Cap. 10:31 Punuc EN'IITIES (e) CoRPoRATE GovERI"<ANCE No. 4/2018 formulate and document a fonnal written conflict of interest policy and an objective compliance process for implementing that policy. 238. The chief audit executive should have a standing invitation to attend executive or management meetings. 239. The chief audit executive should be on the same level with other heads of depmtments within the company. AUDIT Co~UvliTTEE Principles 240. The Board should establish an audit committee but this will depend on the nature and size of the company and the complexity and diversity of its operations. 241. The audit committee approves the risk-based intemal audit plan, and the annual expenditure and capital budget of the auditing department, aad evaluates the performance of the internal audit function annually. 242. The audit committee should- (a) assist the Board to fulfil its obligations relating to financial reporting by appointing Board members to consider specific audit issues; (b) strengthen the independence of the external auditors hy providing them with another channel of conunnnication with the Board other than the chairperson of the Board, chief executive officer, finance director or chief financial officer; enhance, through the manner in which it discharges its function, public confidence in the integrity of the company's financial statements. (c) 243. The audit committee's functions vary from company to company but they invariably include the follmving(a) (b) reconm1ending the nomination and remuneration of external auditors; reviewing the audit carried out by external auditors; (c) (d) discussing with the external auditors any problems that arise during audits; reviewing the company's accounting policies and the need to make changes to them; (e) (f) reviewing the company's internal control environment; revievving reports from the company's internal audit dcpattment and providing an independent retX>rting channel for the internal auditors \VhO would othenvise rcpmt to the finance director only; (g) reviewing the half-year and annual financial statements prior to their approval by the Board; reviewing the independence and objectivity ofthe auditors of the company; (h) (i) recommending to the Board the appointment of the chief financial officer or financial director and reviewing his or her performance; (j) ensuring that the company's internal control procedures arc adequate; (k) appointing a new firm of auditors and negotiating the audit fee; (l) preparing the terms of reference of new auditors for adoption by the Board. Recommendations 244. The Board should ensure that(a) it builds and sustains an ethical cmporate culture in the company; (b) it clearly articulates the ethical standards and ensures that the company takes measures to meet them; 139