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Ultra Electronics Holdings PLC
Terms of Reference of the Audit Committee
1. CONSTITUTION
The Board has resolved to establish a Committee of the Board to be known as the Audit Committee.
2. PURPOSE OF COMMITTEE
To oversee the Company's internal financial controls and to monitor the integrity of all formal reports and announcements relating to the Company's financial performance.
3. MEMBERSHIP
The Committee is appointed by the Board and comprises the non-executive directors of the Company. The Finance Director/Company Secretary is the Secretary of the Committee.
The Chairman of the Committee is appointed by the Board.
4. ATTENDANCE AT MEETINGS
A quorum is two members. No meeting may be held validly unless all members of the Committee have received notice thereof. Whenever it is practicable meetings should be arranged so that all Committee members and the Committee Secretary can be present.
A representative of the external auditors normally attends meetings at which the statutory financial results of the Company are discussed. The Committee meets with the external auditors at least once a year without executive Board members present.
A representative of the Internal Audit service provider attends meetings at which the effectiveness of the Company's internal financial controls are discussed.
5. FREQUENCY
Meetings are held not less than three times a year. The external auditors may request a meeting if they consider that one is necessary.
6. AUTHORITY
The Committee is authorised by the Board to investigate any activity within its terms of reference. It is authorised to seek any information it requires from any employee and all employees are directed to co-operate with any request made by the Committee.
The Committee is authorised by the Board to obtain outside legal or professional advice and to secure the attendance of outsiders with relevant experience and expertise if it considers this necessary.
7. ROLE AND RESPONSIBILITIES
The responsibilities of the Committee are:
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(a)
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to monitor the integrity of the half-year and annual financial statements before submission to the Board, focussing particularly on:
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(i)
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any changes in accounting policies and practices
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(ii)
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major judgmental areas
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(iii)
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significant adjustments resulting from the audit
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(iv)
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the going concern assumption
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(v)
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compliance with accounting standards
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(vi)
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compliance with stock exchange and legal requirements;
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(b)
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to monitor the integrity of any other formal announcements relating to the Company's financial performance;
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(c)
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to review and monitor the external auditors‚ independence and objectivity, and the effectiveness of the external audit process, taking into account relevant UK professional and regulatory requirements;
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(d)
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to make recommendations to the Board in relation to the appointment of the external auditors, the audit fee and any questions of resignation or dismissal;
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(e)
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to develop and implement a policy on the engagement of the external auditors to supply non-audit services, taking into account all relevant ethical guidance;
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(f)
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to discuss with the external auditors before the audit commences the nature and scope of the audit, and ensure co-ordination where more than one audit firm is involved;
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(g)
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to review the external auditors‚ management letter and managements response;
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(h)
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to review the Company's annual statement on corporate governance prior to endorsement by the Board;
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(i)
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to review the Company's internal financial controls and the internal control and risk management systems;
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(j)
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to monitor and review the effectiveness of the Company's internal audit function;
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(k)
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to make recommendations to the Board in relation to the appointment of the internal auditors, the audit fee and any questions of resignation or dismissal;
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(l)
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to discuss with the internal auditors before the audit commences the nature and scope of the audit, and to ensure co-ordination between the internal and external audits;
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(m)
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to ensure that the internal audit function is adequately resourced and has appropriate standing within the Company;
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(n)
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to discuss problems and reservations arising from the external and internal audits, and any other matters the auditors may wish to discuss (in the absence of management where necessary);
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(o)
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to consider the major findings of internal investigations and managements response;
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(p)
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to review the arrangements by which staff of the Company may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters;
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(q)
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to consider other topics, as defined by the Board; and
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(r)
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to report to the Board in respect of the above responsibilities, identifying any matters in respect of which it considers that action or improvement is needed, and making recommendations as to the steps to be taken.
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8. REPORTING PROCEDURES
The Secretary circulates the minutes of the Committee meetings to all members of the Board.
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