Euroclear Belgium Audit and Risk Committee Terms of Reference

Transcription

1 Euroclear Belgium Audit and Risk Committee Terms of Reference (Terms of Reference adopted on 22 March 2010 last amended following the Board meeting on 25 April 2013) Approved/reviewed by Audit Committee: 22 April 2013 Approved/reviewed by Board: 25 April 2013

2 TABLE OF CONTENTS 1. PURPOSE AND RESPONSIBILITIES Advisory Role Relationships with other corporate bodies and regulators Reporting Calendar CONSTITUTION Membership Operating rules Attendees Rights of Access Committee Support and Resources SELF-ASSESSMENT OF COMMITTEE EFFECTIVENESS REPORTING TO THE BOARD REVIEW AND AMENDMENT OF THESE TERMS OF REFERENCE...6

3 1. PURPOSE AND RESPONSIBILITIES The Audit and Risk Committee (the Committee ) assists the Board of Directors (the Board ) in fulfilling its responsibilities for oversight of the quality and integrity of the accounting, auditing and reporting practices of Euroclear Belgium ( Company ), the review of the effectiveness of internal controls and risk management systems, and such other duties as directed by the Board Advisory Role The principal advisory duties and responsibilities of the Committee are to: monitor the financial reporting process and the integrity of the financial statements (annual accounts) of the Company. This includes, but is not limited to, annual and half-yearly reports and any formal announcements relating to the Company s financial performance as well as reviewing significant financial reporting judgements and questions and recommendations of the External Auditors in relation to these; monitor and review the effectiveness of the Company s internal financial controls and the Company s internal control systems; monitor and review the effectiveness of the Company s risk management systems and risk profile; monitor and review the risks in relation to bribery, corruption and fraud that the Company is exposed to by reason of its business as well as the appropriateness and effectiveness of the compliance and risk-management measures in place to prevent bribery, corruption and fraud; review and recommend to the Board the core equity requirements and risk tolerance levels to be approved by the Board; review the Company s process for monitoring compliance with laws and regulations; review the Company s process for monitoring its security and business continuity arrangements; monitor and review the adequacy, effectiveness and performance of the Company s Internal Audit function; review of the Internal Audit Plan and changes thereto; review the Internal Audit Charter annually; review the Company s External Auditor s Audit Plan; consider and make recommendations to the Board, for it to put to the shareholders for approval in general meeting, in relation to the appointment, re-appointment, removal and remuneration of the Company s External Auditor; review of the External Auditor annual engagement letter and fees in relation to core audit (for recommendation to the shareholders) and non-core services; assess and monitor annually the External Auditor s independence and objectivity and the effectiveness of the audit process, taking into consideration relevant professional and regulatory requirements; 1

4 review and recommend to the Board the Company s policy on the engagement of the External Auditor to supply non-audit services. The Committee should ensure that the provision of such services does not impair the External Auditor s independence and objectivity, taking into account relevant ethical guidance regarding the provision of non-audit services by the External Audit firm; review the Company s arrangements for its employees to raise concerns, in confidence, about possible wrongdoing in financial reporting or other matters. The Committee shall ensure that these arrangements allow proportionate and independent investigation of such matters and appropriate follow up action; review the Company s risk profile, provided by the CRO (Chief Risk Officer), which takes a forward-looking view of the cumulative effect of the major risks affecting the Company, the actions taken by management to manage such risks and the CRO s view on the adequacy of such actions; assess the consistency of the Company s risk profile with the Company s willingness and ability to bear such risks (risk tolerances); annual review of adequacy of the compliance function and review of the Compliance and Ethics Division Charter; review of changes to accounting policies. periodic review of amendments to Board risk policies of the Company. review and recommend to the Board the appointment and removal of the Local Head of Audit and the Chief Risk Officer for the Company; 1.2. Relationships with other corporate bodies and regulators In order to perform its duties the Committee will maintain effective working relationships with the board, management, the internal and external auditor, the competent regulator of the Company and, as appropriate, the parent company. To ensure that the Company s financial reporting, risk and compliance practices are consistent with those of the parent and to support the latter in its oversight function, the Committee will keep the audit committee at parent level informed about: any material issues of concern at Company level); and the level of assurance on the safety and soundness of the Company. Similarly, the parent audit committee will ensure the Company s ARC is kept informed about material group level issues under its review having an impact on the Company. The interaction as between parent and subsidiary audit committees will be organized via a cross-attendance program, sharing of relevant minutes and informal contact between members. 2

5 1.3. Reporting Calendar The Committee s specific responsibilities in carrying out its role and the reporting it receives are delineated in the Audit and Risk Committee Reporting Calendar. This calendar will be kept up to date reflecting necessary changes in regulatory requirements, authoritative guidance, and evolving good practices. 2. CONSTITUTION The Committee has been established by the Board who has delegated specific powers to the Committee as set out in these Terms of Reference. The Committee has no executive duties or powers, nor does it diminish the responsibility of individual Board members. However, it is invited and encouraged to make recommendations to the Board and senior management of the Company Membership The Committee shall consist of at least three members. All members shall be nonexecutive directors of the Company, and at least one shall be an independent director in the meaning of the applicable legislation and shall be competent in accounting and audit matters. In addition, at least one of the members shall have recent and relevant financial experience. In addition, the members of the Committee shall collectively have an understanding of the Company s business, accounting, risk and audit matters. All members shall be appointed by the Board on the recommendation of the Nominations and Remuneration Committee, in consultation with the Committee Chairman. Appointments should be for a period of up to three years, renewable at the Board s discretion bearing in mind applicable best practice guidelines. If the Chairman of the Company is an independent director, s/he may be a member of, but not chair, the Committee. The Committee may appoint advisors or observers who shall be professionals with relevant expertise and experience to help the Committee fulfil its duties. The membership and expertise of the Committee shall be disclosed in the Company s Annual Report Operating rules Frequency of meetings The Committee shall meet at least four times annually and on such additional occasion as called for by the Chairman of the Committee. It is expected that members will devote sufficient time to prepare for the meeting and will normally attend in person. Sufficient time should be allowed to enable the Committee to undertake as full a discussion as may be required. 3

6 Agenda The agenda for the meetings will be set by the Committee Chairman. Individual members of the Committee will have the right to place items on the agenda of meetings. Items to be discussed at the meeting must be included on the agenda. Under exceptional circumstances an item not on the agenda may be addressed by the meeting provided all members present or represented agree to this addition. Meeting invitations and meeting agendas may be sent by facsimile, or any other electronic means. The Committee may obtain information and reports from the management of the Company as it deems necessary to prepare the issues to be discussed. Quorum and voting A quorum shall be two members. In cases where a member has resigned as a member of the Board of the Company, such member shall not be taken into consideration when determining the quorum. Meetings can be attended in person, by videoconference or by conference call as agreed by the Committee Chairman. To the extent that voting is required at a meeting, a simple majority of voting members present will be required for approval of a motion. In the case of equality of votes the Committee Chairman will have the casting vote Attendees Only the Committee members are entitled to be present at a meeting of the Committee. The Chairman of the Board or one Board Member, the External Auditor, the Company s Head of Audit, the Company s Compliance Officer and the Company s Risk Officer shall be standing invitees to Committee meetings. In addition, to facilitate the effective conduct of its business, the Committee Chairman may invite other persons to attend meetings, such as Board members, the Chief Executive Officer and other senior managers, as well as any advisor and/or observers appointed by the Committee. The Committee shall hold at least one closed session annually, with each of the Company s External Auditor, the Company s Head of Audit the Company s Compliance Officer and the Company s Risk Officer without executive management present Rights of Access The Committee has the authority from the Board to investigate any matters within its Terms of Reference and has unlimited access to any documents or Company records associated with such investigation. In discharging its responsibilities, the Committee should consider controls over the services outsourced to Euroclear SA/NV (ESA) on which the Company remains dependent. ESA management have agreed to provide copies of a number of reports relevant to the Company to assist the Committee in carrying out its duties in an efficient manner. The Committee will maintain the most recently updated list of such reports. The Company s Head of Audit, the Company s Chief Risk Officer and the Company s Compliance Officer have direct access to the Committee Chairman. Likewise, the Committee Chairman has direct access to the Chairman of the Board. In addition, the Committee Chairman has direct access to the Chairpersons of the Audit Committees of Euroclear plc and ESA and to the ESA Risk Committee. 4

7 2.5. Committee Support and Resources To perform his or her role effectively, each Committee member will obtain an understanding of the detailed responsibilities of Committee membership as well as the Company s business, operations and risks. Once appointed to the Committee, members will receive induction training on all topics considered necessary for their membership. Ongoing training will be provided, as appropriate, to ensure that members knowledge is kept up to date and may take various forms such as formal courses, internal Company seminars or briefings by external parties. A Secretary to the Committee shall be appointed. The Secretary will minute all meetings and circulate these minutes to the Committee for approval. The Committee Secretary will endeavour to ensure that each committee member receives written material in a timely manner ahead of meetings so that the meetings can function effectively. The Committee may invite experts including those employed in the organisations from which the Board members themselves are drawn, to advise the Committee on the review of matters within its responsibility. The Committee has the right to seek external professional advice, at the Company s expense, which may be necessary for the fulfilment of its duties. The Committee may institute special investigations within its authority hiring, if appropriate, special counsel or experts to assist. The Chairman and other members of the Committee may, at their discretion, be in contact on a continuing basis with the key people associated with the Company s governance, including the Board Chairman, Chief Executive Officer, Chief Financial Officer, External Auditor, Local Head of Audit, the Chief Risk Officer, the Compliance Officer and the regulatory authorities. 3. SELF-ASSESSMENT OF COMMITTEE EFFECTIVENESS The Committee will evaluate its own performance on an annual basis against a documented benchmark that reflects regulatory requirements, authoritative guidance, and evolving oversight good practices. 4. REPORTING TO THE BOARD It is expected that feedback from the Committee will be a standing item on the agenda for Board meetings. The Committee Chairman shall report to the Board, in a timely manner, on the Committee s activities and proceedings on all matters within its duties and responsibilities. The Committee shall report to the Board on the Company s [annual] accounts and periodical financial statements. Where appropriate to support Board understanding, or where explicitly requested by a member, dissenting views as well as majority views will be reported. The Committee shall also report to the Board on the performance of the duties of the Committee, identifying any matters in respect of which it considers that action or improvement is needed, and making recommendations as to the steps to be taken. Where necessary, a sufficient interval should be allowed between Committee meetings and main Board meetings to allow any work arising from the Committee to be carried out and reported to the Board as appropriate. Where there is disagreement between the Committee and the Board, adequate time should be made available for discussion of the issue with a 5

8 view to resolving the disagreement. Where any such disagreements cannot be resolved, the Committee has the right to report the issue to the shareholders as part of the report on its activities in the annual report. Minutes of the Committee will be made available to all members of the Board. 5. REVIEW AND AMENDMENT OF THESE TERMS OF REFERENCE The Terms of Reference will be reviewed annually by the Committee, who shall make recommendations for revision to the Board, as they consider appropriate. 6