Audit Committee Charter

Role and responsibilities

1. Purpose

The Committee is a committee of the Bendigo and Adelaide Bank Board. Its purpose is to provide assistance to the Board in relation to oversight of the following.

External audit independence and performance (including prudential audit requirements).
Internal audit and credit risk review function (Group Assurance).
Statutory financial and APRA reporting requirements.
Internal control framework.

2. Composition Competencies

All members must be financially literate (able to read and understand financial statements).

At least one member must have financial expertise (as a qualified accountant or as a financial professional with experience of financial and accounting matters).

At least one member must have an understanding of the industry in which the Bank operates.

3. Scope

The Audit Committee responsibilities apply in relation to Bendigo and Adelaide Bank Limited (Bendigo and Adelaide Bank) and its subsidiaries (together, the Group), including subsidiaries in their capacity as trustee, custodian, responsible entity and securitisation manager, and cover the audit requirements of Australian Prudential Regulation Authority (APRA), as well as audit requirements under the Corporations Act.

4. Responsibilities – Group subsidiary audit policy

Adopt a Group subsidiary audit policy setting out policy and procedures to be followed by all Group entities.

In relation to compliance by Group subsidiaries with the subsidiary audit policy, perform an oversight role, monitor, and, if needed, make recommendations to subsidiary boards.

5. Responsibilities – external audit

Appointment and removal	Adopt procedures for the selection and appointment of the external auditor, to apply across Group entities. Recommend to the Board any proposed appointment or removal of a Bendigo and Adelaide Bank auditor. Receive any proposal from a Group subsidiary for the appointment or removal of a subsidiary auditor, for consideration and approval before the auditor is appointed or removed.
Engagement	Recommend to the Board procedures, to apply across BBL Group entities, for engagement of an external auditor and parameters for the engagement terms and remuneration. Agree the annual audit engagement terms and remuneration for the Bendigo and Adelaide Bank auditor. Review and agree the external audit plan for coverage of material risks and financial reporting requirements. Review rotation of the Bendigo and Adelaide Bank audit engagement partner annually and make recommendations to the Board.
Performance	Assess the performance of the Bendigo and Adelaide Bank auditor on an annual basis and report to the Board on that assessment.
Independence and non-audit services	Maintain a policy in relation to auditor independence, rotation and the provision of non-audit services, and monitor compliance with that policy. Make sure that the policy reflects the requirements of the Corporations Act and APRA and takes into account the ASX Corporate Governance Principles and Recommendations. Receive any proposal by management for the provision of any non-audit services by the external auditor of Bendigo and Adelaide Bank to any Group entity, and approve or reject the proposal, having regard to maintaining auditor independence. Assess the independence of the Bendigo and Adelaide Bank external auditors and whether the Audit Committee is satisfied that the independence of this function has been maintained having regard to the provision of non-audit services, and report to the Board on the assessment. This includes providing the annual statement required by the Corporations Act as to whether the Audit Committee is satisfied that the provision of non-audit services is compatible with the independence of the auditor and the reasons for being so satisfied. Note: The assessment of independence is dealt with in the External Audit Independence policy, including the requirements of the Corporations Act and APRA.
Fit and proper	Assess on an annual basis (or as close to annual as is practicable) whether the auditor is fit and proper for the purposes of the Bendigo and Adelaide Bank Group Fit and Proper policy.
Management and representation letter	Receive and consider the management representation letter from the CFO to the external auditors.
Closing reports	Receive and consider the closing report issued by the external auditor in connection with the half-year and full year financial statements for Bendigo and Adelaide Bank, and report to the Board on the Committee’s consideration of the closing report. Receive and consider a summary of any material issues arising from any Group subsidiary audit (to the extent that this is not covered in the closing report for Bendigo and Adelaide Bank).
External audit management letter	Receive and consider the external audit management letter, including findings and recommendations, together with management responses.

6. Responsibilities – internal audit

Oversight of the Group Assurance (internal audit) function across the Group, including the following.

Review and approve the Group Assurance charter.
Review and approve the Group Assurance Plan including the scope and resourcing.
Annual assessment of the performance, adequacy, and independence of the Group Assurance function and report to the Board on the outcome of that assessment.

Review Group Assurance recommendations arising from internal audit and credit risk reviews and investigations and management report responses.

Receive any relevant reports from the Group Assurance function relating to credit risk, internal control and systems process.

Recommend to the Board the appointment and removal of the General Manager Group Assurance.

7. Responsibilities – statutory financial reporting

Assessment of whether external financial reporting is consistent with committee members’ information and knowledge and is adequate in their opinion for shareholder needs and report to the Board on the assessment.

Oversee compliance with the statutory financial reporting obligations of the Group.

Review the reviewed half year financial statements and audited full year financial statements, together with the external audit closing report (see 5 above). The review is to include the following disclosures.

Any significant changes in accounting policies, principles and practices. This includes any proposed departures from accounting standards.
The appropriateness of disclosures in the financial statements.
Any significant audit adjustments.
Related party transactions.
Any known issues that may have a material impact on the financial statements including any material subsequent events.

Recommend the half-year and full year financial statements for Bendigo and Adelaide Bank to the Board for adoption.

Decide any change in Group accounting policies.

CEO and CFO declarations

Receive and review the written statements to the Board by the CEO and CFO on the following and on any other matters required by the Corporations Act and assess the processes that were used to reach the opinion provided in the statements.

The financial records of Bendigo and Adelaide Bank for the financial year have been properly maintained in accordance with section 286 of the Corporations Act;
The financial statements and notes referred to in paragraph 295 (3) (b), for the financial year comply with the accounting standards;
The financial statements and the notes for the financial year give a true and fair view of the financial position and performance of the Company and Consolidated Entity;
Any other matters that are prescribed by the regulations for the purposes of this paragraph in relation to the financial statements and the notes for the financial year are satisfied;
The above statements are founded on a sound system of risk management and internal control; and
Bendigo and Adelaide Bank’s risk management and internal control system is operating effectively in all material respects in relation to financial reporting risks.

8. Responsibilities – internal control

Ongoing review of risk management and internal compliance and control systems in the Group and report to the Board on the results of the review.

9. Responsibilities – prudential and APRA

APRA targeted review	Review the objective, scope and outcome of the annual targeted reviews.
APRA prudential audit report	Recommend the annual audit report on compliance with prudential requirements and prudential statistical returns for APRA to the Board.
APRA reviews and reports	Oversight of review of reports from APRA and actioning in respect to the ADI.
Meeting with APRA	The Committee members are to be available to meet with APRA on request. The request is to be made through the Company Secretary.

10. Responsibilities – other

Reporting of concerns	The Committee must establish and maintain policies and procedures for employees to submit, confidentially, information about accounting, internal control, compliance, audit, and other matters about which the employee has concerns. The Committee is also to have a process for making sure employees are aware of these policies and for dealing with matters raised by employees under these policies.
Policies	The Committee has delegated authority from the Board to approve amendments to policies within its scope of responsibility. The Committee has a discretion to refer any amendment to the Board for decision. Note: The Board Committee Procedural Rules require an annual report to the Board providing an overview of amendments made by the Committee to policies. Examples: Reporting of Concerns, External auditor – selection and appointment, External auditor - independence policy, Group subsidiary audit policy, accounting policy changes.
Taxation	Review the implementation of steps taken to address the taxation compliance issues associated with operations and any major transaction or arrangement considered by the Board.
Reviews	The Committee may initiate reviews, as needed, to fulfil the Committee’s responsibilities under this charter.
General	Any other responsibilities delegated to the Committee by the Board from time to time. This may include oversight of due diligence, for example, in relation to major transactions.

Procedure

1. Procedural rules

The Bendigo and Adelaide Bank Board Committees – Procedural Rules apply to the Audit Committee.

2. Conflict of interests

A member of the Committee is not entitled to be present when an act or omission of that director or a contract or arrangement involving that director or a related party of that director is being investigated or discussed.

However, if in the opinion of the Committee, their investigation or discussion will be assisted by hearing from the interested director, the Committee may invite the director to address the Committee. The director will not be invited to take part in the deliberations following that address.

3. Meeting frequency

The Committee must meet at least 6 times a year.

Current composition and attendees

This section does not form part of the charter. It sets out the composition and attendees current at the last date of review of the charter.

Composition

Ms Dawson (Chair)
Mr Abrahamson
Mr O’Dwyer
Ms Radford

Attendees

The following persons have a standing invitation to attend meetings, subject to the discretion of the Committee to revoke the invitation in relation to attendance at all or any meetings or a specific item of business.

Managing Director (Mike Hirst)
Chief Financial Officer (Richard Fennell)
Group Financial Controller (Adam Woods)
General Manager Group Assurance (Linda Veronese)
Ernst & Young representative

This charter was adopted by the Board of Bendigo and Adelaide Bank Limited on 15 December 2003. It was amended 28 June 2004, 25 July 2005, 25 September 2006, 18 December 2006 and 28 April 2008 and 1 March 2010