Terms of reference for the audit committee

This guidance note proposes model terms of reference for the audit committee of a company seeking to comply fully with the requirements of the UK Corporate Governance Code, published in July 2018 (the Code) and reflects the FRC Guidance on Audit Committees (FRC Guidance), published in April 2016. It draws on the experience of company secretaries and is based on good practice as carried out in some of the UK’s largest listed companies. The Code and the FRC Guidance are available at www.frc.org.uk.

The model terms of reference are intended as a guide for companies to adapt to their needs. In particular

• Companies with additional primary listing(s) may need to amend the terms of reference in light of additional requirements in the relevant country, in particular, the US Sarbanes-Oxley Act 2002.
• Some responsibilities that are relevant to certain companies or sectors only are shown in square brackets.
• There are a number of responsibilities that may be carried out by the audit committee, which, alternatively, may be carried out by another board committee or at board level and these have been mentioned in footnotes.

The guidance notes on terms of reference for all board committees should be read together when allocating responsibilities to the committees. It is important to recognise the links and overlap between the responsibilities of board committees and, consequently, the need for each board committee to have full knowledge of the deliberations of other committees through reports to the board and, if possible, by appointing at least one member of a committee to each of the other committees.

You will need to be logged in as a member, or free subscriber in order to access this guidance note. If you are not yet registered as a free subscriber, you can do so here: Register

Log in to access resource