Audit Committee Charter

Flight Centre Limited's Audit Committee supports and advises the Board in relation to the Flight Centre Limited Group of companies.

Committee Purpose

The audit committee's primary functions include:

Recommending the external auditor's appointment/removal, reviewing the auditor's performance and scope of the audit
Review internal and external audit management letters to monitor management's remedies to correct noted deficiencies.
To help the Board oversee the risk management framework, including the determination of the scope of the internal audit function, ratifying the Chief Internal Auditor's appointment/removal and contributing to the Chief Internal Auditor's performance assessment
Review the company's published financial results
Report to the Board on matters relevant to the committee's role and responsibilities
Ensure the timely adoption of and adherence to all relevant accounting policy changes
To oversee corporate governance policies and issues with respect to legal and regulatory compliance bodies

Committee Composition

The Committee will consist of at least two independent, non-executive directors with a working understanding of finance and accounting practices. The committee members are permitted to invite senior executives or independent advisors to attend upon approval of the Chairman.

Audit Committee meetings will occur at least twice a year for the release of the audited financial statements and then as and when required. The chairman will call the meeting upon request by any committee member, Chief Financial Officer or external auditors.

Minutes of the meeting

Minutes of the Audit Committee meetings are to be taken by the Company Secretary (or delegate). The Chairman will report findings and recommendations to the full Board in conjunction with the minutes of the Audit Committee meeting being circulated to the full Board.

Appendix 2

Internal Audit Charter

Objectives

Internal audit supports management's business objectives and the Audit Committee's need for overall assurance on the quality and cost effectiveness of internal controls.

The primary objective of the internal audit function is to assist management achieve its objectives through advice on risk management and internal control practices. Internal control is a management process designed to provide reasonable assurance regarding the achievement of the following objectives:

The reliability and integrity of information;
Compliance with policy, plans, procedures, laws and regulations;
The safeguarding of assets;
Effective and efficient use of resources; and
The accomplishment of established objectives and goals.

Importantly, an appropriate control environment is necessary for systems of internal control to be effective. The control environment elements include integrity, ethical values, management style and structure, authority and responsibility, human resources policies and practices and competence of personnel.

Responsibilities

Internal audit is responsible for evaluating controls relevant to risks, developing priorities and recommending procedures that will ensure effective internal control. This will include:

Conducting an independent review of management control systems and practice as a basis for identifying ways of improving efficiency, effectiveness and minimizing financial risks;
Reviewing the adequacy of systems and procedures established by management to safeguard assets and making appropriate recommendations for improvement;
Ascertaining the extent of compliance with established policies, procedures and statutory requirements;
Appraising the adequacy, integrity, security, reliability and usefulness of management information systems and computer systems;
Helping to generate an awareness of risk management effective control techniques with a commitment to using them throughout the organisation; and
Cooperating in providing a range of professional internal consultancy services to management.

Annual Internal Audit Plan

An internal audit plan will be prepared in consultation with management and the Audit Committee and approved by the Audit Committee each year.

The plan will be based on a risk assessment and will be the key driver of audit activity throughout the year and clearly sets out the internal audit projects, tasks, resources, responsibilities and deadlines, including the communication and co-ordination framework. The plan forms the basis of project management and performance measurement for the internal audit function.

Prior to the commencement of each audit project, a briefing meeting with management will be conducted to agree the detailed scope of each audit project. A project plan is prepared for each audit area in consultation with management.

Reporting

Audit reporting and recommendations will reflect a good understanding of the business and provide an intelligent analysis of the issues. The following reports will be provided:

Audit Report – on completion of the audit fieldwork a closing meeting will be held, where a draft audit report is discussed. This report must be formally responded to in writing within 1 week of the close meeting (unless otherwise agreed).

Risk Rating – during the audit closing meeting, a risk rating will be provided to management. This risk rating provides a quantitative benchmark of the perceived risk and compliance issues identified within each business.

Audit Committee Report – this report is prepared prior to all Audit Committee meetings, and provides a summary of the audit activity conducted in the previous period, the risk ratings for the previous period, significant audit findings, areas of internal audit focus in the coming period and any other matters that the Internal Audit Manager considers appropriate for inclusion.

Global SWOT Report – this report is prepared monthly and includes similar information to the Audit Committee Report.

Nation SWOT Report – this report is prepared on a half-yearly basis, and provides a summary of the audit activities conducted within the Nation over the preceding period, and a summary of planned audit activity for the following period.

Quality and Skills

The Internal Audit function should ensure that the team's skills are developed and maintained through:

Re-skilling and training (eg in complex technical areas, in the use of technology, implementing best practice and in developing inter-personal skills such as communication);
Techniques such as benchmarking to identify and adopt appropriate best practices;
The engagement of external specialists as and when necessary and cost-effectively to meet changing business needs; and
Developing and monitoring appropriate internal audit performance measures, including mechanisms for continuous improvement.

The internal audit team shall respect the confidentiality of information acquired in the course of their work and must demonstrate objectivity and professionalism, including applying the Code of Ethics, Standards and Guidelines of the Institute of Internal Auditors, Institute of Chartered Accountants in Australia and the Australian Society of Certified Practicing Accountants.

Independence

For the internal audit function to fulfil its responsibilities, it is essential that it is independent of the activities it audits and reviews. Internal audit is independent when it carries out its work freely and objectively, and derives its independence from the Audit Committee to which it has unrestricted access.

Internal audit also has unrestricted access to all the records, personnel, property and operations of FCL with due responsibility for safekeeping and confidentiality.