Principle 4

Safeguard integrity in corporate reporting

Audit and Risk Committee

The Audit and Risk Committee meets as required and at least four times throughout the year.  For membership and attendance details of the Audit and Risk Committee, refer to the Directors’ Report.  The qualifications and experience of each member of the Audit and Risk Committee is outlined in the director profiles in the Annual Report.

The composition of the Audit and Risk Committee is based on the following principles:

  • The Committee should consist of non-executive directors only
  • The Committee should consist of a majority of independent directors
  • The Chairperson of the Committee should be an independent director and not Chairperson of the Board
  • The Committee should consist of at least three members
  • The Committee should include members who are financially literate with at least one member who has financial and accounting related expertise

The Audit and Risk Committee is governed by a charter which outlines the Committee’s role and responsibilities, composition, structure and membership requirements.  The charter is reviewed annually to ensure it remains consistent with the Board’s objectives and responsibilities.  Refer to the Group’s website at www.gwagroup.com.au under Corporate Governance Policies for a copy of the charter.  A detailed Terms of Reference has been developed to ensure the Audit and Risk Committee meeting agenda is consistent with the Committee’s role and responsibilities as outlined in the charter.

The External Auditor, Internal Auditor, Managing Director, Chief Financial Officer, Company Secretary and other Group executives (as required) attend Audit and Risk Committee meetings, by invitation, to present the relevant statutory information, Financial Statements, reports, and to answer the questions of the members.  At the Audit and Risk Committee meetings, the members will meet with the External Auditor without management present.

The main responsibilities of the Audit and Risk Committee include:

  • Review of financial statements and external financial reporting
  • Assess the management processes supporting external reporting
  • Assess whether the external reporting is adequate to meet the information needs for shareholders
  • Recommendations on the appointment and removal of the External Auditor
  • Review and monitor the performance and independence of the external audit function
  • Review of tax planning and tax compliance systems and processes
  • Review and monitor risk management and internal compliance and control systems
  • Assess the performance and objectivity of the internal audit function
  • Reporting to the Board on the Committee’s role and responsibilities covering all the functions in its charter

The Company Secretary prepares the draft minutes for each Audit and Risk Committee meeting, which is tabled at the next Audit and Risk Committee meeting for review and approval.  The draft minutes are also included in the Board papers for the next Board meeting following the Audit and Risk Committee meeting.

Certification of Financial Reports 

The Managing Director and Chief Financial Officer state in writing to the Board at each reporting period that, in their opinion:

  • The financial records of the Group have been properly maintained;
  • The financial reports present a true and fair view of the Group’s financial position and performance;
  • The financial reports comply with Accounting Standards; and
  • The opinion has been formed on the basis of a sound system of risk management and internal compliance and control which is operating effectively.

The statements from the Managing Director and Chief Financial Officer are based on a formal sign-off framework established throughout the Group and reviewed by the Audit and Risk Committee as part of the financial reporting process.

External Auditor Independence

The Board recognises the importance of a truly independent external audit firm to ensure that the audit function delivers, for the benefit of the Board and all other stakeholders, an unbiased confirmation of both the Financial Statements and the state of affairs of the Group.  Consistent with the Board’s commitment to an independent audit firm, a policy has been approved by the Board on the role of the External Auditor, which is designed to ensure the independence of the external audit function.

The Audit and Risk Committee reviews the independence of the external audit function annually and makes a recommendation to the Board on continuing independence.  As part of this review, the Audit and Risk Committee examines the non-audit roles performed by the External Auditor to satisfy itself that the auditor’s independence is not compromised.  Whilst the value of non-audit services could, in extreme cases, compromise audit independence, more important is to ensure that the External Auditor is not passing an audit opinion on the non-audit work of its own firm.

As a further measure to ensure the independence of the audit function, the Chairman of the Audit and Risk Committee must pre-approve all audit services provided by the External Auditor and non-audit services with a value of greater than $5,000.

During the year, the Group’s External Auditor, KPMG, provided an Auditor Independence Declaration to the Board (refer to the Directors’ Report) that, to the best of their knowledge and belief, there have been no contraventions of:

  • The auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
  • Any applicable code of professional conduct in relation to the audit.

In considering the KPMG independence declaration and the recommendation of the Audit and Risk Committee, the Board was satisfied with the continuing independence of the external audit function.  For details of the non-audit roles performed by KPMG during the year, please refer to the Auditors’ Remuneration note to the Financial Statements.

Selection and Appointment of External Auditor

Following shareholder approval at the 2004 Annual General Meeting, KPMG was appointed External Auditor for the financial year commencing 1 July 2004 after a comprehensive tender process conducted by the Audit and Risk Committee.  KPMG replaced Ernst & Young who had been the External Auditor since 1995.

Rotation of External Auditor

KPMG has advised the Group that their policy of audit partner rotation requires a change in the lead engagement partner and review partner after a period of five years.  An audit partner rotation plan has been reviewed and approved by the Audit and Risk Committee to ensure the transition process is managed effectively.  In accordance with the plan, effective from 1 July 2015, Ms Julie Cleary of KPMG was appointed the Lead Engagement Partner following the rotation of Mr Greg Boydell.

AGM Attendance

The External Auditor attends the Annual General Meeting and is available to answer questions from shareholders about the conduct of the external audit and the preparation and content of the Independent Auditor’s Report.  Shareholders attending the Annual General Meeting are made aware they can ask questions of the External Auditor concerning the conduct of the audit.