globe telecom, inc. · 2.1.3 protect the accuracy and reliability of globe’s financial and...
Post on 30-May-2020
25 Views
Preview:
TRANSCRIPT
2
Contents Page
Introduction
3
Purpose/Mission 4
Authority 5
Audit and RPT Committee Membership 6
Roles and Responsibilities 7
Meetings 17
Audit and RPT Committee Report to the Board of Directors 19
Performance Evaluation and Continuous Improvement 20
Functional and Secretariat Support 21
3
Introduction: The Audit and Related Party Transactions (RPT) Committee Charter (the Charter) defines clearly the purpose/mission, authority, composition, oversight function and responsibility of the Audit and RPT Committee of the Board of Directors (the Board) of Globe Telecom, Inc. (Globe) in upholding strong corporate governance that supports Globe’s long term success aligned with the corporate objectives set by the Board and the best interest of its stockholders and stakeholders. The members of the Audit and RPT Committee shall review the Charter, at least annually, focusing on the relevance and appropriateness of all its provisions, with reference to Globe’s Manual of Corporate Governance and in compliance with legal and regulatory requirements for publicly-listed companies. Any revisions made in the Charter are approved by all members of the Audit and RPT Committee and are subject to final approval of the Board. A soft file copy of the Charter is available in the corporate governance section of Globe’s official website
www.globe.com.ph , accessible to the public.
4
Purpose/Mission: To support the Board in the discharge of its functions, primarily on internal controls, material related party transactions (RPTs) and other key corporate governance matters, it is the policy of Globe to constitute and maintain a competent and working Audit and Related Party Transactions (RPT) Committee with fiduciary roles, responsibilities and accountabilities. These will be defined in an Audit and RPT Committee Charter (the Charter) approved by the Board and made known to all shareholders and stakeholders of Globe. The Audit and RPT Committee shall provide assistance to the Board in fulfilling its purpose to maximize
Globe’s long-term success and create sustainable value for its shareholders and stakeholders by carrying
out the Committee’s oversight responsibility relating to Globe’s:
● Financial statements and disclosures, financial reporting principles, process, policies and systems;
● Internal Controls;
● External/independent auditors;
● Internal Audit function; and
● Compliance with relevant legal, regulatory and corporate governance requirements
To demonstrate full commitment in fulfilling its roles and responsibilities, all members of the Audit and
RPT Committee of the Board shall:
● Exemplify high ethical standards and exercise objective and independent judgment in the discharge
of its function, always with due consideration to the interests and rights of Globe’s shareholders and
stakeholders as established by laws and contractual relations and obligations.
● Devote the time and attention required to perform its duties and responsibilities, including sufficient
time to be knowledgeable of Globe’s business.
● Maintain free and open communication with Globe’s Management, external/independent auditors, internal auditors, Board, and other Board committees.
The Audit and RPT Committee charter is also aligned with Globe's Manual of Corporate Governance (MCG) and compliant with SEC Memo Circular No 19 Series of 2016: Code of Corporate Governance for Publicly Listed Companies.
Globe’s Management is responsible for the day-to-day operations of the organization. This includes,
among others:
1. Ensuring the integrity of Globe’s financial statements, reporting and disclosures; and
2. Establishing and maintaining a strong and effective system of internal controls to ensure the
integrity, transparency and proper governance in the conduct of business.0
0Based on SEC CG Code for PLCs, Principle 12 .
5
The external/independent auditors are directly responsible to the Audit and RPT Committee in helping ensure the integrity of Globe’s financial statements.
The internal auditors help the Audit and RPT Committee oversee that an appropriate internal control
system is in place, identify the operational controls and financial reporting issues through the
continuous review of the adequacy and effectiveness of Globe’s internal controls and corporate
governance processes.
Authority: The Audit and RPT Committee has the authority to:
1. Request reports or information from Management relevant to the agenda set in every Audit and RPT Committee meeting, in accordance with the Charter.
2. Challenge, inquire and/or probe on reports submitted and representations made by Management,
external/independent auditors, the Chief Audit Executive, and external consultants. 3. Have full discretion to invite any director or executive officer to attend its meetings.
4. Appoint, compensate and oversee the work of the public accounting firm contracted by Globe as
external/independent auditor to conduct the audit/review of Globe’s annual financial statements in
connection with the statutory and regulatory requirements. This firm will report directly to the
Audit and RPT Committee.
5. Facilitate discussions and resolve any disagreements between Management and the
external/independent auditor regarding financial reporting and disclosures.
6. Direct the Internal Audit function.
7. Retain independent consultants, subject matter experts or other professionals to advise the Audit
and RPT Committee or assist in the conduct of an investigation, when necessary, without the
permission of Management. The Audit and RPT Committee shall be provided with the needed
resources to support its work.
8. Seek any information it requires from employees (all of whom are directed to cooperate with the
Audit and RPT Committee’s requests) and/or external parties relevant to the discharge of its
function.
9. Meet with Globe’s Chief Audit Executive, Management, external/independent auditors, or external
consultants, as often as necessary, to discuss any issue arising from the audit process.
6
Audit and RPT Committee Membership: In accordance with Globe’s Manual of Corporate Governance (MCG):
1. The Audit and RPT Committee shall be appointed by the Board of Directors from among their
members, as supported by an approved Board Resolution.
2. The Audit and RPT Committee shall be composed of such number of members as the Board may
designate, but in no case less than three (3) members, majority of whom shall be Independent
Directors including its Chairman; a director who has no executive responsibility and does not
perform any work related to the operations of Globe, including its subsidiaries, affiliates and special
purpose entities.1
Majority of the members of the Audit and RPT Committee should be independent of Management and the controlling shareholders, free from any business or other relationship, with no direct or indirect control over Globe, its directors, Management, shareholders and related interests, including such other person(s) or juridical entity that may pose a potential conflict of interest(s), of Globe, its subsidiaries, affiliates and special purpose entities, which, in the opinion of the Board of Directors, would interfere significantly with the exercise of objective and independent judgment in carrying out the functions of the Audit and RPT Committee.1
3. Members of the Audit and RPT Committee shall elect a Chairman of the Committee who should be
both a non-executive director and an independent director. The Chairman of the Audit and RPT
Committee cannot be the Chairman of the Board or of any other committees of the Board.2
4. The Chairman of the Audit and RPT Committee shall be responsible for ensuring the effective
interaction among the Audit and RPT Committee members and with Management and the internal
and external/independent auditors.
5. Each member of the Audit and RPT Committee shall have an adequate working knowledge,
experience and/or expertise that is relevant to Globe’s operations and financial management
systems and controls; and in particular, an understanding of accounting and auditing principles, and
Globe’s regulatory environment, to enable, individually and collectively, effective discharge of its
roles and responsibilities.
6. For first-time members of the Audit and RPT Committee, copies of the Audit and RPT Committee
Charter and Internal Audit Charter will be provided, together with an orientation conducted by the
Chief Audit Executive covering, at minimum, the following:
● Globe Group – ownership structure, subsidiaries, joint ventures and associates
● Globe Organization
● Globe Internal Audit Department – key responsibilities, annual audit planning process, annual
work plan, overall audit report rating framework and audit issue rating framework
1Based on SEC CG Code for PLCs Definition of Terms for “Non-Executive Director”, “Independent Director” and “Related Party”. 2Source: SEC CG Code for PLCs, Principle no. 3, Establishing Board Committees, Recommendation no. 3.2.
7
Roles and Responsibilities: To support the Board in the optimal performance of its roles and responsibilities, the Audit and RPT Committee is expected, through the provision of checks and balances, to oversee Globe’s financial reporting and disclosures, audit, material RPTs and other key corporate governance matters, acting on a fully informed basis, in good faith, with due diligence and care, and in the best interest of the company and all shareholders3. Specifically, the Audit and RPT Committee shall be responsible for the following: 1. Financial Reporting and Disclosure
1.1 Review financial statements and all related disclosures and reports certified by the Chief
Financial Officer, and released to the public and/or submitted to the Philippine Securities and
Exchange Commission (SEC) for compliance with both the internal financial management
handbook and pertinent accounting standards, including legal and regulatory requirements.
1.2 Review quarterly, half-year and annual financial statements before submission to the Board of
Directors, focusing on changes in accounting policies and practices, alternative accounting
treatments and major judgmental areas, significant adjustments resulting from the audit,
going concern assumptions, compliance with accounting standards, tax, legal, and regulatory
requirements.
1.3 Ensure that Management formulates accounting/reporting processes and practices in
accordance with the Philippine Financial Reporting Standards (PFRS), including rules and
procedures in compliance with the financial reporting requirements of various regulatory
agencies.
3Source: SEC CG Code for PLCs, Principle nos. 2 and 3, Recommendations 2.1 and 3.1, respectively.
8
2. Internal Controls
Where internal control is defined as a process designed and effected by the Board of Directors,
Management, and all levels of personnel in the organization to provide reasonable assurance on the
achievement of Globe’s objectives through efficient and effective operations; reliable, complete and
timely financial and management information; and compliance with applicable laws, regulations,
and Globe’s policies and procedures4, the Audit and RPT Committee shall:
2.1 Ensure existence of sound and comprehensive internal control procedures and processes
encompassing governance of Globe’s operations, maintained/updated regularly, documented
and approved, in order to:
2.1.1 Safeguard Globe’s resources and assure effective utilization
2.1.2 Prevent occurrence of fraud and wrongdoing
2.1.3 Protect the accuracy and reliability of Globe’s financial and management reports
2.1.4 Protect the integrity of information systems and logical assets
2.1.5 Ensure compliance with applicable laws and regulations
2.2 Ensure that a transparent financial and operational management system, supported by a
Procedures and Policies Handbook that will be used by the entire organization, is established
to ensure the integrity of internal control activities throughout Globe.
2.3 Consider and discuss with Management, the internal auditors, and the external/independent
auditors, the major issues as to the adequacy and effectiveness of Globe’s internal control
processes covering operational control systems, information technology system and security
controls, financial process and management reporting controls, compliance monitoring and
reporting controls, and any special audit steps adopted in light of material control deficiencies.
2.4 For significant control weaknesses identified, request Management to explain the impact and
the actions taken to rectify the identified control weaknesses.
2.5 Receive an annual attestation from the President/Chief Executive Officer, the Chief Finance
Officer and the Chief Audit Executive on the existence of adequate and effective internal
control system in the conduct of Globe’s business, in general.
2.6 Review the policy and arrangements by which employees and/or any other persons may, in
confidence, raise concerns about possible improprieties in matters of financial reporting or
other matters; and ensure that there is independent investigation into all whistleblower
complaints and appropriate follow-up.
2.7 Approve new or changes to existing policies related to its area of responsibility.
4Source: SEC CG Code for PLCs, Definition of Terms for Internal Control.
9
3. External/Independent Auditor
The Audit and RPT Committee ensures that Globe has set appropriate policies and processes that
strengthens the external/independent auditor’s independence and improves audit quality.4 In
performing its oversight function over external/independent auditor, the Audit and RPT Committee
shall:
3.1 Recommend the appointment, retention or discharge of the external/independent auditors
accredited by SEC, including the fixing of their remuneration. The external/independent
auditor appointment, re-appointment, removal and fees shall be approved by the Board and
ratified by the shareholders.5
Every five (5) years, or when the need arises as decided by the Audit and RPT Committee, a
bid for the annual statutory audit of Globe’s financial statements is carried out by the Chief
Audit Executive in accordance with Globe’s Procurement policy. The bid is offered to the top
public accounting firms duly accredited by SEC, and the request for bid proposal covers, among
others:
3.1.1 Compliance statement on the firm’s understanding of the work to be done,
commitment to perform work within the required time period and why the firm believes
it to be the best qualified to perform the engagement.
3.1.2 Technical proposal’s mandatory elements: independence, license to practice in the
Philippines, record of relevant engagement, legal/disciplinary proceedings taken or
pending against the firm, quality assurance and professional practice development,
professional services offered and deliverable reports and communication of results.
3.1.3 Critical elements: industry experience including global reputation, audit quality, audit
approach and methodology, use of technology, proposed engagement team
composition, business continuity plans
3.1.4 Details of professional Fees
3.2 In the case of discharge or change of external/independent auditor, ensure that there is
process for reporting to the regulators and the public through Globe’s website and Annual
Report the reasons for discharge or change and the date thereof, including the nature of non-
audit services performed by the external/independent auditor, as applicable. A preliminary
copy of the said report shall be given by Globe to the external/independent auditor before its
submission to the SEC and stockholders.4
3.3 Ensure the rotation of the lead engagement partner at least once every five (5) years, or
earlier and consider whether there should be regular rotation of the audit firm itself.
5Source: SEC CG Code for PLCs, Principle no.9, Strengthening the External Auditor’s Independence and Improving Audit Quality,
Recommendation no. 9.1.
10
3.4 Review and pre-approve the external/independent auditors’ plans to understand the basis for
their risk assessment and financial statement materiality, including the scope and frequency of
the audit.
In this regard, the Audit and RPT Committee shall discuss with the external/independent auditors, before the audit commences, the nature, scope and related fees of the audit, and ensure proper coordination when more than one professional service firm is needed.
3.5 Monitor coordination of efforts between the external/independent auditors and internal
auditors. The Audit and RPT Committee shall ensure that the internal auditors and
external/independent auditors act independently from each other and focus on optimum
coverage and minimal duplication of efforts between the external and internal auditors.
3.6 Ensure that the external/independent auditor has unrestricted access to all records, properties
and personnel to enable performance of the required audit.
3.7 Ensure that the external auditors have direct and unrestricted access to the Chairman of the
Audit and RPT Committee.
3.8 Review and approve proportion of audit versus non-audit work both in relation to their
significance to the external/independent auditors’ and in relation Globe’s year-end financial
statements, and total expenditure on consultancy, to ensure that non-audit work will not be in
conflict with the audit functions of the external/independent auditor. The non-audit work of
external/independent auditor allowed by the Audit and RPT Committee shall be disclosed in
Globe’s Annual Report and Annual Corporate Governance Report.
3.9 Review with the external/independent auditor any problems or difficulties, including any
restrictions on the scope of the external/independent auditor’s activities or on access to
requested information and any significant disagreements with Management. The review may
also include discussion of any proposed accounting adjustments that were “passed” or not
recorded.
3.10 Review of the external/independent auditor’s evaluation of internal accounting controls.
External/independent auditors shall provide feedback to the Audit and RPT Committee on
their observations of internal control weaknesses arising from statutory financial audits.
External/independent auditors should highlight findings which are disputed by Management
or where Management has not agreed to implement remedial actions that would rectify the
identified weaknesses.
3.11 Conduct a separate meeting in executive session, with the external/independent auditors to
discuss any matters that the Audit and RPT Committee or external/independent auditors
believe should be discussed privately, including the results of the audit, year-end financial
statements, and the quality of the management, financial and accounting controls.
11
3.12 Review the disposition of the recommendations in the external/independent auditor’s
management letter.6
3.13 Allow the external/independent auditors to present their views in a report, if the
external/independent auditor believes that the statements made in an annual report,
information or proxy statements filed during their engagement are incorrect or incomplete.
3.14 Ensure the attendance of the external/independent auditors in the Annual General
Stockholders’ Meeting to address queries within the audit scope.
3.15 Review the performance of the external/independent auditors, through the conduct of annual
survey of external/independent auditors’ performance by Internal Audit among all Globe
Management and employees identified to have substantial interaction with the
external/independent auditors relevant to the annual statutory audit engagement. The survey
covers evaluation of the external/independent auditors’ performance based on the following
criteria:
● Quality of Services and Processes
● Credibility and Sufficiency of Resources
● Audit Scope
● Communication and Interaction
● Liaison/Relationship with Internal Audit
● Independence, Objectivity and Professional Skepticism
The survey also includes eliciting feedback/comments from the respondents on the perceived
strengths and weaknesses of the external/independent auditors.
6Source: SEC CG Code for PLCs, Principle no.3, Establishing Board Committees, Recommendation no. 3.2 (i).
12
4. Internal Audit Function
The Audit and RPT Committee, through the Internal Audit Department, monitors and evaluates the
adequacy, effectiveness and reliability of Globe’s overall internal control systems covering financial
and management reporting, organization management, operations, information technology,
security of physical and logical assets, compliance monitoring and reporting. In this regard, the
Audit and RPT Committee shall:
4.1 Review and approve the Internal Audit Charter and obtain concurrence by the Board, including
subsequent revisions thereto.
4.2 Oversee the implementation of an independent internal audit function as stated in the
approved Internal Audit Charter.
4.3 Have a qualified Chief Audit Executive set up and oversee the Internal Audit Department; and
be responsible for the internal audit activities, including those outsourced to third party
service providers.
4.4 Recommend the appointment and/or grounds for approval of the Chief Audit Executive. The
Audit and RPT Committee shall establish and identify the reporting line of the Chief Audit
Executive, i.e., functionally report directly to the Audit and RPT Committee, so that the
reporting levels allow the internal audit activity to fulfill properly its duties and responsibilities.
The terms and conditions for the appointment/dismissal of the Chief Audit Executive shall be
in accordance with the existing Globe policy for hiring/dismissal of heads of
functions/departments. The Audit and RPT Committee, having appointed the Chief Audit
Executive, shall also concur in his/her replacement, re-assignment or dismissal.
4.5 Review with Management and the Chief Audit Executive the plans, activities, staffing, and
organizational structure of the internal audit function.
4.6 Review and approve the Annual Internal Audit Work Plan and all deviations therefrom, and
ensure that internal audit examinations cover at least the evaluation of adequacy and
effectiveness of controls encompassing Globe’s governance of operations, information
systems, reliability and integrity of financial and management information, effectiveness and
efficiency of operational systems and processes, safeguarding of resources and ensure
effective utilization, and compliance with laws, rules and regulations.
The Annual Internal Audit Plan shall include the audit scope, resources and budget necessary
to implement it.
The Audit and RPT Committee shall also ensure that audit resources are allocated reasonably to the areas of highest risk and further ensure that the Annual Internal Audit Plan is in conformity with the objectives of Globe.
13
4.7 Approve the terms and conditions for outsourcing internal audit services. When specialized
skills are not available within the Internal Audit organization to carry-out reviews of complex
operations or sophisticated integrated systems, the Audit and RPT Committee may approve
the augmentation of the expertise of the Internal Audit organization through the engagement
of external specialists (e.g., IT security, forensic, fraud, telecommunication system experts,
etc.) on a project or retainer basis.
4.8 Ensure that the internal auditors have free and full access to all of Globe’s records, properties,
and personnel relevant to and required by its function and that the internal audit activity shall
be free from interference in determining its scope, performing its work and communicating its
results.
4.9 Review Internal Audit’s periodic reports and the Internal Audit Annual Report. Periodic reports
shall highlight the status of projects in accordance with the audit plan approved by the Audit
and RPT Committee, as well as, any unplanned projects. Such reports shall include a summary
of key findings and recommendations, including the status of implementation. The Annual
Report shall discuss the Internal Audit Department’s activities and performance relative to the
audit plans and strategies approved by the Audit and RPT Committee.
4.10 Review and monitor Management’s responsiveness to the Internal Auditor’s findings and
recommendations.7 On an ongoing basis, Internal Audit shall provide the Audit and RPT
Committee with confirmation on the implementation of remedial actions agreed by
Management in response to internal audit reports and other reports from the
external/independent auditor, external counsel or the regulators.
4.11 Review and ensure the effectiveness of the internal audit function, including compliance with
the Institute of Internal Auditors’ International Standards for the Professional Practice of
Internal Auditing.
4.12 Provide inputs on the performance of the Internal Audit Department and
communicate/discuss such inputs with the Chief Executive Officer who shall then translate
these into a performance appraisal applicable to the Chief Audit Executive and internal
auditors taken as a whole.
4.13 Conduct separate meetings with the Chief Audit Executive to discuss any matter arising from
the internal auditors’ work that the Audit and RPT Committee or the auditors may deem
necessary to be discussed privately.
7Source: SEC CG Code for PLCs, Principle no.3, Establishing Board Committees, Recommendation no. 3.2 (e).
14
5. Compliance Oversight
In order to coordinate, monitor and facilitate compliance with laws, rules and regulations8, the Audit
and RPT Committee shall:
5.1 Ensure that effective procedures are established for:
(i) The receipt, retention, and treatment of complaints received by Globe regarding non-
compliance with internal policies, including accounting controls, or auditing matters; and
(ii) The confidential, anonymous submission by employees or other interested persons of
concerns regarding questionable accounting or auditing matters.
(iii) Appropriate corporate culture promoting ethical behavior.
5.2 Review control environment of Globe to assess whether Management sets the right tone that
supports culture of integrity and promotes the corporate values of Globe.
5.3 Review the process for communicating the code of conduct, ethics policy, and anti-fraud policy
to all of Globe’s personnel.
5.4 Review internal control framework implemented by Management for fraud prevention and
detection, including review of material or significant RPTs in accordance with the Globe Policy
on RPTs.
On an annual basis, Management, together with Internal Audit, shall assess the effectiveness
of Globe’s Anti-Fraud Policy framework and present the results of its assessment to the Audit
and RPT Committee, together with proposed improvement on the anti-fraud policies and
controls to be adopted to address any gaps noted from the review.
The Audit and RPT Committee shall also be provided by Management with reports on all cases of suspected and actual frauds and breaches of laws and regulations on a quarterly basis or more frequent, as necessary.
5.5 Review the process for monitoring and reporting compliance with applicable laws and
regulations.
5.6 Review reports of internal and external/independent auditors, and regulatory agencies, where
applicable, ensuring that Management is taking appropriate actions in a timely manner,
including addressing control and compliance issues.
5.7 As necessary, institute and oversee special investigation, and, if appropriate, hire special
counsel or experts to provide the necessary assistance.
8Source: SEC CG Code for PLCs, Principle no.3, Establishing Board Committees, Recommendation no. 3.2 (k).
15
6. Related Party Transactions
Globe’s Policy on Related Party Transactions (RPTs) consists of:9 ● Definition of related parties ● Coverage and materiality threshold ● Guidelines to ensure arm’s-length terms ● Identification and prevention of management of potential or actual conflicts of interest ● Review by the Audit and RPT Committee ● Whistle-blowing mechanism ● Restitution of losses and other remedies for abusive RPTs ● Disclosure of RPTs
In carrying out its oversight function over RPTs, the Audit and RPT Committee shall:10
6.1 Based on Globe’s Policy on RPTs, assess on an ongoing basis, existing relations between and
among businesses and counterparties to ensure that all related parties are identified
continuously, RPTs are monitored, and subsequent changes in relationships with
counterparties (from non-related to related, and vice versa) are captured. Subject to the
coverage and materiality threshold defined in Section 2 of Globe’s Policy on RPTs, related
parties, RPTs and changes in relationships should be reflected in the relevant reports to the
Board and regulators.
6.2 Review and approve all covered and material RPTs, as defined in Section 2 of Globe’s Policy on
RPTs, to ensure that these are not undertaken on more favorable economic terms (e.g., price,
commissions, interest rates, fees, tenor, collateral requirement) to such related parties than
similar transactions with non-related parties under similar circumstances and that no
corporate or business resources of Globe are misappropriated or misapplied, and to determine
any potential reputational risk issues that may arise as a result of or in connection with the
transactions. In evaluating RPTs, the Audit and RPT Committee takes into account, among
others, the following:
6.2.1 The related party’s relationship to Globe and interest in the transaction;
6.2.2 The material facts of the proposed RPT, including the proposed aggregate value of such
transaction;
6.2.3 The benefits to Globe of the proposed RPT;
6.2.4 The availability of other sources of comparable products or services; and
6.2.5 An assessment of whether the proposed RPT is on terms and conditions that are
comparable to the terms generally available to an unrelated party under similar
circumstances.
9Source: SEC CG Code for PLCs, Principle no.2, Establishing Clear Roles and Responsibilities of the Board, Recommendation no. 2.7.
10Source: SEC CG Code for PLCs, Principle no.3, Establishing Board Committees, Recommendation no. 3.5, items (a) to (f).
16
6.3 As defined in Section 8 of Globe’s Policy on RPTs, ensure that appropriate disclosure is made,
and/or information is provided to regulatory authorities relating to Globe’s RPT exposures, and
policies on conflicts of interest or potential conflicts of interest. The disclosure should include
information on the approach to managing material conflicts of interest that are inconsistent
with such policies, and conflicts that could arise as a result of Globe’s affiliation or transactions
with other related parties;
6.4 Subject to the coverage and materiality threshold defined in Section 2 of Globe’s Policy on
RPTs, report to the Board of Directors on a regular basis the status and aggregate exposures to
each related party, as well as, the total amount of exposures to all related parties;
6.5 Ensure that the covered RPTs as defined in Section 2 of Globe’s Policy on RPTs, including write-
off of exposures, are subject to a periodic independent review or audit process; and
6.6 Oversee the implementation of the system for identifying, monitoring, measuring, controlling,
and reporting RPTs, including a periodic review of RPT policies and procedures.
17
Meetings: 1. To provide a systematic guide for the discharge of its responsibilities, the Audit and RPT Committee
will agree on an annual calendar. The Audit and RPT Committee shall meet at least quarterly.
Preferably, the quarterly meetings will be held prior to the meeting of the Board of Directors.
2. As aligned with MCG, the quorum for any meeting shall be the majority of the Audit and RPT
members.
3. In cases when there is a need for special meetings, or upon request of the internal or external
auditors, to take up any critical matters that would need approval in between the quarterly
meetings, it shall be up to the Chairman of the Audit and RPT Committee to either call for a special
meeting or just allow the routing of the relevant reports among all the Audit and RPT Committee
members and document discussion and decision through correspondence.
4. As aligned with the MCG, members may attend each meeting in person or via teleconference or videoconference or by any other technological means allowed by the SEC.
5. A member shall not vote on any matter in which he or she has any direct or indirect interest and shall recuse himself or herself from the portion of the meeting involving the potential conflict.
6. The Audit and RPT Committee shall report to the Board on discussions and decisions taken at each Audit and RPT Committee meeting and make recommendations to the Board, as necessary.
7. The agenda for the meetings will be developed by the Chief Audit Executive, based on the agreed calendar of activities and inputs from the Audit and RPT Committee members, subject to the approval of the Audit and RPT Committee Chairman.
8. All members of the Audit and RPT Committee are informed of the approved agenda at least ten (10)
business days prior to the Audit and RPT Committee meeting.
9. Globe key officers, such as the President and Chief Executive Officer and Chief Finance Officer, shall
be requested to attend the Audit and RPT Committee meetings. As, and when appropriate, the
Audit and RPT Committee may require other members of Management to be present at the
meetings. External subject matter experts, such as the appointed external/independent auditors
and other consultants, may also be invited to the meetings.
10. The Audit and RPT Committee shall have separate meetings with the Chief Audit Executive, Chief
Compliance Officer, Chief Risk Officer and external/independent auditors in executive session
(without any executive director of the Board and/or any member of Management present) at least
twice a year.
18
11. The Audit and RPT Committee shall meet with the Board at least every quarter without the presence
of the Chief Executive Officer or other management team members, and periodically meets with the
Chief Audit Executive.11
12. The external/independent auditors and/or Chief Audit Executive may request a meeting with the
Audit and RPT Committee whenever deemed necessary.
13. Minutes of the Audit and RPT Committee meetings shall be prepared by the Chief Audit Executive,
reviewed by all members of the Audit and RPT Committee and attested by the Audit and RPT
Committee Chairman.
11Source: SEC CG Code for PLCs, Principle no.3, Establishing Board Committees, Recommendation no. 3.2 (last paragraph).
19
Audit and RPT Committee Report to the Board of Directors: To keep the Board of Directors apprised on the results of the Audit and RPT Committee’s activities, the Chairman of the Audit and RPT Committee shall submit a report every quarter to the Chairman of the Board of Directors; and shall be ready to present the report to the full Board during its meeting for the quarter. The Audit and RPT Committee Chairman will also submit and present an Annual Audit and RPT Committee report to the full Board during its first meeting following the immediate fiscal year. The Annual Audit and RPT Committee report shall include the Committee’s concurrence on the adequacy and effectiveness of the internal controls (including financial, operational, compliance and information technology controls). Other reporting responsibilities of the Audit and RPT Committee to the Board:
1. Report regularly to the Board of Directors about Audit and RPT Committee activities and issues that
arise with respect to the quality or integrity of Globe’s financial statements, the effectiveness of the
system of internal controls, the performance and independence of Globe’s external/independent
auditors, the performance of the internal audit function and Globe’s compliance with legal,
regulatory or corporate governance requirements.
2. Highlight to the Board any serious concerns over the design or operating effectiveness of internal
controls that may have a material impact on the financial statements.
3. For any awareness or knowledge of any suspected fraud or irregularity, or suspected infringement
of any laws or regulations of any regulatory authority in the Philippines, which has or is likely to have
a material impact on Globe’s operating results or financial position, the Audit and RPT Committee
must discuss such matter with the external/independent auditor and, at an appropriate time, report
the matter to the Board.
4. Provide an open avenue of communication between internal auditors, the external/independent auditors, Management and the Board of Directors.
5. Report annually to the Board of Directors, describing the Audit and RPT Committee’s composition, responsibilities and how they were discharged, and any other information required by rule, including approval of non-audit services. Confirm annually that all responsibilities outlined in this Charter have been carried out.
6. Review any other reports Globe issues that relate to the Audit and RPT Committee’s responsibilities.
7. Review and assess the adequacy of the Audit and RPT Committee Charter at least annually,
requesting Board of Directors’ approval for proposed changes and ensure appropriate disclosure as
may be required by law or regulation.
8. Perform other activities related to this Charter as requested by the Board of Directors.
20
Performance Evaluation and Continuous Improvement: To ensure that the Audit and RPT Committee continues to fulfill effectively its responsibilities in
accordance with global best practices and in compliance with Globe’s Manual of Corporate Governance
and other relevant regulatory requirements, the Audit and RPT Committee shall conduct an assessment
of its performance and undergo training, at least annually. In this regard, the Audit and RPT Committee
shall:
1. As a body, evaluate the effectiveness of the performance of the Audit and RPT Committee using as
baseline the expectations set out in this Charter and documenting results of self-assessment in a
worksheet, designed in compliance with SEC’s guidelines12 for the assessment of the Audit and RPT
Committee’s performance.
To further improve the performance of the Audit and RPT Committee, members of Management,
Internal Audit, General Counsel and external/independent auditors shall be required to comment
and/or provide feedback using the same assessment questionnaire. The results of the said
assessment may be validated by Globe’s Compliance Officer.
2. Based on the results of the self-assessment, formulate and implement plans to improve its
performance. These shall include the identification of relevant training needs intended to keep the
members up-to-date with the developments in the business and changes in the legislative /
regulatory environment, industry best practices, corporate governance, accounting and auditing
standards, internal controls, and other relevant issues. All members shall be given the opportunity
to attend professional and technical development courses.
3. Semi-annually, review the status of implementation of such plans for improvement.
In addition, the Audit and RPT Committee shall obtain and subject itself to an independent assessment
by the Board of Directors relative to its performance in accordance with expectations set out in this
Charter and the discharge of its responsibilities as specified in the Audit and RPT Committee Calendar of
Activities.
All documents and records pertinent to the assessment process shall be kept intact by the Internal Audit
Department, which may be examined from time to time by the SEC and/or such other appropriate
government agencies or instrumentalities.
12 Based on SEC Memo Circular No. 4, series of 2012: Guidelines for the Assessment of the Performance of Audit and RPT Committees of
Companies Listed on the Exchange.
21
Functional and Secretariat Support: The Internal Audit Department, headed by the Chief Audit Executive, shall support the Audit and RPT
Committee in the rendition of its functions, specifically:
1. Internal Audit shall provide all the secretariat support to the Audit and RPT Committee.
2. Meeting agendas shall be prepared and provided to the members of the Audit and RPT Committee
in advance along with briefing materials.
3. The Chief Audit Executive shall attend all the Audit and RPT Committee meetings and be primarily
responsible for recording the minutes of the meetings.
4. Minutes of Audit and RPT Committee meetings, attested by the Audit and RPT Committee Chairman,
shall be kept on file and accessible by all members of the Audit and RPT Committee. Minutes shall
be available for inspection by any member of the Board of Directors, as and when requested. The
Corporate Secretary shall be given a copy of the Audit and RPT Committee minutes for safekeeping.
5. The Chief Audit Executive oversees the drafting of the Audit and RPT Committee Charter and ensures conformity with regulatory requirements.
6. The Chief Audit Executive performs such other duties and responsibilities as may be provided by the
Audit and RPT Committee in the discharge of the Committee’s function.
top related