1. OVERVIEW
1.1 Contrary In accordance withto the Australian
Stock Exchange Corporate Governance Council's recommendation 4.2,
which states "The Board should establish an audit
committee", the Board of Medusa Mining Limited (the
"Company" or "Medusa") believes the Company is
not of a size, nor are its financial affairs of such complexity to
justify the establishment of an Audit Committee. formalised an
Audit Committee on 17 November 2009.
1.2 At this stage of Medusa's development, the
Board has resolved:
(a) not to establish an Audit Committee
("Committee");
(b) that the issue whether a Committee be
established, be reviewed annually;
(c) that a formal Charter setting out the
Committee's role and responsibilities, composition, structure
and membership requirements be implemented; and
(d) that the responsibility for all issues and
matters normally dealt with by the Committee be assigned to the
Company Secretary, reporting directly to the Board (with respect
to the auditor's management letter and any other matter it deems
appropriate).
2. OBJECTIVES
2.1 The function of the Committee is to assist the
Board in fulfilling its corporate governance responsibilities in
respect to:
(a) compliance with legal and regulatory
obligations;
(b) the establishment and maintenance of the
internal control framework;
(c) the reliability and integrity of financial
information; and
(d) audit, accounting and financial reporting
obligations.
2.2 It is the responsibility of the Committee to
maintain free and open communication between the Committee,
external auditors and management of the Company.
2.3 In discharging its role, the Committee is
empowered to investigate any matter brought to its attention with
full access to all books, records, facilities and personnel of the
Company and the authority to engage independent counsel and other
advisers as it determines necessary to carry out its duties.
2.4 Until such time as the Committee is formally
established, the functions of the Committee will be assumed by the
Company Secretary, reporting directly to the Board.
3. MEMBERSHIP
4. MEETINGS
4.1 The Committee shall meet at least twice a
year, in March and September of each year (before the completion
of the half-yearly and annual accounts)
4.2 Attendees at Committee meetings in addition to
members, will comprise the auditors and appropriate members of
management.
4.3 Additional meetings may be convened if
requested by any member of the Committee or relevant partner of
the auditors.
4.4 The quorum for a meeting is two members.
4.5 At each meeting, the Committee will meet
privately with:
(a) management to ensure that there are no
issues relating to the external audit; and
(b) the auditors to allow any sensitive issues
be discussed and to seek assurances that no management
restrictions are being placed upon them.
4.6 With the exception of the annual audit plan,
all recommendations are referred to the Board for approval.
4.7 The Secretary, in conjunction with the
Chairperson of the Committee is responsible for preparation of the
agenda for each meeting and must circulate the agenda and
Committee papers to each member of the Committee at least 2
business days before each meeting.
4.8 The minutes of each meeting are recorded and
included in the papers for the next full Board meeting after each
Committee meeting.
5. ROLE AND RESPONSIBILITIES
Understanding the Business
5.1 The Committee shall ensure that it understands
the Company's structure, controls and types of transactions in
order to adequately assess any significant risks faced by the
Company.
Legal and Regulatory Compliance
5.2 Without limiting its scope, the Committee
will, in conjunction with the Board, monitor the procedures to
ensure compliance with:
(a) the Corporations Act 2001, ASX Listing Rules
and other regulatory requirements; and
(b) all internal policies and procedures.
Internal Control
5.3 Evaluate whether management is setting the
appropriate "control culture" by communicating the
importance of internal financial controls and the management of
financial risks and ensuring that all employees have an
understanding of their roles and responsibilities.
5.4 Evaluate the adequacy, security and
effectiveness of the Company's computer systems and applications
and the contingency plans for processing financial information in
the event of systems breakdown.
5.5 Gain an understanding of whether internal
control recommendations made by the auditors have been implemented
by management and if not why not.
Financial Reporting
5.6 Gain an understanding of the current areas of
greatest financial risk and what steps have been taken by
management to manage them effectively.
5.7 Consider with the auditors issues of fraud,
illegal acts and deficiencies in internal control that is likely
to prevail in the Company.
5.8 Review any legal issues which could impact
significantly on the financial statements.
5.9 Review significant accounting and reporting
issues and their impact and effect on the Company's financial
statements.
5.10 Review the half-yearly and annual financial
statements prior to consideration by the Board, to ensure they
represent a true and fair view of the Company's financial position
and performance by focusing on the following areas:
(a) compliance with accounting standards
(including an assessment of management's selection of accounting
policies and disclosures);
(b) significant changes in accounting policies
and practices;
(c) major judgmental areas (eg application of
depreciation and amortization rates, valuation of assets and
liabilities, contingencies , provisions); and
(d) significant audit adjustments.
5.11 Review all representation letters signed by
management to ensure that the information provided is complete and
appropriate.
5.12 Review other sections of the financial
statements and consider whether the information is understandable
and consistent with the members' knowledge of the Company and its
operations.
Auditors
5.13 Recommend to the Board, the appointment,
re-appointment or replacement (subject, if applicable to
shareholder ratification) and remuneration of the auditors.
5.14 In assessing which audit firm should be
engaged, factors such as reputation, knowledge of industry,
resources, commitment and value added benefits to the Company
should be considered.
5.15 Review and approve the audit plans of the
auditors (it is not the duty of the Committee to itself plan or
conduct audits).
5.16 Review the overall scope of the audit,
including identified risk areas and any additional agreed upon
procedures.
5.17 Evaluate the overall effectiveness and
independence of the auditors.
5.18 Resolve any disagreements between management
and the auditors with respect to financial reporting.
5.19 Implement a process for the pre-approval of
all audit and non-audit/assurance services provided by the
auditors (who are not to be appointed to take any
non-audit/assurance services that may impair the auditors'
judgment or independence in respect of the Company).
5.20 At least on an annual basis, obtain and
review a report from the auditors outlining:
(a) the auditor's internal quality control and
conflict procedures;
(b) any material issues arising out of the most
recent quality control and steps taken to deal with such issues;
and
(c) all relationships between the auditors and
Medusa's management in order to assess the auditor's
independence.
5.21 Meet separately with the auditors to discuss
any matters that the Committee or auditors believe should be
discussed privately.
5.22 Ensure that significant findings and
recommendations made by the auditors are received and discussed
and that management responds to the recommendations.
6. REPORTING RESPONSIBILITIES
7. OTHER RESPONSIBILITIES
7.1 Establish procedures for the receipt,
retention and treatment of complaints received by the Company
regarding accounting, internal accounting controls or auditing
matters and the confidential, anonymous submission by employees of
the Company of concerns regarding questionable accounting or
auditing matters.
7.2 Review policies and work practices on
sensitive areas referred by the Board.
7.3 If necessary, institute special investigations
and if necessary, hire experts to assist.
7.4 Review and update the charter.
7.5 Evaluate the Committee's own performance on a
regular basis.
