AUDIT AND RISK COMMITTEE CHARTER

PURPOSE
The Audit and Risk Committee ("the Committee") is a committee of the Adtrans Group Limited (ADG) Board ("the Board"). The Committee's primary functions are to:
  • Consider the Group's financial statements for the half and full year, including:
    the Managing Director and Company Secretary letter of representation to the Board, and
    the Management representations in respect of the Group's financial reporting and the adequacy and effectiveness of its risk management, internal compliance and control systems;
  • Consider and review the scope of work, reports and activities of the external auditor;
  • Establish policies as appropriate with regard to independence of the external auditor;
  • On the basis of information received from the external auditors and management, form a judgement as to the independence of the external auditors;
  • Consider the appointment and proposed fees of the external auditor and, if appropriate, conduct a tender of the audit. Any subsequent recommendation following the tender for the appointment of an external auditor will be put to the Board and then, if a change is approved, it will be put forward to shareholders for their approval;
  • Receive from management information as to their processes for the identification, monitoring and management of significant business risks;
  • Consider internal control and compliance structures;
  • Consider the respective work plans of internal audit and group compliance, review summary reports of their reviews and monitor management's response;
  • Review issues arising for any income tax audits by the Australian Tax Office and significant taxation transactions and strategies of the company.
The Committee makes recommendations to the Board on matters arising from each of the abovementioned objectives.

COMPOSITION
  • The Committee shall be appointed by the Board and comprise a minimum of three independent non-executive directors.
  • A quorum shall be any two (2) members, or any greater number determined by the Committee from time to time.
  • The duties and responsibilities of a member of the Committee shall be in addition to those duties set out for a Director of the Board.
  • Committee members will have a working familiarity with general finance and accounting practices. At least one member of the Committee should have accounting or related financial management expertise and at least one member should have a detailed understanding of the industry in which ADG operates.
  • It is appropriate that members of the Committee have a range of different backgrounds, skills and experiences, having due regard to the operational, financial and strategic risk profile of ADG.
CHAIRMAN
  • The Board shall appoint the Committee Chairman.
  • The Chairman of the Board and any Executive Director are not eligible to be a member of the Committee.
  • The Committee Chairman shall have leadership experience and a strong finance, accounting and/or business background.
MEETINGS AND ATTENDANCE
  • The Committee should meet at least three (3) times per year. Additional meetings may be held as the work of the Committee demands.
  • The Committee Chairman will call a meeting of the Committee if so requested by any member of the Committee, the external auditor, internal auditor, or by the Chairman of the Board.
  • As necessary or desirable, the Committee Chairman may invite members of management, including the head of internal audit, and representatives of the external auditors or other external advisors to be present at meetings of the Committee.
  • At least annually, the Committee shall meet with the external auditor without management present.
  • At least annually, the Committee shall meet with the internal auditor without management present.
  • Proceedings of all Committee meetings are minuted and signed by the Committee Chairman. Minutes of Committee meetings are tabled at ADG Board meetings.
  • At least annually, the Committee shall meet with ADG tax advisors to discuss tax matters and the tax profile of ADG.
AUTHORITY AND REPORTING
  • The external auditor reports to the Committee and the Board of Directors.
  • The Committee has authority to investigate any activity within its terms of reference or any matters specifically requested by the Board.
  • The Committee has unrestricted access to all records and staff of the Group (including internal audit) and the external auditors.
  • The Committee shall consider at each meeting whether any failures of risk management, internal control or compliance matters (that are brought to the Committee's attention) are significant and should be immediately reported to the Board.
  • Any suspected frauds or irregularities shall be immediately reported by Management to the Committee.
  • The Committee submits two summary reports to the Board each year. A report is submitted to the respective Board meeting that approves the:
    • half year financial statements; and
    • the full year financial statements.
INDEPENDENT ADVICE
The Committee shall have access to external professional advice as necessary, at the company's expense, with the approval of the Chairman of the Board, which will not be unreasonably withheld.

SECRETARY
The Company Secretary for ADG shall act as Secretary of the Committee.

VOTING
  • Matters arising for determination at Committee meetings shall be decided by a majority of votes of Directors present and voting and any such decision shall for all purposes be deemed a decision of the Committee.
  • In the case of equality of votes, the Chairman of the meeting, in addition to his deliberative vote, has the casting vote.
REPORTING
Proceedings of all meetings are minuted and signed by the Committee Chairman. Minutes of all Committee meetings will be provided to the subsequent Committee meeting.

REVIEW OF CHARTER
This charter is to be reviewed annually by the Corporate Governance Committee to ensure it remains consistent with the Board's objectives and responsibilities.

PUBLICATION OF CHARTER
This charter is to be made available to shareholders on the Company's website

April 2009