Principle 4

 

Safeguard integrity and financial reporting

1. Audit and risk committees

Each of RE1, RE2 and DIHL has appointed an audit and risk committee which complies with the requirements of the Principles. They are currently comprised as follows:

  RE1
Name and position Executive/independent
Doug Halley
Director (Committee Chairman) 		Independent
The Hon. Michael Lee
Director 		Independent
Emma Stein
Director 		Independent
  RE2
Name and position Executive/independent
Duncan Sutherland
Director (Committee Chairman) 		Independent
Ron Finlay
Director 		Independent
Eric Goodwin
Director 		Independent
  DIHL
Name and position Executive/independent
Doug Halley
Director (Committee Chairman) 		Independent
Emma Stein
Director 		Independent
Ron Finlay
Director 		Independent

The qualifications of the members of each audit and risk committee can be found here.

2. Audit and risk committee charters

In establishing its audit and risk committee, each of RE1, RE2 and DIHL has established a charter under which the committee is to operate. The charter is materially the same for both companies.
The responsibilities of the audit and risk committee under each charter in relation to financial reporting are to:

  • Review and report to the board on the financial statements and related notes, and on the external auditor's audit of the financial statements and the report thereon
  • Recommend to the board the appointment and removal of the external auditor, review the terms of its engagement including arrangements for the rotation of external audit partners, and the scope and quality of the audit
  • Monitor auditor independence. The audit and risk committee meets with the external auditor at least twice a year and more frequently if required.

Details of the risk monitoring duties of the audit and risk committee are set out in the Principle 7 commentary.

3. Auditor independence

The audit and risk committees have adopted a policy which includes the following to ensure the independence of the external auditor:

  • The external auditor must remain independent from Macquarie and DUET at all times and must comply with APES 110: Code of Ethics for Professional Accountants pertaining to financial independence, and business and employment relationships
  • The external auditor must monitor its independence and report to the board every six months that it has remained independent
  • Significant permissible non-audit assignments awarded to the external auditor must be approved in advance by the audit and risk committees (or their chairmen between meetings)
  • All non-audit assignments are to be reported to the audit and risk committees every six months
  • The DUET audit engagement partner and review partner must be rotated every five years.

The RE1, RE2 and DIHL boards and audit and risk committees are of the view that, at the present time, Ernst & Young is best placed to provide DUET's audit services. Ernst & Young is a top tier professional services firm and has provided audit services to DUET since its establishment and is familiar with its structure and businesses. The auditor is required to be independent from DUET and Macquarie. Ernst & Young meets this requirement. The auditor attends DUET's annual general meetings and is available to answer security holder questions on the conduct of the audit, and the preparation and content of the auditor's report.