Audit Board Terms of Reference

1. Purpose

 1.1 The Audit Board forms part of the Firm's governance arrangements for promoting audit quality and protecting the public interest, supporting the Public Interest Committee (PIC) in carrying out its responsibilities having regard to the Audit Firm Governance Code 2022 ("AFGC") and related expectations for audit firm governance and transparency.

1.2 The Independent Non-Executives are members of both the Audit Board and the PIC. The Audit Board provides a forum for more detailed consideration of audit quality matters within the Firm's wider governance framework.

1.3 In particular, the Audit Board oversees and considers:

1.4 The promotion of audit quality; and

1.4.1 The Audit Service Line's strategy, culture and governance arrangements, including how the Firm ensures that those within the audit practice remain focused above all on delivering high-quality audits in the public interest and fostering a culture that supports that objective.

2.    Responsibilities

2.1 In its role of advising on the promotion of audit quality the Audit Board will consider the audit practice’s actions to ensure the consistent delivery of high-quality audits in the public interest, this will include, but is not limited to:

2.1.1 Audit strategy – consider the audit strategy of the firm in the context of ensuring that (i) the people within the audit practice are focused above all on delivering of high-quality audits in the public interest; and (ii) establishing and promoting a culture supportive of the public interest;

2.1.2 Partner promotion and remuneration – consider whether the firm’s procedures in respect of partner promotion and remuneration support the delivery of high quality audits;

2.1.3 Audit quality indicators – consider the appropriateness of the indicators selected and targets set by the audit practice, and the actual results and audit practice’s responses to these results;

2.1.4 Audit quality plans and actions – consider the appropriateness of the audit quality plans and the progress and impact of actions to address;

2.1.5 Actions to support quality in PIE audits – consider the firm’s response to ensuring quality in PIE audits;

2.1.6. Audit Service Line (SL) Training plans and delivery – consider whether the plans and delivery are appropriate to support audit quality and the development of the technical skills and knowledge of the audit people;

2.1.7 Audit SL Culture – consider the effectiveness of the firm’s systems and initiatives for promoting and improving audit quality with a culture that delivers quality; and

2.1.8 Audit SL Whistleblowing – consider the firm’s arrangements for an effective Audit SL whistleblowing policy and procedure, and issues raised under this process.

3.    Relationships with other governance arrangements

3.1.   Independent Non-Executives (INEs) are members of both the PIC and Audit Board. The PIC focuses on firm‑wide public interest oversight. The Audit Board provides a mechanism, alongside its advisory function, for the INEs to devote more time to matters relating to audit quality and to monitor the drivers of audit quality in more depth.

3.2.   The role of the INEs, the Firm's supporting obligations and escalation arrangements are set out in the Independent Non-Executive Charter here.

3.3.   Governance Council representatives attend PIC and Audit Board meetings to promote alignment of oversight activities and ensure matters of shared responsibility are considered in a coordinated manner.

4.    Our Effectiveness

4.1.   The Audit Board recognises the importance of it making an effective contribution and fulfilling its role and responsibilities in an effective manner. The Audit Board shall undertake an annual evaluation of its effectiveness.

5.    Audit Board ToR

5.1.   The Audit Board shall review, approve and publish on the LLP’s website on an annual basis the Audit Board terms of reference.

5.2.   Any material changes shall require approval in accordance with the Firm's governance arrangements.

6.    Members

6.1.   The Audit Board consists of not fewer than three independent non-executive members, the Head of Audit and the Head of Audit Quality.

6.2.   Membership comprises a majority of INEs, reflecting the principles of the AFGC.

7.    Meetings

7.1.   There shall be a minimum of four Audit Board meetings per annum.

7.2.   Additional meetings of the Audit Board may be called at any time by any Audit Board member.

7.3.   The Audit Board is quorate when at least the Chair, one other independent non-executive and one other Audit Board member are present, as long as INEs are in the majority of members.

7.4.   The Chair may delegate their responsibilities to another INE to enable the Audit Board to be quorate if they are unable to attend.

7.5.   Any Audit Board member can request that any relevant matter is considered by the Audit Board, such consideration being at the discretion of the Chair. 

7.6.   Meetings are ordinarily held in person, although virtual participation is permitted where all participants can hear and be heard.

7.7.   Meetings are supported by the UK Secretariat, which provides secretariat services including meeting minutes and action tracking.