An audit committee plays a key role in assisting Council to fulfil its governance and oversight responsibilities in relation to financial reporting, internal control structure, risk management systems, legislative compliance, ethical accountability and the internal and external audit functions.

Council’s Audit Committee Charter further defines the role of the Committee.

Toowoomba Regional Council Audit Committee Charter

1. Introduction

The Local Government Act 2009 requires that each large local government must establish an Audit Committee.

2. Purpose

This Audit Committee Charter (Charter) sets out the objective, role, authority, membership, tenure, reporting and other requirements that apply to and govern the Audit Committee of Council (Committee), in accordance with the Local Government Act 2009 and the Local Government Regulation 2012.

3. Establishment of the Audit Committee

3.1 The Committee:

  1. is established:
    • to satisfy the requirement under the Local Government Act 2009 that each large local government must have an Audit Committee; and
    • as an advisory Committee in accordance with the Local Government Regulation 2012.
  1. is governed by the requirements for Audit Committees set out in the Local Government Act 2009 and the Local Government Regulation 2012.

4. Role of the Audit Committee

4.1 The Local Government Act 2009 requires Audit Committees to:

  1. monitor and review:
    • the integrity of financial documents;
    • the internal audit function; and
    • the effectiveness and objectivity of the local government's internal auditors.
  1. make recommendations to the local government about any matters that the Committee considers need action or improvement;
  2. On matters of accountability, risk management and internal control; and
  3. Provide Council updates via the Committee Chairperson (when requested by Council).

The Committee does not replace or replicate established management responsibilities or the reporting obligations of either internal audit or external audit functions.

5. Authority

5.1 The Committee:

  1. is an advisory Committee only;
  2. has no executive powers, delegated responsibility or management responsibilities; and
  3. in performing its monitoring, oversight, review and advisory role in accordance with this Charter, is authorised to:
    1. access reasonable information and records;
    2. request the attendance of senior management at its meetings;
    3. conduct meetings with internal and external auditors, as necessary; and
    4. subject to prior approval of the CEO of Council seek advice from external parties.

6. Independence and Resourcing

6.1 The Committee:

  1. is independent from Council's senior management, but must liaise closely with management as well as internal and external auditors to carry outs its responsibilities; and
  2. will receive the support of Council and its senior management.

6.2 The Committee is administratively supported by the Governance and Legal Services Branch for Council.

7. Composition and Meetings

7.1 Committee Composition

The Committee composition will be:

  1. Two (2) Councillors of the Council appointed in accordance with practices and procedures of Council;
  2. Three (3) external members, independent from and external to Council, appointed by Council following the calling of applications;
  3. At least 1 external member who has extensive experience and skills in financial matters is required to be appointed to the Audit Committee;
  4. Council will appoint one of the external members as Chairperson;
  5. The position of Chairperson shall not be held by the same person for any longer than four (4) consecutive years;
  6. Each member of the Audit Committee will be entitled to only one (1) vote;
  7. The Chief Executive Officer will be invited to attend meetings of the Committee and will have no voting rights;
  8. Representatives from internal audit, risk management, external audit and other officers where necessary may be invited to attend Committee meetings and provide technical and other advice to the Committee; and
  9. Any Councillor may attend an Audit Committee meeting as an observer.

7.2 Appointment of members

For the Committee:

  1. Councillor appointments to the Audit Committee shall be determined by Council;
  2. Council shall, two months prior to expiration of external members’ term, place advertisements inviting nominations from individuals with appropriate professional qualifications for membership of the Audit Committee;
  3. External members will be selected to provide a balance of professional skills, knowledge and technical experience appropriate to the responsibilities of the Committee;
  4. External members shall be appointed for a maximum term of four (4) years, subject to an annual performance review process;
  5. External members may reapply and can serve a maximum of two terms;
  6. The maximum term for external members may be extended until a suitable applicant is appointed;

7.3 Appointment of Chairperson

For the Committee:

  1. The Chairperson must preside at each meeting of the Committee; and
  2. If the appointed Chairperson is absent or unavailable to preside, a member chosen by the Members present at the meeting must preside.

7.4 Remuneration:

External Members are entitled to be remunerated by Council on a per Committee meeting basis, as follows:

  1. Chairperson of the Audit Committee, $3,000 per meeting (excluding GST and superannuation, inclusive of all travel and other incidentals);
  2. External Members, $2,500 per meeting (excluding GST and superannuation, inclusive of all travel and other incidentals);
  3. $1,000 per meeting for any additional or special meetings i.e. Financial Statement Audit Committee Meeting;
  4. The per Committee meeting remuneration amounts are compensation for both preparation and attendance at meetings of the Committee by the External Members and other ancillary meetings; and
  5. Councillor Members are not entitled to remuneration on the basis that they are being remunerated in their capacity as a councillor.

7.5 Committee Meetings:

  1. The Local Government Regulation 2012 requires audit Committees to meet at least twice each financial year;
  2. For Council, the Committee usually meets at least four times each financial year; and
  3. Additional special Audit Committee meetings as decided by the Committee.

7.6 Agenda and Meeting Process

  1. The Chief Executive Officer will be the Executive Officer to the Committee, and will be responsible for specialist reports, and all correspondence associated with the Audit Committee;
  2. The Council will provide a Minute Secretary for the purpose of recording the Minutes of Audit Committee meetings and for the distribution of Minutes following meetings of the Committee; Meeting agenda shall be prepared and distributed to all members of the Committee at least five (5) days prior to a meeting;
  3. The Minute Secretary shall forward a copy of the Minutes including recommendations of each Audit Committee meeting to all Committee members, as well as to Council, for submission to the Ordinary Meeting, as soon as possible following the meeting.
  4. A quorum of the Audit Committee shall be constituted by the majority of members of the Committee being present at the meetings; and
  5. In person attendance to the Committee meetings are preferred, however the use of teleconference and video conference facilities are permitted under extenuating circumstances attendance.

7.7 Qualities and attributes of Audit Committee Members

Audit Committee members are collectively expected to possess the following expertise and personal qualities:

  • An understanding of the core activities of Council and its controlled entities. This understanding to include the environment in which they operate, the strengths, weaknesses, opportunities and threats;
  • Commitment to the continual improvement of the outputs that the Council delivers and that contribute to the achievement of Council’s priorities;
  • High level of competency in financial and operational reporting and the ability to analyse complex financial reports and statutory financial statements;
  • demonstrated knowledge of legislative, regulatory and industry standards applying to government agencies and/or large business enterprises and a high level of understanding of best practice internal controls, risk management and corporate governance;
  • understand complex issues and the importance of transparency, accountability and probity in a public authority;
  • experience in working in a large organisation at a senior level with demonstrated strong business acumen; and
  • have strong ethical values, integrity, the ability to inquire and give direct and honest opinions to promote best practice.

7.8 Removal or Resignation of members

  1. If a Committee member’s performance is determined to be unacceptable or if their conduct (including conflicts of interest) is unacceptable by Council their appointment may be terminated by Council; and
  2. If a member should choose to resign from the Committee, they will be expected to give one (1) month notice, unless circumstances have changed in a way that makes it appropriate for the member to resign immediately.

8. Responsibilities and reporting

The Committee’s duties shall include:

  1. Internal Audit
    • Evaluate the quality and effectiveness of the Internal Audit function, particularly in respect of planning, monitoring and reporting;
    • Review Internal Audit plan; and
    • Monitor the progress and performance of Internal Audit against its annual audit plan; Monitor management’s response to internal audit findings and recommendations and the actions proposed to be taken by management
  1. External Audit
    • Review the scope of the audit activities with the external auditors and provide input and feedback on the external auditor’s proposed audit strategy and audit plan including financial statements;
    • Review of effectiveness of the annual external audit; and
    • Review the findings and recommendations of external audit, management responses to audit reports and the extent to which external audit recommendations concerning internal accounting controls and other matters are addressed.
  1. Risk Management:

Provide feedback on Councils:

    • risk management framework for identifying, escalating, monitoring and managing significant enterprise risks;
    • assess the impact of the Council’s risk management framework;
    • assess and contribute to the audit planning processes relating to the risks and threats to Council; and
    • monitor whether the risk management framework/program is receiving support from all levels of management.
  1. Financial Statements:
    • Review the appropriateness of accounting policies adopted by Council;
    • Review the appropriateness of significant assumptions and judgments made by management particularly around estimations which impact on reported amounts of assets, liabilities, income and expenses in the financial statements;
    • Review the financial statements for compliance with prescribed accounting and other requirements;
    • Review, with management and the external auditors, the results of the external audit and any significant issues identified;
    • Analyse the Council’s financial performance and financial position and seek explanation for significant trends or variations from budget or forecasts;
    • Ensure that assurance with respect to the accuracy and completeness of the financial statements is given by management;
    • Recommend approval of the Financial Statements (including sustainability ratios) to the CEO and Mayor; amd
    • Review the final draft financial statements prior to its approval by Council, taking on board any external audit comments. In particular the review should focus on but not limited to:
      1. significant changes in accounting policies and practices ;
      2. major judgmental areas;
      3. significant audit adjustments;
      4. proposed departures from accounting standards.
  1. Fraud and Corruption Control
    • Review the process of developing and implementing the Council’s fraud control arrangements; and
    • Review reports on fraud that outline any identified allegations of fraud, the status of any ongoing investigations and any changes to identified fraud risk in Council.

9. Evaluation, review and amendment

9.1 Evaluation of Committee Activities

  1. The Committee must undertake an annual self-assessment of its performance for the previous twelve months prior to the end of each calendar year; and
  2. The Committee will provide a report of the annual review outcomes to Council.

9.2 Assessment of the Internal Audit function’s Effectiveness

  1. The Committee must undertake an annual assessment to review the effectiveness of the internal audit function; and
  2. The Committee will provide a report of the annual review to the Chief Executive Officer

9.3 Review and Approval of the Charter and Induction of Members

The Charter will be reviewed at minimum once every four (4) years by the Council.

10. Conflicts of Interest

Members are required to declare any interests that could constitute a real, potential or perceived conflict of interest with respect to participation on the Committee. The declaration must be made on appointment to the Committee and in relation to specific agenda items at the outset of each Committee meeting and be updated as necessary.