The Coal Authority
Audit Committee
Terms of Reference

Approved as amended: 20 May 2008

1. Constitution

1.1 The Board hereby resolves to establish a Committee of the Authority to be known as the Audit Committee (“the Committee”).

2. Membership

2.1 The Chairman and Members of the Committee shall be appointed by the Board but shall not include the Authority’s Chairman. The current Members of the Audit Committee are Mr John Hawksley, Dr Barrie Jones, Mr Stephen Dingle and Dr Pauleen Lane. The Chairman of the Audit Committee shall be a Non-Executive Board Member other than the Chairman of the Board. The current Chairman of the Audit Committee is Mr John Hawksley who will be succeeded by Mr Stephen Dingle on 11 September 2008.

2.2 The Committee shall consist of not less than 2 Members all of which must be independent Non-Executive Directors. Its Quorum shall be 2.

2.3 The Secretary to the Board shall be Secretary of the Committee and shall take minutes of the meetings.

3. Reporting

3.1 The Audit Committee will formally report in writing to the Board and Accounting Officer after each meeting; this shall normally be done through the circulation of minutes.

3.2 The Audit Committee will provide the Board and Accounting Officer with an Annual Report, timed to support finalisation of the accounts and the Statement on Internal Control, summarising its conclusions from the work it has done during the year.

4. Meetings

4.1 The Chief Executive of the Authority, in his capacity as Accounting Officer for the Authority, and its Director of Finance shall normally attend meetings of the Committee. Other Board Members shall have the right of attendance.

4.2 The internal and external auditors will be invited to all meetings and will receive copies of all papers.

4.3 The Committee shall meet not less than 4 times per year. The Chairman and both the External and Internal Auditors may request a meeting if they consider one necessary.

4.4 The Audit Committee may ask any other officials of the organisation to attend to assist it with its discussions on any particular matter.

4.5 The Audit Committee may ask any or all of those who normally attend but who are not members to withdraw to facilitate open and frank discussion of particular matters.

4.6 The Board or the Accounting Officer may ask the Audit Committee to convene further meetings to discuss particular issues on which they want the Committee's advice.

5. Authority

5.1 The Committee shall be an advisory body with no executive powers. It is authorised by the Board to investigate any activity of the Authority within its duties and to seek any information that it requires from any officer or employee of the Authority, who are required to co-operate with the Committee in its enquiries. Requests for work by, and reports from, the internal auditors of the Authority shall be channelled through its Chief Executive as Accounting Officer. The Committee shall have the right to receive internal audit reports as soon as they are available.

6. Rights

6.1 The Committee is authorised to procure other independent professional advice if it considers this necessary.

6.2 The Committee may co-opt additional members for a period not exceeding a year to provide specialist skills, knowledge and experience.

6.3 The Committee may procure specialist ad-hoc advice at the expense of the organisation, subject to budgets agreed by the Board.

7. Duties

7.1 The specific duties of the Committee shall be:-

to review and discuss with management and auditors the preliminary results, interim information and annual financial statements before submission to the Board, focusing particularly on:-

1. the quality and acceptability of the accounting policies and practices and financial reporting disclosures and changes thereto;
2. areas involving significant judgement, estimation or uncertainty;
3. material misstatements detected by the auditors that individually or in aggregate have not been corrected and management’s explanations as to why they have not been adjusted;
4. the basis for the going-concern assumption;
5. compliance with financial reporting standards and relevant financial and governance reporting requirements;
6. management's representation letter to the external auditors

7.2 to discuss with the External Auditor the nature and scope of each forthcoming audit and to ensure that he has the full co-operation of the officers and employees of the Authority;

7.3 to consider all reports on the statements of accounts of the Authority by the External Auditor and other relevant reports by him, the achievement by the Authority of value for money and the response to any management letters;

7.4 to review the Authority’s annual statement on internal control and its compliance with the Corporate Governance guidance prior to consideration by the Board; and in particular where requested by the Board to review:-

1. the policies and overall process for identifying and assessing business risks and managing their impact on the Authority;
2. regular assurance reports from management, internal audit, external audit and others on the operational effectiveness of matters related to risk and control;
3. the timeliness of, and reports on, the effectiveness of corrective action taken by management; and
4. whether the principles of the Corporate Governance guidance are being embedded within the Authority;

7.5 to ensure that the service provided by the internal auditors of the Authority meets, or exceeds, the standards specified in the “Government Internal Audit Manual” and the agreed level of service;

7.6 to consider and advise the Board on its annual and long-term audit programme;

7.7 to consider reports by the internal auditors of the Authority, including value for money reports, and the arrangements for their implementation;

7.8 to periodically review and update its own terms of reference requesting Board approval for all proposed changes and, at appropriate intervals, evaluate its own performance against its terms of reference and best practice;

7.9 to consider any other matter when requested to do so by the Board;

7.10 to report to the Board on its discharge of the above duties; in addition, the Chairman of the Committee shall give a report to the Board after each meeting of the Committee;

7.11 anti-fraud policies, whistle-blowing processes, and arrangements for special investigations;

7.12 (where appropriate) proposals for tendering for either Internal or External Audit services or for purchase of non-audit services from contractors who provide audit services.