TORs of the Audit, Risk  & Compliance

The Board of Directors of AWAK resolved to constitute an Audit, Risk & Compliance Committee herein after referred to as the AR&C with the following Terms of Reference:

1.AWAK vision and mission

The Association of Women Accountants of Kenya (AWAK) is a non-political and non-profit making professional women accountants’ organization, which draws its membership from women accountants. Registered in 1994 under the Societies Act, the association continues to pursue the main objective of member empowerment, at the same time contributing to varying needs in society. With its motto “Uplifting our World,” AWAK champions for women empowerment in the society.

2.Specific Objective of the Committee:

The purpose of the AWAK’s Audit, Risk & Compliance Committee is to assist the board to discharge its responsibility to exercise due care, diligence and skill in handling the affairs of AWAK. The specific responsibilities of the Committee shall include (and not limited to) the activities listed under item (6) below.

3.Composition

1. The Board shall, by resolution, appoint a chair from among the Board Members, who shall be the Chairman / Convener of the committee.
2. The Committee members shall appoint a Vice Chairman / Co-convener from its members.
3. Membership will be drawn from AWAK members other than the Board
4. A call for nomination shall be sent out annually for AWAK members willing to join the committee. Previous committee members interested in continuing to serve shall be nominated based on attendance records.
5. At least 12 (twelve) members shall be nominated into the committee annually.
6. The Committee Chairman shall have a casting vote in case of a tie.

4.Qualifications

1. All fully paid up members of AWAK in good standing are eligible
2. Members must express willingness to serve on the committee, attend meetings and volunteer their time and services
3. If the member composition exceeds 18 members the Chair of the Audit, Risk & Compliance Committee will develop a qualification criterion in consultation with the Board and Nominations Committee to reduce the number to a more reasonable one

5.Meetings and Procedure

1. The Secretariat will act as secretary and will take responsibility for recording the deliberations & implementing decisions reached at each meeting.
2. Meetings shall be held at least four times in an year or when called to do so by AWAK Board but before the Board Meeting­­­­­­­­­­­­­­­­
3. Three members present shall constitute a quorum.
4. AWAK secretariat may attend the committee meetings however only members of the Committee shall have a right to vote.
5. Notice of meetings together with the agenda be sent at least two weeks to the date of the meeting
6. Minutes of all meetings shall be sent to committee members within one week after the meeting

6.Responsibilities

The functions of the Committee shall include (but not be limited) to aassisting the board to discharge its responsibility of ensuring corporate governance is observed while conducting the affairs of the Association in relation to the following areas:

6.1Financial Reporting

6.1.1  The Committee shall:

• ensure that the interests of members are properly protected in relation to financial reporting and internal control;
• monitor the integrity of the financial statements of the AWAK, including its annual and interim reports, preliminary results announcements and any other formal announcement relating to its financial performance, reviewing significant financial reporting issues and judgments which they contain; and
• review summary financial statements, significant financial returns to regulators;

6.1.2  The Committee shall review and challenge where necessary:

• the consistency of, and any changes to, accounting policies both on an annual basis;
• the methods used to account for significant or unusual transactions where different approaches are possible;
• whether the Association has followed appropriate accounting standards and made appropriate estimates and judgments, taking into account the views of the external auditor;
• significant adjustments resulting from the audit;
• the going concern assessment;
• the clarity and completeness of disclosure in the Associations financial reports and the context in which statements are made;
• all material information presented with the financial statements, such as the operating and financial review and the corporate governance statement (in so far as it relates to the audit and risk management); and
• (viii) Where the Committee is not satisfied with any aspect of the proposed financial reporting by the Company, it shall report its views to the Board.

6.1.3 Where requested by the Board, the Committee should review the content of the annual report and accounts and advise the Board on whether, taken as a whole, it is fair, balanced and understandable and provides the information necessary for members to assess the Association’s performance, business model and strategy.

6.2 Internal Controls and Risk Management Systems

The Committee shall:

6.2.1 Keep under review the adequacy and effectiveness of the Associations internal control and internal financial controls and risk management systems;

6.2.2 Review the statements to be included in the Annual Report concerning internal controls and risk management, prior to endorsement by the Board;

6.2.3 Evaluate whether management is setting an appropriate internal control environment by ensuring that employees are aware of the importance of internal control and risk management; and

6.2.4 Consider how management is controlling the security of IT systems and processes and whether appropriate contingency plans are in place in the event of an IT failure.

6.3 Compliance, whistle blowing and fraud

The Committee shall:

6.3.1 Review the adequacy and security of the Associations arrangements for its employees and members to raise concerns, in confidence, about possible wrongdoing in financial reporting or other matters. The Committee shall ensure that these arrangements allow proportionate and independent investigation of such matters and appropriate follow up action;

6.3.2 Review the company’s procedures for detecting fraud;

6.3.3 Review the management level of compliance to statutory deadlines, keep under review the adequacy and effectiveness of the Associations compliance function.

6.4 External Audit

The Committee shall:

6.5.1 Consider and make recommendations to the Board, to be put to members for approval at the AGM, in relation to the appointment, re-appointment and removal of the Associations external auditor and should ensure that key partners within the appointed firm are rotated from time to time. The appointment of the external auditors shall be considered regularly by the Committee and in any event

not less than three yearly intervals. The Committee shall oversee the selection process for new auditors and if an auditor resigns the Committee shall investigate the issues leading to this and decide whether any action is required;

6.5.2 Ensure that at least once every three years the audit services contract is put out to tender to enable the committee to compare the quality and effectiveness of the services provided by the incumbent auditor with those of other audit firms; and in respect of such tender oversee the selection process and ensure that all tendering firms have such access as is necessary to information and individuals during the duration of the tendering process.

6.5.3   Oversee the relationship with the external auditor including (but not limited to):

• approval of their remuneration, whether fees for audit or non-audit services and that the level of fees is appropriate to enable an effective and high quality audit to be conducted;
• approval of their terms of engagement, including any engagement letter issued at the start of each audit and the scope of the audit;
• assessing annually their independence and objectivity taking into account relevant professional and regulatory requirements and the relationship with the auditor as a whole, including the provision of any non-audit services;
• satisfying itself that there are no relationships (such as family, employment, investment, financial or business) between the auditor and the Association (other than in the ordinary course of business) which could adversely affect the auditor’s independence and objectivity;
• monitoring the auditor’s compliance with relevant ethical and professional guidance on the rotation of audit partners, the level of fees paid by the Association compared to the overall fee income of the firm, office and partner and other related requirements;
• assessing annually their qualifications, expertise and resources and the effectiveness of the audit process which shall include a report from the external auditor on their own internal quality procedures; and
• Evaluating the risks to the quality and effectiveness of the financial reporting process and consideration of the need to include the risk of the withdrawal of their auditor from the market in that evaluation.

6.5.4 Meet regularly with the external auditor, including once at the planning stage before the audit and once after the audit at the reporting stage. The Committee shall meet the external auditor at least once a year, without management being present, to discuss their remit and any issues arising from the audit;

6.5.5 Review and approve the annual audit plan and ensure that it is consistent with the scope of the audit engagement;

6.5.6   Review the findings of the audit with the external auditor. This shall include but not be limited to, the following;

• a discussion of any major issues which arose during the audit,
• any accounting and audit judgments, and
• Levels of errors identified during the audit.

6.5.7     The Committee shall also review the effectiveness of the audit.

6.5.8   Review any representation letter(s) requested by the external auditor before they are signed by management;

6.5.9 Review the management letter and management’s response to the auditor’s findings and recommendations;

6.5.10 Develop and implement a policy on the supply of non-audit services by the external auditor, taking into account any relevant ethical guidance on the matter; and

6.5.11 Develop and recommend to the Board the Company’s policy in relation to the provision of non-audit services by the auditor with the objective of ensuring that the provision of such services does not impair the external auditor’s independence or objectivity.

6.6 Reporting Responsibilities

6.6.1 The Committee Chairman shall report formally to the Board on its proceedings after each meeting on all matters within its duties and responsibilities.

6.6.2 The Committee shall make whatever recommendations to the Board it deems appropriate on any area within its remit where action or improvement is needed.

6.6.3 The Committee shall compile a report to members on its activities to be included in the Association’s Annual Report a statement that the Committee considered the annual report and accounts, taken as whole, is fair, balanced and understandable and provided the information necessary for members to assess the Associations performance, business model and strategy; and an explanation to the members of how, if the auditor provides non-audit services, auditor objectivity and independence is safeguarded.

7.Review of the Committee

1. The Committee shall undertake an annual self-review of its objectives and responsibilities.
2. The committee shall also be subject to a review by the AWAK Board on an annual basis

8.Reporting Procedures

1. The Chairman shall report the Committee’s deliberations to the AWAK Board.
2. The minutes of all Committee meetings shall be circulated to Members after each meeting.
3. The Chairman shall present an annual report to the AWAK Board summarizing the Committee’s activities during the year and any related significant results.

9.Cessation of Membership

One’s membership to the committee shall cease by:

• 1. 1. Resignation by the member giving the committee one months’ notice ad handing over any activities the member has been involved in
     2. Failure to attend three consecutive meetings unless a waiver is obtained from the Chairman. The waiver will be provided after the meeting considers the support the member is providing to the Committee remotely
     3. Member is not in good standing

 Review of TOR

These terms of reference shall be subjected to review by the Board.

BY ORDER OF THE BOARD