Guidance

Audit and Risk Assurance Committee: terms of reference

Updated 8 June 2022

The Departmental Board (‘the Board’) establishes the Department for International Trade (DIT) Audit and Risk Assurance Committee (‘the Committee’) to support the Board and Accounting Officer in their responsibilities for issues of risk, control and governance.

The Committee reviews the comprehensiveness of assurances in meeting the Board and Accounting Officer’s assurance needs. The Committee reviews the reliability and integrity of these assurances.

UK Export Finance (UKEF) retains a separate governance structure - including Board, Audit Committee, Risk Committee and supporting infrastructure. The DIT ARAC has no governance or oversight role for UKEF.

Membership

The members of the Audit and Risk Assurance Committee are:

• Dominic Johnson, the Chair of ARAC and independent ARAC Member (who is a non-executive board member with responsibility for the Union)
• Hanif Barma, Robert Milburn and Jim Watson, independent ARAC members
• Sir Stephen O’Brien, non-executive board member and ARAC independent member

The ARAC’s secretary is Luke Taylor.

Appointments

Members will be appointed for periods of up to 3 years. This is extendable by no more than one additional 3-year period, subject to approval by the DIT Accounting Officer in conjunction with the Chair.

Reporting

The Committee will formally report to the Board and accounting officer after each meeting via circulation of the minute and a cover note.

The Chair will raise any issues at the meeting orally, if required.

The Committee will provide the Board and Accounting Officer with an annual report:

• timed to support finalisation of the accounts and the governance statement
• summarising its conclusions from the work it has done during the year

Responsibilities

The Committee operates in an independent advisory capacity, providing advice to the Board and Accounting Officer on:

• the strategic processes for risk, control and governance and the governance statement
• the accounting policies, the accounts, and the annual report of the organisation, including:
  • the process for review of the accounts prior to submission for audit and levels of error identified
  • management’s letter of representation to the external auditors
• the planned activity and results of both internal and external audit
• adequacy of management response to issues identified by audit activity, including external audit’s management letter
• assurances relating to the management of risk and corporate governance requirements for the organisation
• anti-fraud policies, whistle-blowing processes, and arrangements for special investigations
• its own effectiveness, which the Committee will review periodically and report the results of that review to the Board

Rights

The Committee may:

• co-opt additional members for a period not exceeding a year to provide specialist skills, knowledge and experience
• procure specialist ad-hoc advice at the expense of the organisation, subject to budgets agreed by the Board

Access

The Head of Internal Audit and the representative of External Audit will have free and confidential access to the Chair of the ARAC.

Conflicts of interest

A Committee member or attendee, who becomes aware of a potential conflict of interest relating to matters being discussed by the Committee, should give prior notification to the Chair.

If this is not possible, declare this at the meeting and, where necessary, withdraw during discussion of the relevant agenda item.

Frequency and procedures of meetings

The ARAC will meet at least 4 times a year. The Chair of the Committee may convene additional meetings, as they deem necessary.

The procedures of ARAC’s meeting are:

• a minimum number of 3 members of the Committee will be present for the meeting to be deemed quorate
• Committee meetings will normally be attended by the Accounting Officer, the Chief Operating Officer, Head of Internal Audit, and a representative of External Audit
• the Committee may ask any other officials of the organisation to attend to assist it with its discussions on any particular matter
• the Committee may ask any or all of those who normally attend but who are not members to withdraw to facilitate open and frank discussion of particular matters
• the Board or the Accounting Officer may ask the Committee to convene further meetings to discuss particular issues on which they want the Committee’s advice
• the Committee will hold annual closed meetings with Internal Audit and the National Audit Office

Information requirements

For each meeting the Committee will be provided with:

• a report summarising any significant changes to the organisation’s strategic risks and a copy of the strategic / corporate risk register
• progress report from the Head of Internal Audit summarising:
  • work performed (and a comparison with work planned)
  • key issues emerging from the work of internal audit
  • management response to audit recommendations
  • changes to the agreed internal audit plan
  • any resourcing issues affecting the delivery of the objectives of internal audit
• a progress report (written / verbal) from the External Audit representative summarising work done and emerging findings
• management assurance reports
• reports on the management of major incidents, ‘near misses’ and lessons learned

As and when appropriate the Committee will also be provided with:

• proposals for the terms of reference of internal audit/the internal audit charter
• the internal audit strategy
• the Head of Internal Audit’s annual opinion and report
• quality assurance reports on the internal audit function
• the draft accounts of the organisation
• the draft governance statement
• a report on any changes to accounting policies
• External Audit’s management letter
• a report on any proposals to tender for audit functions
• a report on co-operation between internal and external audit
• the organisation’s risk management strategy