Audit Committee

The Audit Committee is composed of Mr David Demarco (chairman), Mrs Muriel Rutland and Dr Alicia Agius Gatt. The Committee is responsible for reviewing the financial reporting process and policies, the system of internal control and management of financial risk, the audit process, any transactions with related parties and the Company’s process for monitoring compliance with laws and regulations. When the Audit Committee’s monitoring and review activities reveal cause for concern or scope for improvement, it shall make recommendations to the Board on the action needed to address the issue or make improvements.

The Audit Committee has the task to ensure that any potential conflicts of interest are resolved in the best interests of the Group. Its primary objective is to assist the Board in dealing with issues of risk, control and governance and in reviewing the Issuer’s reporting processes, financial policies and internal control structure. The Audit Committee also oversees the conduct of the external audit and facilities communication between the Issuer’s Board, management and external auditors.

The Board has set formal terms of reference of the Audit Committee that establish its composition, role and function. The Audit Committee is a committee appointed by the Board and is directly responsible and accountable to the Board. The Board reserves the right to change these terms of reference from time to time.

The main role and responsibilities of the Audit Committee are:

  1. to review procedures and assess the effectiveness of the internal control systems, including financial reporting;
  2. to assist the Board in monitoring the integrity of the financial statements, the internal control structures, the financial reporting processes and financial policies of the Company;
  3. to make recommendations to the Board in relation to the appointment of the external auditor and to approve the remuneration and terms of engagement of the external auditor following appointment by the shareholders in general meeting;
  4. to monitor and review the external audit functions, including the external auditor`s independence, objectivity and effectiveness;
  5. to establish internal procedures and to monitor these on a regular basis;
  6. to establish and maintain access between the internal and external auditors of the Company and to ensure that this is open and constructive;
  7. to review and challenge where necessary, the actions and judgements of management, in relation to the interim (if applicable) and annual financial statements before submission to the Board, focusing particularly on:
    • (i) critical accounting policies and practices and any changes in them;
    • (ii) decisions requiring a major element of judgement;
    • (iii) the extent to which the financial statements are affected by any unusual transactions in the year and how they are disclosed;
    • (iv) the clarity of disclosures and compliance with International Financial Reporting Standards;
    • (v) significant adjustments resulting from the audit;
    • (vi) compliance with stock exchange (if applicable) and other legal requirements; and
    • (vii) reviewing the Company’s statement on Corporate Governance prior to endorsement by the Board;
  8. to gain an understanding of whether significant internal control recommendations made by internal and external auditors have been implemented by management;
  9. to review the internal audit function of the Company (if any), including its plans, activities, staffing and organisational structure;
  10. to monitor the statutory audit of the annual financial statements;
  11. to discuss Company policies with respect to risk assessment and risk management, review contingent liabilities and risks that may be material to the Company; and
  12. to consider other matters that are within the general scope of the Committee that are referred to it by the Board of Directors.
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