Audit Committee

Terms of reference

1. Constitution

1.1. The Authority hereby resolves to establish a Committee to be known as the Audit Committee ("the Committee"). The function of the Committee is to advise and make recommendations to the Authority and its Chief Executive as Accounting Officer on all matters relating to corporate governance including internal control, risk management, internal and external audit and compliance with financial reporting requirements.

1.2. In pursuance of these functions, the Committee is authorised by the Authority to review and investigate any activities within the Human Fertilisation and Embryology Authority that fall 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.

1.3. The Committee is authorised by the Authority to obtain outside legal or other independent professional advice and to secure the attendance of outsiders with relevant experience and expertise if it considers this necessary.

2. Membership

2.1.The Committee shall be appointed by the Chair from amongst the members of the Authority (not including the Authority Chair) and suitably qualified independent persons and shall consist of no fewer than 5 members, including no more than two co-opted (non-executive) members whose appointment shall be agreed by a full Authority meeting. A quorum shall be no fewer than 2 Authority members.

2.2 The Committee shall include individuals with experience of senior level corporate governance, senior level finance and business experience, as well as representation of clinical expertise, legal and communications knowledge.

2.3 Members are appointed for a term of three years, and membership will be subject to regular review.

3. Attendance

3.1. The Chief Executive, Director of Resources, such other members of the Executive staff as the Chair may agree, a representative of the Internal Auditors and a representative of the External Auditors shall normally attend meetings unless the Committee wishes to meet in private. However, at least once a year, the Committee shall meet with the External and Internal Auditors without any members of the Executive being present.  The HFEA Chair may attend at his/her discretion and with the agreement of the Audit Committee Chair.

3.2 The Authority's Committee Administrator shall act as the Secretary to the Committee.

4. Frequency

4.1. Meetings shall be held no fewer than three times a year, but will meet virtually if required for specific advice or if there are urgent items needing consideration.  The External Auditor or Internal Auditors may request a meeting if they consider that one is necessary.

4.2 The Secretary shall ascertain at the start of each meeting the existence of conflicts of interest and minute them accordingly. Committee members should advise the Secretary of any conflicts as and when they arise, including outside of meetings.

4.3 The Secretary shall minute the proceedings and resolutions of all meetings of the Audit Committee. Minutes from meetings shall be circulated promptly following the meeting date to all members of the Committee.

4.4 Meetings are summoned by the Secretary of the Committee at the request of any member. Unless otherwise agreed, notice of venue, time and agenda should be forwarded no fewer than five days before the meeting.

5. Delegated Decision Making Powers

• To approve the internal audit programme.
• To approve the Statement on Internal Control included in the Annual Accounts.

6. Duties

6.1. The duties of the committee are:

Internal Control and Risk Management

The Committee shall review the effectiveness of the system of internal control and risk management.

In particular, the Committee will review the adequacy of:

• all risk and control related disclosure statements, together with any accompanying statement from the Internal Auditors, prior to endorsement by the Authority.
• the structures, processes and responsibilities for identifying and managing key risks facing the organisation.
• the policies for ensuring that there is compliance with relevant regulatory, legal and code of conduct requirements as set out in the Controls Assurance Standards and other relevant guidance.
• the operational effectiveness of polices and procedures as agreed by the Resources Committee.
• the policies and procedures for all work related to fraud and corruption as set out in the Secretary of State Directions and as required by Counter Fraud Services.

Internal Audit

The Committee shall make recommendations on the appointment, and if relevant the dismissal, of the internal audit service and the audit fee payable.

External Audit

The Committee shall:

• Enhance the effectiveness of the relationship with external audit (the HFEA Act 1990 appoints the Comptroller and Auditor General as external auditor).
• Discuss with the external auditor, before the audit commences, the nature and scope of the audit to ensure no unjustified restrictions or limitations are made.
• Review the work of external audit. This will include the review of all reports and annual audit letters, together with the associated management responses.
• Review any fees payable in respect of non audit services provided by the external auditor, and ensure the provision of non audit services does not impair the auditors' independence or objectivity.
• Review the performance of external audit.
• Ensure that an annual meeting takes place between the External Audit Director and the Chair of the Audit Committee.

Financial Reporting

The Committee shall review the annual financial statements before their submission to the Authority focusing particularly on changes in, and compliance with accounting policies and practices.

Whistle Blowing

The Committee shall consider the effectiveness of the Authority's whistle blowing policy and the procedures in place to manage the policy.

6.2    General Duties

• To conduct the business of the Committee in accordance with Standing Orders.
• To ensure Members of the Committee comply with the Code of Conduct in relation to declaration of interests.
• To ensure that the work of the Committee reflects and implements the objectives of the Corporate and Business Plans agreed by the Authority.
• To submit to the Authority an annual report on the work of the Committee, in time to contribute to the Authority's Annual Report and to provide regular informal reports as necessary.

7.   These Terms of Reference were agreed on 9th May 2007 and will be reviewed annually.