- Foreword and Introduction
- 1. Introduction
- 2. The Audit Committee’s functions and responsibilities
- 3. Membership of the Audit Committee
- 4. Relationships with key stakeholders
- 5. Conduct of the Audit Committee
- 6. Assessment of the Audit Committee’s performance
- Part 2
- Part 3
PDF of Checklists And Proforma [0.5MB]
Model Audit Committee charter—FMA entity 
Chief Executives and Audit Committees are encouraged to review their existing charters against this model taking into account each entity’s particular circumstances including the range of factors outlined in Part 3 of this Guide.
The Chief Executive has established the Audit Committee in compliance with section 46 of the Financial Management and Accountability Act 1997 (FMA Act) and Regulation 22C of the Financial Management and Accountability Regulations.
This charter sets out the committee’s objectives, authority, responsibilities, composition and tenure, reporting and administrative arrangements.
The objective of the committee is to provide independent assurance and assistance to the Chief Executive (and the Executive Board) on [the entity’s] risk, control and compliance framework, and its financial statement responsibilities.
The Chief Executive authorises the committee, within its responsibilities, to:
- obtain any information it requires from any employee or external party (subject to any legal obligation to protect information);
- discuss any matters with the external auditor, or other external parties (subject to confidentiality considerations);
- request the attendance of any employee, including the Chief Executive, at committee meetings; and
- obtain legal or other professional advice, as considered necessary to meet its responsibilities, at [the entity’s] expense to a preapproved limit of $XXX
Composition and tenure
The Audit Committee comprises [insert number or range] members, appointed by the Chief Executive. 
The Chief Executive will appoint the Chair of the committee.
The committee is authorised to appoint a Deputy Chair who will act as chair in the absence of the Chair.
The Chief Executive, Chief Financial Officer, Chief Information Officer, and Head of Internal Audit may attend meetings as observers, as determined by the Chair, but will not be members of the committee.
A representative of external audit will be invited to attend all meetings of the committee, as observer.
The members, taken collectively, will have a broad range of skills and experience relevant to the operations of [the entity]. At least one member of the committee will have accounting or related financial management experience with an understanding of accounting and auditing standards in a public sector environment.
Members will be appointed for an initial period not exceeding three years. Members may be re-appointed after a formal review of their performance, for a further period not exceeding two years, unless otherwise agreed following discussions with the Chair.
Legislative and policy compliance
Parliamentary committee reports and external reviews
Performance reporting framework
The committee may establish one or more sub-committee/s to assist the full committee in meeting its responsibilities.
The responsibilities, membership and reporting arrangements for each sub-committee shall be documented and approved by the full committee. The committee stipulates that:
- a member of the full committee is appointed as Chair of the sub–committee; the membership of sub–committees may extend beyond members of the full committee if additional expertise on particular matters is required;
- minutes of all meetings of sub-committees are to be taken, distributed promptly to all members of the full committee, and tabled for discussion at the next full committee meeting; and
- important issues that may require consideration by the full committee are brought to the attention of the Chair immediately following a sub-committee meeting so that the Chair is in a position to decide what action to take.
Audit Committee sub–committees should not assume any management functions nor should management exert inappropriate influence over the work of sub–committees.
Responsibilities of committee members
Members of the committee are expected to understand and observe the legal requirements of the FMA Act and regulations. Members are also expected to:
- act in the best interests of the entity;
- apply good analytical skills, objectivity and good judgment;
- express opinions constructively and openly, raise issues that relate to the committee’s responsibilities and pursue independent lines of enquiry; and
- contribute the time required to review the papers provided.
The committee will as often as necessary, and at least once a year, report to the Chief Executive on its operation and activities during the year. The report should include:
- a summary of the work the committee performed to discharge its responsibilities during the preceding year;
- a summary of [the entity’s] progress in addressing the findings and recommendations made in internal and external audit and parliamentary committee reports;
- an overall assessment of [the entity’s] risk, control and compliance framework, including details of any significant emerging risks or legislative changes impacting [the entity]; and
- details of meetings, including the number of meetings held during the relevant period, and the number of meetings each member attended.
The committee may, at any time, report to the Chief Executive any other matter it deems of sufficient importance to do so. In addition, at any time an individual committee member may request a meeting with the Chief Executive .
The committee will meet at least four times per year. A special meeting may be held to review [the agency’s] annual financial statements.
The Chair is required to call a meeting if asked to do so by the Chief Executive , and decide if a meeting is required if requested by another member.
The committee will develop a forward meeting schedule that includes the dates, location, and proposed agenda items for each meeting for the forthcoming year, that cover all the responsibilities outlined in this charter.
Attendance at meetings and quorums
A quorum will consist of a majority of committee members. Where there is more than one external member on the committee, a quorum will include at least one external member.
The Chief Executive, in consultation with the committee, will appoint a person to provide secretariat support to the committee. The secretariat will: ensure the agenda for each meeting is approved by the Chair; the agenda and supporting papers are circulated, at least one week before the meeting; and ensure the minutes of the meetings are prepared and maintained. Minutes must be reviewed by the Chair and circulated within two weeks of the meeting to each member and committee observers, as appropriate.
Conflicts of interest
Once each year, members of the Audit Committee will provide written declarations to the Chair for provision to the Chief Executive declaring any potential or actual conflicts of interest they may have in relation to their responsibilities. External members should consider past employment, consultancy arrangements and related party issues in making these declarations and the Chair should be satisfied that there are sufficient processes in place to manage any real or perceived conflict.
At the beginning of each Audit Committee meeting, members are required to declare any potential or actual conflicts of interest that may apply to specific matters on the meeting agenda. Where required by the Chair, the member will be excused from the meeting or from the committee’s consideration of the relevant agenda item(s). Details of potential or actual conflicts of interest declared by members and action taken will be appropriately minuted.
New members will receive relevant information and briefings on their appointment to assist them to meet their committee responsibilities.
The Chair of the Audit Committee, in consultation with the Chief Executive, will initiate a review of the performance of the committee at least once every two years. The review will be conducted on a self-assessment basis (unless otherwise determined by the Chief Executive) with appropriate input sought from the Chief Executive, committee members, senior management, the internal and external auditors, Chief Financial Officer, and any other relevant stakeholders, as determined by the Chief Executive.
The Chair will provide advice to the Chief Executive/Board on an external member’s performance where an extension of the member’s tenure is being considered.
Review of charter
At least once a year the committee will review this charter. This review will include consultation with the Chief Executive.
Any substantive changes to the charter will be recommended by the committee and formally approved by the Chief Executive.
. In entities subject to the FMA Act, responsibility and accountability for the entity generally rests with the Chief Executive. However, entities such as Prescribed Agencies under the FMA Act may have different governance structures depending on the entity’s particular enabling legislation or other instrument of appointment. These arrangements can include entities governed by a single chief executive or a chief executive together with a number of full or part-time appointees. The specific arrangements under which entities are constituted will, in turn, dictate their governance arrangements including the composition and membership of the Audit Committee
. The Audit Committee may have a temporary increase in the number of members as a result of staggering the rotation of members.
. In exercising these responsibilities in particular, it is important that the committee’s responsibilities be determined at the commencement of the program or activity, in consultation with those with line management responsibility for the program or activity.
.The FMA Act, s.44, Promoting proper use etc. of Commonwealth resources, states that: ‘A Chief Executive must manage the affairs of the Agency in a way that promotes proper use of the Commonwealth resources for which the Chief Executive is responsible’. Proper use is defined as: ‘efficient, effective, economical and ethical use that is not inconsistent with the policies of the Commonwealth’..
.The FMA Regulations require the Audit Committee to provide advice to the Chief Executive on the preparation and review of financial statements of the agency.
In line with this convention, the Australian Parliament has enacted the Criminal Code Amendment (Bribery of Foreign Public Officials) Act 1999.
. Chief Executives of FMA agencies are required to provide an annual Certificate of Compliance to their portfolio minister and copied to the Minister for Finance and Deregulation, by 15 October each year.
. FMA Regulation 22C requires the Audit Committee to advise the Chief Executive about the internal audit plans of the Agency.
. FMA Regulation 22C requires the Audit Committee to coordinate, as far as practicable, the work programs relating to internal and external audit.
. The FMA Regulations require the Audit Committee to review all audit reports involving matters of concern to senior management of the agency, including the identification and dissemination of good practices; and provide advice to the Chief Executive on action to be taken on matters of concern raised in a report of the internal auditors or in a report of the Auditor-General concerning the agency.
. See s46(1)(b) of the FMA Act.
. This should include being advised of the implications for the entity of audit recommendations and guidance arising from such things as cross-agency audits and better practice guides.
. FMA Regulation 22C requires the Audit Committee to review all audit reports involving matters of concern to senior management of the agency, including the identification and dissemination of good practices.
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