Corporate report

DfT Group Audit and Risk Assurance Committee: terms of reference

Published 20 July 2017

Executive summary

The Group Audit and Risk Assurance Committee (GARAC) has been established as a sub-committee of the DfT Board to support and advise the DfT Principal Accounting Officer in discharging their responsibilities for risk, control and governance and the associated audit and assurance procedures.

This document sets out the GARAC terms of reference.

Authority

The GARAC is authorised by the DfT Board to:

• investigate any activity within its terms of reference
• seek any information that it requires from any employee of the DfT Group
• seek information from or request meetings with appropriate external stakeholders; and
• obtain, at the department’s expense, appropriate external professional advice and, if necessary, invite external advisers to attend meetings of the committee to provide specialist skills, knowledge and experience — the chair should approve any request for external professional advice, after discussion with the Principal Accounting Officer

All employees are directed to cooperate with any request from the committee.

GARAC responsibilities

The GARAC will advise the DfT Board and Accounting Officer in the following areas.

External audit

GARAC will:

• review the auditor’s strategic plans and steps taken by the auditors to respond to changes in regulatory and other requirements
• review the annual audit approach and associated audit fee
• review the external auditor’s pre-certification report and the adequacy of management’s response
• review other reports of interest from the external auditor, including value for money reports and management’s response
• make enquiries about the effectiveness of liaison between external and internal audit
• review the performance of external audit

Internal audit

GARAC will:

• review and agree the internal audit strategy and programme and, where appropriate, request that internal audit undertakes specific work
• satisfy itself that the internal audit function is adequately resourced and has appropriate standing within the department
• review Group Audit progress reports on the effectiveness of systems for internal control, financial reporting, governance and risk management
• review the annual Group Audit opinion and report
• consider management’s response to any significant internal audit recommendations
• review the appointment or dismissal of the DfT Group Chief of Internal Audit
• review the performance of internal audit

Management

GARAC will:

• review the management assurance process and results of the assessments of management action plans;
• review the counter-fraud and bribery policies and procedures, review procedures operated by the department for handling allegations from whistleblowers, arrangements for special investigations and, upon request, a log of all complaints
• review management’s reports on the effectiveness of systems for internal control, financial reporting, governance and risk management

Annual accounts and financial reporting

GARAC will:

• review, and challenge where necessary, the actions and judgements of management, in relation to the annual accounts and the annual report of the department before submission to the Principal Accounting Officer, paying particular attention to:
  • the process for review of the accounts prior to submission for audit
  • levels of error identified
  • management’s letter of representation to the external auditors
  • critical accounting policies and practices, and any changes in them
  • decisions requiring a major element of judgement, including
  • the extent to which the resource accounts are affected by any unusual transactions in the year and how they are disclosed
  • the clarity of disclosures
  • significant adjustments resulting from the audit
  • compliance with accounting standards
  • compliance with obligations under HM Treasury guidelines and obligations under other applicable laws and regulations
• review the group’s governance statement prior to endorsement by the Principal Accounting Officer (the Principal Accounting Officer remains responsible for forming his or her evidence-based view on the effectiveness of internal controls).

Risk management

GARAC will:

• consider the adequacy of assurances relating to the management of risk and corporate governance requirements for the organisation
• review the policies and process for identifying and assessing business risks and the management of those risks by the department and the group
• consider the effectiveness of the policies and processes for risk, control and governance

Committee effectiveness

GARAC will:

• monitor the performance of GARAC and periodically review its own effectiveness, including a review of the committee terms of reference, and report the results of that review to the DfT Board