17.— The Act of 2004 is amended by inserting the following Part after Part 7A:

“PART 7B

ACCOUNTING OFFICER AND AUDIT COMMITTEE

Director General to be accounting officer of Executive.

40G.— The Director General shall be the accounting officer in relation to the appropriation accounts of the Executive for the purposes of the Comptroller and Auditor General Acts 1866 to 1998.

Audit committee.

40H.— (1) As soon as practicable after the commencement of this section, the Director General shall establish an audit committee to perform the functions specified in section 40I.

(2) The audit committee shall be appointed by the Directorate and shall consist of—

(a) one of the appointed directors,

(b) not fewer than 4 other persons who, in the opinion of the Directorate, have the relevant skills and experience to perform the functions of the committee, at least one of whom shall hold a professional qualification in accountancy or auditing.

(3) A person is not eligible for appointment to the audit committee pursuant to subsection (2)(b) if that person is an employee of the Executive.

(4) The Directorate shall designate one of the persons appointed pursuant to subsection (2)(b) to be the chairperson of the audit committee.

(5) The term of a person’s membership of the audit committee shall be determined by the Directorate when appointing that person.

(6) A member of the audit committee may resign from the committee by letter addressed to the Directorate.

(7) The Directorate may at any time remove a member of the audit committee for stated reasons.

(8) The terms and conditions of membership of the audit committee shall be determined by the Directorate with the consent of the Minister and the Minister for Public Expenditure and Reform.

(9) The Director General shall ensure that the audit committee is provided with the necessary secretarial and other resources to enable it to perform its functions.

Functions of audit committee.

40I.— (1) The audit committee shall—

(a) advise the Director General on financial matters relating to his or her functions,

(b) report in writing at least once in every year to the Director General on those matters and on the activities of the committee in the previous year, and

(c) provide a copy of that report to the Directorate and the Minister.

(2) The audit committee shall—

(a) advise the Directorate on financial matters relating to its functions,

(b) report in writing at least once in every year to the Directorate on those matters, and

(c) provide a copy of that report to the Minister.

(3) The audit committee’s duties under subsections (1)(a) and (2)(a) include advising on the following matters:

(a) the proper implementation by the Executive of Government guidelines on financial issues;

(b) compliance by the Director General with section 22 of the Exchequer and Audit Departments Act 1866, section 19 of the Comptroller and Auditor General (Amendment) Act 1993 and any other obligations imposed by law relating to financial matters;

(c) the appropriateness, efficiency and effectiveness of the Executive’s procedures relating to—

(i) public procurement,

(ii) seeking sanction for expenditure and complying with that sanction,

(iii) the acquisition, holding and disposal of assets,

(iv) risk management,

(v) financial reporting, and

(vi) internal audits.

(4) The audit committee shall meet at least 4 times in each year and may invite any person it considers appropriate (whether that person is or is not an employee of the Executive) to attend a meeting of the committee.

(5) The Director General shall—

(a) ensure that the audit committee is provided with all of the Executive’s audit reports, audit plans and monthly reports on expenditure, and

(b) if he or she has reason to suspect that any material misappropriation of the money for which he or she is the accounting officer, or any fraudulent conversion or misapplication of the Executive’s property, may have taken place, report the matter to the audit committee as soon as practicable.

(6) The Director General shall furnish to the audit committee information on any financial matter or procedure necessary for the performance of its functions by the committee when requested to do so and where such information relates to—

(a) any contract that the Executive proposes to enter into involving expenditure of an amount in excess of a threshold specified by the committee, and

(b) any legal proceedings taken or threatened against the Executive that may give rise to a potential financial liability.”.