China Railway Construction Corp Limited : Terms of Reference of the Audit and Risk Management Committee
03/30/2012| 03:26am US/Eastern
Recommend:
The Committee is established by the Board and shall report to
the Board.
The Committee is mainly responsible for proposition of the
engagement and replacement of the Company's external audit
firm; supervision of the Company's internal audit system;
liaison, supervision and inspection of the Company's internal
and external audit; review of financial information and the
disclosure thereof; review of the internal control system;
formulation of the Company's risk management strategies and
solutions; risk control, management, supervision and
assessment of major decision-makings, important events, and
key business procedures, and etc..
2. Membership
2.1 The Committee shall be composed of three to five
non-executive Directors, the majority of whom shall be
independent non-executive Directors. And at least one of the
independent non-executive Directors shall possess appropriate
professional qualifications or have appropriate accounting or
financial management expertise.
2.2 The Committee shall have one chairman, who shall be an
independent non-executive Director. The candidates for the
members, as well as for the chairman of the Committee, shall
be proposed by the Chairman of the Board, after discussion
with relevant Directors, to the Board for consideration and
approval.
2.3 A former partner of the accounting firm which is now
responsible for auditing the Company's accounts shall be
prohibited from acting as a member of the Committee for a
period of one year commencing from the date his ceasing:
(1) to be a partner of the firm;
(2) to have any financial interest in the firm. whichever is
the later.
3. Powers and Duties
3.1 The Committee shall, on behalf of the Board,
independently assess and supervise the compliance, legality,
and effectiveness of the Company's economic activities. It
shall mainly exercise and perform the following powers and
duties, and shall report to the Board the following
matters:
(1) to provide recommendations to the Board on the
engagement, renewal of the engagement or dismissal of an
external audit firm, to approve the remuneration and
engagement terms of the external audit firm, and to deal with
any issues relating to the resignation or the dismissal of
the external audit firm.
(2) to review and monitor whether the external audit firm is
independent and objective and whether the audit procedure is
effective, and, before the commencement of the audit work, to
discuss with the audit firm in advance such relevant issues
as the nature and scope of the audit, and relevant reporting
responsibilities.
(3) to formulate and implement policies on the non-audit
services provided by the external audit firm, and to report
and make recommendations to the Board on any matters where
action or improvement is needed.
(4) to serve as the key representative body for overseeing
the Company's relations with the external audit firm.
(5) to examine and monitor the completeness of the Company's
financial statements, annual reports, interim reports and
quarterly reports, and to review the major opinions on
financial reporting contained in the statements and reports;
when the Committee submits its review reports to with respect
to these statements and reports to the Board, it shall focus
special attention on the following matters:
(i) any changes in accounting policies and practices; (ii)
areas that involve material judgments;
(iii) material adjustments made as the result of an
audit;
(iv) assumptions on the enterprise as a going concern and any
qualified opinions;
(v) whether the accounting standards have been complied with;
and
(vi) whether the Rules Governing the Listing of Securities on
the Stock Exchange of Hong Kong Limited and laws on financial
reporting have been complied with.
(6) with respect to Item (5) above:
(i) members of the Committee shall liaise with the Board and
senior
management of the Company and the audit firm engaged by the
Company and the Committee shall meet with the Company's
independent external audit firm at least twice a year;
(ii) the Committee shall consider any significant or unusual
items that are, or may need to be, reflected in such reports
and accounts, and shall give due consideration to any matters
that have been raised by the Company's accountant, financial
personnel, internal auditor, or the supervision personnel, or
the audit firm engaged.
(7) to examine the Company's financial monitoring, internal
monitoring and risk management systems;
(8) to discuss the internal control system with management in
order to ensure that management has performed its duty of
establishing an effective internal monitoring system; This
discussion shall include the adequacy of the resources, staff
qualifications and experience, and whether the training
programmes budget of the Company's accounting and financial
reporting function; to oversee the effective implementation
and self-evaluation of internal control and coordinate with
the internal control audit as well as other related
matters.
(9) on its own initiative or as assigned by the Board, to
consider material results of investigations of internal
control matters and the feedback thereon by management to
such results.
(10) to be responsible for liaison between the internal audit
department and the external audit firm, so as to ensure
coordination of their work; to ensure that the internal audit
department has sufficient resources for its operations and
ensure that the internal audit department has the appropriate
status in the Company; and to examine and monitor whether the
internal audit are effective.
(11) to examine the Company's financial and accounting
policies and practice. (12) to examine the Letters of
Explanation of Review Matters submitted to
management by the external audit firm, any major doubts with
respect to the accounting records, financial accounts or
monitoring system raised with management by the external
audit firm and the responses given thereto by management.
(13) to ensure that the Board timely gives feedback on the
matters raised by the external audit firm in its audit
reports.
(14) to review arrangements staff of the Company can use, in
confidence, to raise concerns about possible improprieties in
financial reporting, internal control or other matters. The
Committee should ensure that proper arrangements are in place
for fair and independent investigation of these matters and
for appropriate follow-up actions.
(15) to submit the annual report on overall risk management
to the Board.
(16) to consider the Company's risk management strategies and
the solutions for major risk management.
(17) to consider the judgment criteria or the judgment
mechanism related to major decision-makings, major risks,
major events and important business procedures, as well as
the risk assessment report of major decisions.
(18) to consider the comprehensive report on the supervision,
assessment and audit of risk management submitted by the
internal audit department.
(19) to consider the establishment of the risk management
organizations, and proposals of their responsibilities .
(20) to work out the list of the Company's connected persons
and report to the Board and the Supervisory Committee; and to
conduct a preliminary review of the connected transactions to
be submitted to the Board for consideration.
(21) to report to the Board its decisions or recommendations,
except those which cannot be reported according to the laws
or regulatory restrictions.
(22) other matters requested by the Board.
(23) other relevant requirements for the powers and duties of
the Committee according to the listing rules of the place
where the shares of the Company are listed as amended from
time to time.
3.2 The Committee shall examine and supervise the
independence of the external audit firm in accordance with
the procedure below:
(1) study all relations between the Company and the audit
firm (including non-audit services);
(2) ask for information from the audit firm every year, and
get to know the policies and procedures adopted by the audit
firm for keeping its independence and with respect to the
implementation of relevant supervision rules, including the
rules on replacement of the partner and staff of the audit
firm;
(3) meet the external audit firm without the presence of the
management at least once a year to discuss the matters
related to audit expenses, any matters incurred due to the
audit work and other matters proposed by the audit firm.
4. Meetings
4.1 The Committee's meetings are in the form of regular
meetings and interim meetings. At least one regular meeting
of the Committee shall be held in the
first half of a year and in the second half of a year each.
Meetings shall be presided over by the chairman of the
Committee. Where the chairman is unable to be present, he or
she may authorize a member of the Committee (independent
non-executive director) to preside over.
4.2 The Committee's meetings shall be convened with the
attendance of two-thirds or more of the members.
4.3 The Committee may invite the Company's other Directors,
supervisors, the President, and other senior management
members to attend the meeting as appropriate . If necessary,
the Committee may also invite the intermediaries to attend
the meeting and provide professional opinions on its
decision-makings, and shall sign a confidentiality agreement
with them. All the expenses caused thereby shall be borne by
the Company.
4.4 Voting at the Committee's meetings shall be by
ballot or by a show of hands and each member shall have one
vote. The resolutions adopted at the meetings shall be
effective only when being approved by more than half of all
members.
4.5 The resolutions passed at the Committee's meetings and
the voting results shall be reported to the Board of the
Company in writing.
4.6 There shall be complete minutes of the Committee's
meetings. Members attending the meetings shall sign the
minutes. The meeting minutes shall be kept by the Secretariat
of the Board and made available for inspection by directors
at any time.
The first draft of the meeting minutes shall be submitted to
all members for review as soon as possible and members shall
provide written amendment suggestions. The final draft of the
meeting minutes shall be finished within a reasonable time
after the meetings and shall be sent to all the members for
record.
5. Other Provisions
5.1 The Company shall provide necessary funds and other
resources to the Committee for performing its duties. These
funds and other resources shall be used for:
(i) the remuneration of the external firm for provision of
such services as financial audit, examination or
verification;
(ii) all expenses necessary for the Committee to engage
external professional consultant;
(iii) necessary or proper administrative expenses for the
Committee to perform its duties.
5.2 The Committee shall respond to the invitation by the
Chairman of the Board and have the chairman of the Committee
(or, where the chairman is unable to be present, another
member or his or her authorized representative) attend each
annual general meeting and answer questions raised
thereon.
5.3 Where the Company does not accept the opinions of the
Committee on the engagement, renewal of the engagement or
dismissal of the external audit firm, the Company shall
present in the Corporate Governance Report the Committee's
statement on its recommendations, as well as the reasons why
the Board disagrees.
Note: The senior management refers to the President, Vice
President(s), the Chief Accountant, the Chief Engineer, the
Chief Economist, and the Secretary to the Board, all of whom
are engaged by the Board.
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This press release was issued by CRCC - China Railway Construction Corporation Limited and was initially posted at http://english.crcc.cn/Portals/4/3.30Terms%20of%20Reference%20of%20the%20Audit%20and%20Risk%20Manage ment%20Committee.pdf . It was distributed, unedited and unaltered, by noodls on 2012-03-30 09:23:37 AM. The issuer is solely responsible for the accuracy of the information contained therein.
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