The Committee consisted of four Independent Non-Executive Directors as at 30 June 2020. In line with its approved Terms of Reference, the Committee should meet at least once every quarter. During the year under review, the Committee met 4 times.

Composition:

The Committee shall consist of a minimum of three independent members.

Membership as at 30 June 2020:

The membership of the Committee shall be appointed by the Board from amongst the Independent Directors of the Bank. As at 30 June 2020, the Committee was in adherence with the membership rudiments.

Current recomposed membership:

Note: Sanjiv Bhasin, CEO, is invited as and when required.

Fundamental functions comprise:

General

• Ensuring that there is an open avenue of communication between the Head of Internal Audit, the Head of Compliance, the External Auditors and the Board;
• Reviewing annually and, if necessary, propose for formal Board adoption, amendments to the Committee's Terms of Reference;
• Considering, in consultation with the External Auditors and the Head of Internal Audit, the audit plans and scope, ensuring the co-ordination of audit effort is maximized;
• Performing such additional duties as may be assigned to it by the Board of Directors;
• Reporting to the Directors on the conduct of its responsibilities, with particular reference to the appointment, powers and duties of auditors, as per section 39 of The Banking Act 2004 (amended August 2020);
• Reviewing the unaudited and/or audited financial statements of the Bank before they are approved by the Board;
• Reviewing the unaudited and/or audited financial statements of AfrAsia Investments Limited (AIL) before they are approved by the Board;
• Reviewing such transactions which could adversely affect the sound financial condition of the Bank as the auditors or any officers of the Bank may bring to the attention of the Committee or as may otherwise come to its attention; and
• Ensuring that the Bank complies with regulatory requirements

Financial Statements

• Examining, reviewing and challenging the quality and integrity of the financial statements of the Bank, including External Auditor’s report, annual and half-yearly reports, interim reports and any other formal announcement relating to the organisation’s financial performance;
• Reviewing and reporting to the Board on significant financial reporting issues and judgements which these financial statements contain, having regards to matters communicated to the Committee by the Auditors;
• Reviewing with management any significant difficulties or disputes encountered during the audit;
• Reviewing other matters related to the conduct of the audit which are to be communicated to the Committee under The Banking Act 2004 (amended August 2020), The Companies Act 2001 of Mauritius and International Financial Reporting Standards;
• Overseeing appropriateness of the process, models and the assumptions made for IFRS 9, their impact on financial statements and to satisfy themselves that the dynamic nature of calculating and reporting the Probability of Default and the Expected Credit Loss is maintained, as per the requirements of the Bank of Mauritius; and
• The Audit Committee should try and meet or convene by phone at least one week before the formal review of audited annual financial accounts which are recommended to the Board for approval, so that any important issues which need to be discussed with management and the external auditors are given sufficient time for resolution.

Internal Control

• Enquiring from management, the Head of Internal Audit and the external auditors about significant risks or exposures and evaluate the steps taken to minimise such risk to the Bank;
• Considering and reviewing with management and the Head of Internal Audit significant findings during the year and management's responses thereto;
• Requiring management to implement and maintain appropriate accounting, internal control and financial disclosure procedures and review, evaluate and approve such procedures; and
• Ensuring that management is taking appropriate corrective action in response to deficiencies identified by the auditors, including internal control weaknesses and instances of non-compliance with laws and examine and review the contents of the external auditors’ management letter, together with management's responses thereto.

External Audit

• Recommending to the Board, the external auditors to be appointed and their remuneration, review and approve the scope and quality of their work, independence and their discharge or resignation and examine and review any significant changes which have been required in the external auditor's audit plan;
• Considering with management and external auditors the rationale for employing external audit firms for the audit of any subsidiary company other than the principal external auditors;
• Ensuring that at least once every five years the external 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 external auditor with those of other external audit firms. Overseeing 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. Several firms should be screened, and the Committee should obtain written or verbal proposals to enable it to arrive at its recommendation;
• If an external auditor resigns, the Committee shall investigate the underlying issues leading to the resignation and decide whether any action is required;
• Overseeing the relationship with the external auditors including (but not limited to): and

1. • Recommendations on their remuneration for non-audit services;
   • Approval of their terms of engagement, including any engagement letter issued at the start of each external audit and the scope of the audit;
   • Assess annually their independence and objectivity taking into account relevant professional and regulatory requirements and the relationship with the external auditor as a whole, including the provision of any non-audit services;
   • Satisfy themselves that there are no relationships (such as family, employment, investment, financial or business) between the external auditor and the Bank (other than in the ordinary course of business) which
   • could adversely affect the external auditor’s independence and objectivity;
   • Monitor the external auditors’ compliance with relevant ethical and professional guidance on the rotation of external audit partner, the level of fees paid by the Bank compared to the overall fee income of the firm, office and partner and other related requirements;
   • Assess annually the qualifications, expertise and resources of the external auditors and the effectiveness of the external audit process, which shall include a report from the external auditors on their own internal quality procedures; andAssess annually their independence and objectivity taking into account relevant professional and regulatory requirements and the relationship with the external auditor as a whole, including the provision of any non-audit services;
   • Evaluate the risks to the quality and effectiveness of the financial reporting process and consideration of the need to include the risk of withdrawal of the external auditors from the market in that evaluation.

• Meeting regularly with the external auditors (including once at the planning stage before the audit and once after the audit at the reporting stage) and at least once a year, without management being present, to discuss the external auditor’s remit and any issues arising from the external audit.

Internal Audit

• Reviewing and approving, where possible in advance of the event, the appointment, replacement, reassignment, or dismissal of the Head of Internal Audit;
• • Any difficulties encountered in the course of internal audits and any restrictions placed on internal audit scope of work or access to required information or personnel;
  • The audit plan of future audits to be conducted;
  • The internal auditing department's budget and staffing; and
  • Any changes which have been required in the previously approved audit planConsidering and reviewing with management and the Head of Internal Audit:
• Approving the remuneration of the Head of Internal Audit.

Compliance

• Reviewing regular reports from the Head of Compliance and keep under review the adequacy and effectiveness of the Bank’s compliance function; and
• Considering and reviewing the control plans of the Compliance function.