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					Title              Audit and Risk Committee

Paper no:          051006/2
Paper type         Corporate

Purpose

The purpose of this paper is to:

1.      Formally establish an Audit and Risk Committee.

Meeting date       5 October 2006
Location           Portland House
Agenda Item        9

Status        DECISION
Director      Carolyn Cadman
_____________________________________________________________________

Recommendations

It is recommended that the Commission:

1. Offer any final amendments to the Audit and Risk Committee (ARC) terms of
   reference.
2. Agree Chair and membership of the Committee.


Relevance to current strategy and Corporate Plan

The Commission is required to establish an Audit and Risk Committee as part of
the Management Statement.


Additional resource implications

Members of the Committee will require sufficient time to attend and participate
in meetings.

The Committee will be supported by the CRC’s Private Office.

Annex

Annex 1 - Terms of Reference


____________________________________________________________________________________________

CRC meeting – 5 October 2006         051006/2 - Audit and Risk Committee     Page 1 of 2
Title   Audit and Risk Committee

Purpose

1. The purpose of this paper is to formally establish an Audit and Risk Committee
   for the Commission.

Recommendations

2. Commission members are asked to offer any final amendments to the Terms of
   Reference (Annex 1) before agreeing the membership and Chair of the Audit
   and Risk Committee.

Background

3. The CRC taskgroup considered the draft Terms of Reference of the Audit and
   Risk Committee at a meeting on 7 September 2006 and no amendments were
   suggested.

4. Commission membership of the Audit and Risk Committee is proposed as
   follows:

        John Varley – Chair
        Sheena Asthana
        Norman Glass
        Howard Petch

5. Staff membership of the group will normally be:

        Carolyn Cadman – Director Corporate
        John Dee (PKF) Internal Audit
        Tbc – Head of Corporate Planning and Finance*
        Jane Gawthorne - Corporate Governance Officer (minutes)

*Ken Roy (Director Rural Analysis) will attend until the appointment of this post

Next Steps

6. Audit and Risk Committee meetings are scheduled for the following dates:

        14 December 2006
        15 March 2007
        12 July 2007




 ____________________________________________________________________________________________

CRC meeting – 5 October 2006         051006/2 - Audit and Risk Committee     Page 2 of 2
Commission for Rural Communities                          DRAFT Corporate Governance Handbook

                            Section 5: Terms of Reference for Committees

                                                                          Annex 1 to Paper No 051006/2
Audit and Risk Committee

1.         Objectives

1.1        The Audit and Risk Committee (ARC) is a sub-committee of the Commission. Its
           role is to advise the Chief Executive and the Commission on risk, governance,
           audit and control issues. The CRC will outsource the Internal Audit Function to
           an external contractor 1 .

2.         Membership and attendance

2.1        The Committee is comprised of four Commission members. The Commission
           approves the composition of the committee, including the appointment of the
           Chairman. Commission members who are not members of the Audit and Risk
           Committee have the right of attendance at meetings.

2.2        The Chief Executive as Accounting Officer, Head of Finance and Corporate
           Planning, Internal Auditors and NAO Director are normally in attendance at
           Committee Meetings. Other CRC staff may be asked to attend meetings and
           present papers.

3.         Frequency of meetings

3.1        The Committee meets at least three times a year, normally before or after a
           Commission meeting. NAO, or Defra’s Head of Internal Audit, may request a
           meeting if they consider one necessary. Quorum comprises three members
           of the Committee. Private Office supports meetings and co-ordinates the
           preparation of the agenda and supporting papers. Minutes of the meetings are
           submitted to the Commission, normally at the next Commission meeting.

4.         Organisational status and authority

4.1        The Audit and Risk Committee is an advisory committee of the Commission
           with no executive powers. However it is authorised by the Commission to
           investigate any activity within its terms of reference and to seek any information
           it needs from CRC staff, who are required to co-operate with the Committee in
           the conduct of its enquiries.

4.2        The Audit and Risk Committee is authorised to obtain independent professional
           advice if it considers this necessary.



1   At 2nd October 2006, the CRC outsources to PKF llp.
__________________________________________________________________________________
DRAFT CRC Corporate Governance Handbook                             Section 5: Terms of Reference for Committees
                                                                                         Version 2: 24 August 2006



                                                          Page 1 of 3
Commission for Rural Communities             DRAFT Corporate Governance Handbook

                      Section 5: Terms of Reference for Committees

4.3    The Internal Auditors and NAO have right of access to the Chair of the Audit
       and Risk Committee.

5.     Duties

5.1    The specific duties of the Committee are to:

       a. ensure that a suitable understanding of business risk management exists
          within the organisation and that risk and control matters are subjected to
          appropriate senior management attention;

       b. satisfy itself that the CRC’s Annual Accounts comply with Government
          Accounting, Defra’s Accounts Directions and generally accepted
          accounting principles and practice, including any changes in accounting
          policies and practice and any significant adjustments arising from NAO’s
          audit of the Annual Accounts;

       c. consider the Internal Auditors’ annual and strategic work plans and to
          monitor progress in implementing them;

       d. assure itself that the CRC's internal audit service meets, or exceeds, the
          Government Internal Audit Standard, complies in all other respects with
          these guidelines, meets agreed levels of service and is properly resourced;

       e. ensure that the activity of the Internal Audit function is appropriately focused
          in accordance with business risk assessment;

       f.   consider the NAO Director’s annual plan and to assure itself that the
            external audit service assists in meeting CRC’s requirements;

       g. consider internal and external audit reports, including the external auditor's
          letter and management response, and to ensure that significant weaknesses
          identified by audit are resolved and appropriate steps are taken to prevent
          recurrence;

       h. assist in ensuring that the Accounting Officer receives appropriate
          assurances to facilitate the preparation of the annual corporate governance
          Statement on Internal Control;

       i. promote co-operation between internal and external auditors and other
          review bodies to minimise the burden of audit and review on the
          organisation;

       j.   consider the CRC’s strategy for the prevention and detection of fraud;
__________________________________________________________________________________
DRAFT CRC Corporate Governance Handbook               Section 5: Terms of Reference for Committees
                                                                           Version 2: 24 August 2006



                                            Page 2 of 3
Commission for Rural Communities          DRAFT Corporate Governance Handbook

                     Section 5: Terms of Reference for Committees



       k. report annually to the Commission on the Committee's work and the
          discharge of its responsibilities.




__________________________________________________________________________________
DRAFT CRC Corporate Governance Handbook             Section 5: Terms of Reference for Committees
                                                                         Version 2: 24 August 2006



                                          Page 3 of 3

				
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