ICSA updates its terms of reference for audit committees

ICSA: the Governance Institute has updated its terms of reference for audit committees. These reflect the April 2016 revisions to the UK Corporate Governance Code and the FRC Guidance on Audit Committees which apply to financial years commencing on or after 17 June 2016. They also take into account the changes to the Code in 2014 which required directors to publish a viability statement. The terms of reference draw on the experience of company secretaries and are based on best practice as carried out in some of the UK’s top listed companies.

Changes from the last update in June 2013 include:

  • a new recommendation that a member of the remuneration committee and a member of the risk committee (if there is one) should sit on the audit committee, where possible;
  • a new provision that notices, agendas and supporting papers can be sent in electronic form where the recipient has agreed to this; and
  • additional duties for the audit committee, including: (i) the review of statements requiring board information which contain financial reporting; (ii) the review of the role and mandate of internal audit and the annual assessment of the effectiveness of the internal audit function; and (iii) the oversight of the selection procedure for the external auditor.

The terms of reference can be found here.