The Audit Committee (Committee) is a committee of the Board and applies to Pacific Energy Limited (Company) and its wholly owned subsidiaries.

The primary role of the Audit Committee is to review the integrity of the Company’s financial reporting and oversee the independence of the external auditors.


The Committee and its Chair shall be appointed by the Board.

The Committee shall comprise at least two members and consist only of non-executive directors1, the majority of whom should be independent2.  The Chair of the Committee shall be independent and should not also be Chair of the Board1.

The Committee should include members who are financially literate (i.e. able to read and understand financial statements)3 and at least one member who has financial expertise (i.e. is a qualified accountant or other financial professional with experience of financial and accounting matters)3.  The Committee should include members who have sufficient understanding of the industry in which the Company operates.

The secretary of the Committee should be the Company Secretary or such other person as nominated by the Board.


The Committee is responsible for the review and monitoring of financial reporting, audit and risk management strategies, systems, policies and processes implemented, and reported on, by management.

Members of the Committee generally do not represent themselves as experts in the fields of accounting, auditing or risk management.  As such, it is not the responsibility of the Committee directly to conduct accounting, audit or risk reviews.

Management is responsible for:

  • The preparation, presentation and integrity of the Company’s financial information and other information provided to the Committee;
  • Implementing, managing and maintaining appropriate accounting, financial reporting and risk management strategies, systems, policies and processes, reporting protocols and internal controls that are designed to ensure compliance with applicable accounting standards, laws and regulations; and
  • Maintaining sufficient knowledge, skills and expertise within the Company’s finance function.

The external auditor is responsible for planning and carrying out each audit and review in accordance with applicable auditing standards.  The external auditor is accountable to shareholders through the Committee.

Management and Financial Reporting

The Committee will review the draft half yearly and annual financial statements of the Company prior to consideration by the Board, to assess whether they represent a true and fair view of the Company’s financial position and performance.

The Committee should focus on:

  • Compliance with accounting standards (including an assessment of the appropriateness of management’s selection of accounting policies and disclosures);
  • Significant or unusual transactions and accounting estimates:
  • Significant changes in accounting policies and practices;
  • Underlying earnings and major judgmental areas;
  • Significant audit adjustments and unadjusted audit differences; and
  • The form of the proposed opinion to be issued by the external auditor.

The Committee will review the Declarations signed by the Chief Executive Officer and Chief Financial Officer required by section 295A of the Corporations Act and Recommendations 7.2 and 7.3 of the ASX Corporate Governance Principles.

Compliance with laws and regulations

The Committee will, in conjunction with the Board:

  • Ensure that the Company’s financial statements and reporting complies with the Corporations Act, accounting standards, ASX Listing Rules and other regulatory requirements4,5;
  • Monitor the laws and the regulations that relate generally to the entity’s business operations and review the Company’s compliance with such laws;
  • Seek advice of the Company’s legal advisers on any legal matters that could have significant impact on the Company’s financial statements;
  • Consider the effects on the Company of any new or proposed accounting or tax practices, principles or developments, disclosure requirements and legislative or regulatory pronouncements.

Risk Management and Control Framework

The Committee will consider the adequacy and effectiveness of the Company’s internal control framework by reviewing reports from Management and the external auditors, and by monitoring Management responses and actions to correct any noted deficiencies6.

External Auditor

The Committee will:

  • Recommend to the Board the appointment, reappointment or replacement of the external auditor7;
  • Approve rotation of partners of the external auditor;
  • Review and approve the audit plans and engagement letters of the external auditor, including payment of annual fees and variations to approved fees;
  • Review the overall scope of the external audit, including identified risk areas and any additional agreed-upon procedures;
  • Review the efficiency and effectiveness of the external auditor in relation to their responsibilities7;
  • Ensure there are no unjustified limitations placed on the auditors and resolve any disagreements between management and the external auditor regarding financial reporting;
  • Meet with and assess the findings of the external auditors as well as management’s response to their recommendations;

The Committee will monitor and note compliance by the external auditor with the independence requirements imposed by the Corporations Act and will receive and review the Auditor’s Independence Declaration to be provided to the directors of the Company by the external auditor pursuant to section 307C of the Corporations Act7.

The Committee will implement a process for approval of all audit and non-audit services provided by the external auditor (who are not to be appointed to undertake any non-audit assurance services that may impair the external auditor’s judgment or independence in respect of the Company).

On an annual basis, the Committee will review a report from the external auditor:

  • Confirming that the audit firm’s internal quality control and conflict procedures are in place and operating; and
  • Describing any material issues raised by the most recent quality control, or peer review, of the audit firm and any steps taken to deal with any such issues.

The Committee should meet at least two times a year7.  If required, additional meetings may be requested through the Committee Chair by any Committee member, the Company Secretary or the relevant partner from the external auditor.

A quorum for Committee Meetings is two members.

The Committee may invite such other persons (e.g. the Managing Director and Executive Directors) as it deems necessary.  All directors, including those directors not on the Committee may attend Committee meetings with the consent of the Chair of the Committee.

At each meeting, the Committee will7:

  • Meet with management (without the external auditor) to discuss any issues relating to the external audit; and
  • Separately meet with the external auditor (without management) to discuss any relevant issues and seek assurance that no management restrictions are being placed upon the external auditor.

The Committee will report on its meetings to the Board.  The report should contain all matters relevant to the Committee’s role and responsibilities, including7:

  • Assessment of whether external reporting is consistent with Committee members’ information and knowledge and is adequate for shareholder needs;
  • Assessment of the management processes supporting external reporting;
  • Procedures for the selection and appointment of the external auditor and for the rotation of external audit engagement partners;
  • Recommendations for the appointment or, if necessary, the removal of the external auditor;
  • Assessment of the performance and independence of the external auditors. Where the external auditor provides non-audit services, the report should state whether the audit committee is satisfied that provision of those services has not compromised the auditor’s independence;
  • The results of the Committee’s review of risk management and internal control systems.

The proceedings of all meetings will be recorded in minutes to be approved by the Committee.  The minutes of the Committee shall be made available at the next full Board Meeting of the Company after each Committee meeting7.


The Committee will maintain free and open communication with management and the external auditors.  The Committee has the authority to seek any information if requires from any employee of the Company and all employees must comply with such requests7,8.

The Committee may take such independent legal, financial or other advice as it considers necessary7,9.

The Committee should understand the Company’s group structure and operations and key developments relevant to the Committee and may receive periodic presentations from subject matter experts to assist in achieving such an understanding8.


This Charter of the Audit Committee must be approved by the Board.

The Committee is responsible for the review of the effectiveness of this charter and the operations of the Committee and to make recommendations to the Board of any amendments.


1ASX Corporate Governance Principles, Recommendation 4.2
2ASX Corporate Governance Principles, Recommendation 4.2. “Independence” is based on Recommendation 2.1, Commentary, Box 2.1
3ASX Corporate Governance Principles, Recommendation 4.2, Commentary
4ASX Corporate Governance Principles, Recommendation 7.1, Commentary
5ASX Corporate Governance Principles, Recommendation 5.1, Commentary
6ASX Corporate Governance Principles, Recommendations 7.1 and 7.2, including Commentary
7ASX Corporate Governance Principles, Recommendation 4.3, Commentary
8ASX Corporate Governance Principles, Recommendation 2.5, Commentary
9ASX Corporate Governance Principles, Recommendation 2.1, Commentary