesser extent other members, shall keep in touch on a continuing basis with the key people involved in the 3

6 Company s governance including the Board Chairman, the Chief Executive Officer (CEO), the Chief Financial Officer (CFO), the Head of Internal Audit and the external auditors. 7.3 The Committee may meet without any other director or any officer of the Company present. Only the Committee may decide if a non-member of the Committee should attend a particular meeting or a particular agenda item. Non-members who are not directors of the Company may attend to provide their expertise, but may not vote. It is expected that the external auditor s lead representative will be invited to attend regularly but that this shall always be subject to the Committee s decision. 8. Notice of Meetings 8.1 Meetings of the Committee shall be summoned by the Secretary of the Committee at the request of any of its members or at the request of external or internal auditors if they consider it necessary. 8.2 Unless otherwise agreed, notice of each meeting confirming the venue, time and date together with an agenda of items to be discussed, shall be forwarded to each member of the Committee, any other person required to attend and all other directors, no later than five working days before the date of the meeting. Supporting papers shall be sent to Committee members and to other attendees, as appropriate, at the same time. 9. Minutes of Meetings 9.1 The Secretary shall minute the proceedings and resolutions of all meetings of the Committee, including recording the names of those present and in attendance and names of absentees. 9.2 The Secretary shall ascertain, at the beginning of each meeting, the existence of any conflicts of interest and minute them accordingly. 9.3 Minutes of Committee meetings shall be circulated promptly to all members of the Committee. 9.4 Where decisions are made through circulation, details will be included in the minutes of the Committee meeting immediately following the decision. 10. Responsibilities 10.1 The Committee shall carry out the duties listed below: General Have the power to conduct or authorize investigations into any matters within the committee s scope of responsibilities, provided that the Chairman of the Board of Directors is notified. The committee shall have unrestricted access to members of the management and all information relevant to its responsibilities. The committee shall be empowered to retain independent counsel, accountants, or others to assist it in the conduct of any investigation. Meet as frequently as described in this charter. Report committee actions to the Board of Directors with such recommendations as the committee may deem appropriate. 4

7 Review the Audit Committee charter at least once every three years, unless more frequent reviews are required due to regulatory or other changes, and have all the proposed revisions approved by the Board of Directors. Perform such other function assigned by law, the Company s Memorandum and Articles of Association, or the Board of Directors. Meet with the Company s Internal Auditor, the independent accountants and management in separate executive sessions to discuss any matters that the committee or these groups believe should be discussed privately with the audit committee. Prepare and recommend an annual estimated budget. Financial Reporting 10.2 The Committee shall review the integrity of the Company s accounting and financial practices and reporting and shall review the integrity of the Company s financial and internal controls and financial statements. The Committee shall also review any other financial information contained in other documents Review and discuss with management and the external auditor published documents containing the Company s financial statements including, annual and interim reports and statutory filings, and consider whether the information contained in these documents is consistent with the information contained in the financial statements. The Committee shall review and approve the interim financial statements where the Board is unable to hold a meeting for this purpose Ensure that the Company s CEO and CFO provide in writing to the Committee and the Board as a whole that the Company s interim and annual financial statements present a true and fair view, in all material respects, of the Company s financial condition and results of operations in accordance with applicable accounting standards Ensure that the prudential report is accurate and other Company generated financial statements are in accordance with accounting with the International Financial Reporting Standards (IFRS) Assess internal processes for determining and managing key financial statement risk areas The Committee shall review and challenge where necessary: Whether the Company has followed appropriate accounting policies and made appropriate estimates and judgments, taking into account the views of the external auditors; Alternative treatments of financial information within generally accepted accounting principles; The consistency of, and any changes to, accounting policies both on a year to year basis and across the Company; Significant adjustments resulting from the audit; Management s assessment of the effectiveness of the Company s internal control structure and procedures for financial reporting; 5

8 Regulatory and accounting initiatives, and their effect on the Company s financial statements; Review and discuss possible improprieties in financial reporting or other matters, an ensure that arrangements are in place for independent investigation and follow-up regarding such matters; Recommend any additional or specific audit required in respect of the financial statements and other specific part of the business; and Whether the financial reporting function is adequately resourced, independent of business lines and is run by individuals not involved in day-to-day running of the various business areas. Internal Controls and Risk Management Systems 10.8 Review and evaluate the effectiveness of the Company s policies and procedures for assessing and monitoring significant risks or exposures and the steps management has taken to minimize such risks to the Company. Make use of self-assessments, stress / scenario tests, and/or independent judgements made by external advisors. The Board shall appoint supporting committees, and engage senior management to assist the Audit Committee in the oversight of risk management Review of the following, together with management, the external and internal auditors of the Company: The effectiveness of and/or weaknesses in the Company s internal controls, the overall control environment, accounting and financial controls; Any related significant findings and recommendations reports of the internal auditors, external auditors and governing bodies inspection, together with management s responses thereto, including the timetable for implementation of recommendations to correct weaknesses in internal controls; and The coordination of the audit effort to ensure complete coverage of key business controls and risk areas, the minimization of inefficiency, and the effective use of audit resources. Internal Audit Monitor and review the effectiveness of the Company s internal audit function in the context of the Company s overall risk management system Evaluate the internal audit procedures for establishing the annual internal audit plan and the focus on risk Review, evaluate and approve the scope, risk assessment and nature of the internal auditors plan and any subsequent changes, including whether or not the internal auditors plan is sufficiently linked to the Company s overall business objectives and management s success and risk factors Consider and review with management: 6

9 Significant findings during the year and management s responses thereto, including the timetable for implementation of the recommendations to correct weaknesses in internal control. Any difficulties encountered in the course of the audits, including any restrictions on the scope of the work or access to required information. Any changes required in the planned scope of the audit plan. The Internal Audit Department budget and staffing. The Internal Audit Department charter and policies and procedures Review and concur in the appointment, remuneration, appraisal, replacement, reassignment, or dismissal of the Company s Head of Internal Audit Confirm and ensure the independence of the internal auditor Ensure that the internal audit function is adequately resourced, independent of business lines and is run by individuals not involved in day-to-day running of the various business areas Meet the Head of Internal Audit at least once a year, without management being present, to discuss the scope, responsibilities and any issues arising from the internal audits carried out. In addition, the Head of Internal Audit shall be given the right of direct access to the Chairman of the Board and to the Committee. Compliance with Laws and Regulations Ascertain whether the Company has effective procedures for determining risks and exposures from litigation and claims and from noncompliance with laws and regulations The Committee will review the effectiveness of the system for monitoring compliance with legal and regulatory requirements and the results of management s investigations and follow-up (including disciplinary action) of any fraudulent actions or non-compliance The Committee will ensure that the compliance function is adequately resourced, independent of business lines and is run by individuals not involved in day-to-day running of the various business areas The Committee shall obtain regular updates from management and Company s legal counsel regarding compliance matters, which may have a material impact on the Company s financial statements or compliance policies Review the findings of any examinations by regulatory agencies Review the key persons dealing and market abuse policies and procedures as well as any reports and plans issued in terms of such policies. Compliance with Codes of Ethical Conduct Review and assess the Company s processes for administering a code of ethical conduct Review with the Company internal and external auditors, the results of their review of the Company s monitoring of compliance with the Company s code of conduct Review policies and procedures with respect to officers expense accounts and perquisites, including their use of corporate assets, and consider the results of any review of these areas by the internal and external audit. 7

10 External Audit Consider and make recommendations to the Board, to be put to shareholders for approval at the Annual General Meeting, relating to the appointment, re-appointment and removal of the Company s external auditor. The Committee shall oversee the selection and compensation process for new auditors and, if an auditor resigns, the Committee shall investigate the issues leading to this and decide whether any action is required Oversee the relationship with the external auditor including (but not limited to): Recommendation to the Board of their remuneration, whether fees for audit or nonaudit services and that the level of fees is appropriate to enable an adequate audit to be conducted; Approval of their terms and conditions of engagement of the audit; Assessing annually their independence and objectivity taking into account the following: o o o Relevant professional and regulatory requirements; Determining whether the auditors performance of any non-audit services has compromised independence; and Obtaining from the external auditor a written report listing any relationship between the external auditor and the Company or with any other person or entity that may compromise the auditor s independence. Satisfying itself that there are no relationships (such as close family, employment, investment, financial or business) between the auditor and the Company (other than in the ordinary course of business); Assessing annually their qualifications, expertise and resources and the effectiveness of the audit process; and Monitoring the auditors compliance with relevant ethical and professional guidance on the rotation of audit partners and other requirements Meet regularly with the external auditor at least once a year, and at least once a year in the absence of executive management, to discuss their remit and any issues arising from the audit Review and approve the annual audit plan Review the management letter and management s response to the auditor s findings and recommendations Review the difficulties encountered in the course of the audit work, including any restrictions on the scope of activities or access to requested information, any significant disagreements with management and communications between the audit team and the audit firm s regional or international office with respect to difficult auditing or accounting issues presented by the engagement. 8

11 Whistle Blowing The Audit Committee shall deal with any concerns arising from the whistleblower program adopted by the Board to allow for concerns to be raised confidentially. Concerns may be directly communicated to any Audit Committee member or, alternatively, to an identified officer or employee who will report directly to the Audit Committee on this point. 11. Reporting Responsibilities 11.1 The Chairman of the Committee shall report formally to the Board on its proceedings after each meeting on all matters within its duties and responsibilities The Committee shall make whatever recommendations to the Board it deems appropriate on any area within its ambit where action or improvement is needed. 12. Resources and Authority 12.1 The Committee shall have the resources and authority necessary for its duties and responsibilities, including the authority to select, retain, terminate and approve the fees of outside legal, accounting or other advisors as it deems necessary or appropriate, without seeking the approval of the Board or management. The Company shall provide appropriate funding for the compensation of any such persons. 13. Committee Performance Evaluation 13.1 The Committee shall prepare and review with the Board an annual performance evaluation of the Committee, which shall compare the Committee s performance with its responsibilities as mentioned above and shall recommend to the Board any improvements deemed necessary or desirable to the Committee s Charter The Nomination and Remuneration Committee shall be responsible for administering the evaluation process for the Committee and will present the final scores of the assessment to the Board for evaluation. 14. Other Matters 14.1 Be provided with appropriate and timely training, both in the form of an induction programme for new members and on an ongoing basis for all members Give due consideration to laws and regulations Be responsible for co-ordination of the internal and external auditors Oversee any investigation of activities which are within its Charter and act as a court of last resort Audit Committee members may not enter into paid consulting or other arrangements with the Company without the prior written approval of the Board. 9