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Status: You are viewing the version of the handbook as on 2009-03-31.

DTR 7.1 Audit committees

Audit committees and their functions

DTR 7.1.1RRP

1An issuer must have a body which is responsible for performing the functions set out in DTR 7.1.3 R. At least one member of that body must be independent and at least one member must have competence in accounting and/or auditing.

DTR 7.1.2GRP

The requirements for independence and competence in accounting and/or auditing may be satisfied by the same member or by different members of the relevant body.

DTR 7.1.3RRP

An issuer must ensure that, as a minimum, the relevant body must:

  1. (1)

    monitor the financial reporting process;

  2. (2)

    monitor the effectiveness of the issuer’s internal control, internal audit where applicable, and risk management systems;

  3. (3)

    monitor the statutory audit of the annual and consolidated accounts;

  4. (4)

    review and monitor the independence of the statutory auditor, and in particular the provision of additional services to the issuer.

DTR 7.1.4R

An issuer must base any proposal to appoint a statutory auditor on a recommendation made by the relevant body.

[Note: Article 41.3 of the Audit Directive]

DTR 7.1.5RRP

The issuer must make a statement available to the public disclosing which body carries out the functions required by DTR 7.1.3 R and how it is composed.

[Note: Article 41.5 (part) of the Audit Directive]

DTR 7.1.6GRP

An issuer may include the statement required by DTR 7.1.5 R in any statement it is required to make under DTR 7.2 (Corporate governance statements).

DTR 7.1.7GRP

In the FSA's view, compliance with provisions A.1.2, C.3.1, C.3.2 and C.3.3 of the Combined Code will result in compliance with DTR 7.1.1 R to DTR 7.1.5 R.