Audit and Finance Committee (AFC)

The Audit & Finance Committee (AFC) has the mission of setting out the policy framework as well as the guidelines for the internal audit and for monitoring the financial status of the company. The AFC is also in charge of liaising with the external auditors in-between two Annual General Meetings. 

 
The detailed tasks of the AFC range from drawing up the internal audit plan and proposing the appointment of external auditors to examining the external audit report and deciding on the follow-ups to be taken. 

 
Furthermore, the AFC reviews the effectiveness of the internal control systems and considers any major findings resulting from internal audit investigations.  

The AFC is composed of Board members only.

List of AFC Members

as of May 2016  

Luis Pedro Simoes, Novo Banco, Chairperson  

Kirstine Nilsson, Swedbank   

Narinda You, Crédit Agricole 

Terms of Reference

as of 17th April 2013 

Background

These Terms of Reference (TOR) define the mission and tasks entrusted by the Board of EBA CLEARING to the Audit and Finance Committee of the Board (AFC). These TOR further set forth the rules that shall apply for the composition and working procedures of the AFC.  

Changes to the TOR shall be made by decision of the Board of EBA CLEARING. 

The AFC shall perform an annual assessment of the TOR and shall recommend changes thereto as appropriate to the Board. 

Mission and Scope

The mission of the AFC is to set out the policy and the guidelines for the internal and external audit of the company and its activities, and to define and monitor the internal audit requirements and the tasks entrusted to external auditors. 

The AFC is further entrusted with the review and monitoring of the financial situation of the company. 

The AFC shall endeavour to apply all relevant best practice for Audit Committees both in spirit and letter. 

For the performance of its tasks in preparing recommendations to the Board of EBA CLEARING, the AFC has delegated right of decision from the Board. 

The AFC shall regularly report on its activities to the Board of EBA CLEARING and shall, as applicable, formulate recommendations to the Board. 

The AFC will act as it deems appropriate or necessary in relation to any material issues or concerns identified by the AFC, and the Chairman of the AFC shall report on the findings and recommendations of the AFC to the Chairman of EBA CLEARING, or, as applicable, to the Board. 

The scope of the tasks of the AFC includes in particular: 

a) Accounting and Financial Reporting

  • review the annual financial statements, 
  • review the report on the accounts established by the external auditor, 
  • review and monitor the financial reporting to the annual general meeting closing the accounts for each given fiscal year, 
  • provide a recommendation to the Board on the annual audited balance sheet and financial statements. 

b) Budget, Finance and Financial Planning

  • approve the assets & liabilities and treasury management policies prepared by the Director, Finance, Budget and Accounting, 
  • review, based on proposals submitted by the Management, the budgets and financial plans of the company, 
  • review the affordability and risk implications of high level budget targets/items, 
  • advise the Board on the financial impact of major decisions relating to the company’s organisation and/or activities, 
  • review annually the company’s medium term financial plans. 

c) Specific internal and external audit related tasks

  • recommend to the Board the appointment/dismissal of external auditors and determine their remuneration, 
  • ensure rotation of the external audit engagement partner is in line with any legal requirements and good practice, 
  • ensure to receive statements annually from the external auditors setting out all relationships with EBA CLEARING and affirming their independence, 
  • review annually the work and reporting of the external auditors on financial aspects, and pre-approve any significant consultancy assignments ensuring any such assignments do not place the external auditors in a position of auditing their own work, making management decisions on behalf of EBA CLEARING or in any other way impairing their audit independence, 
  • determine the internal audit plan for each year, 
  • approve the audit plans for financial matters and the systems operated by the company and all related aspects, and ensure absence of significant scope restrictions, 
  • approve changes to the audit plans including cancellation/postponement of audits and reasons for such changes, 
  • review the effectiveness of the internal control systems, 
  • monitor the follow up in relation to major findings from internal or external audit investigations, 
  • ensure that any internal audit is independent of management both by intent and actual practice. 

Composition

The Members of the AFC shall be appointed by the Board of EBA CLEARING from among the members of the Board of Directors. 

When appointing the Members of the AFC, the Board of EBA CLEARING shall endeavor to apply the principle that no two members shall be officers or employees neither of the same Shareholder Banking Group nor of Shareholders who have their registered office in the same country. 

The Members of the AFC shall be confirmed or appointed by the Board of EBA CLEARING annually, typically at the occasion of the first Board meeting following the date of the annual shareholders meeting closing the accounts. 

The Members of the AFC shall appoint an AFC Chairman from among the Members. 

Membership minimum is three persons. 

There should be no overlap between the members of the AFC and the Board Risk Committee (BRC).

Meetings and working procedures of the AFC

a) Access to information and confidentiality

The AFC has full access to any information in the company.  

The AFC has the power to make (or initiate through the Internal Audit Department) any investigation that the AFC may require in any domain of its responsibility. 

Members of the AFC shall, in relation to the activities entrusted to the AFC, keep confidential and refrain from disclosing any confidential information and documents and/or data provided or made available to the AFC and/or of which the AFC members become aware in their capacity as member of the AFC, subject to reporting to the EBA CLEARING Board [and the Shareholders] as referred to above. 

With the approval of the Chairman of the AFC, sensitive confidential information may be classified as restricted to the AFC. 

b) Participation of EBA CLEARING Management and staff (none voting)

The AFC shall receive reporting on a regular basis from the Chief Executive Officer, the Director, Finance, Budget and Accounting and the Director, Internal Audit. Meetings of the AFC shall be attended by the Chief Executive Officer, the Director, Finance, Budget and Accounting, Director, Internal Audit the Chief Risk Officer and by invitation of the AFC, Director, Operations, and the Service Directors or their pre-approved delegates. 

The AFC may request presence of any member of EBA CLEARING staff at its discretion. 

The AFC may invite the Chairman and/or the Deputy Chairman of the CLEARING Board to attend its meetings, for all or part of the agenda items. 

External auditors are present when their annual statements/opinions are discussed and when the AFC deems appropriate. 

c) Meetings

Meetings of the AFC shall be held at least four times annually, usually on a date preceding the Board meetings scheduled in advance for the relevant year. 

Meetings shall be called by the Chairman of the AFC. 

The Chairman of the AFC may call ad hoc meetings, as the Chairman deems necessary or appropriate. 

Meetings shall be held at the premises of EBA CLEARING, or at any other location as the AFC Chairman may decide, and, meetings may also be held by conference call. 

d) Quorum and decision making

A quorum of two members is necessary for a meeting to be properly constituted.   

A quorum can be physical or by presence through participation by conference call. 

Decisions are taken by consensus of the Members of the AFC.