The board must establish an audit committee of at least three directors of which the majority must be independent including the chairman. The committee must:

(a) Review the licensee's accounting and financial policies and practices;
(b) Review the integrity of the licensee's financial and internal controls and financial statements (particularly with reference to information passed to the board - see Paragraph HC-1.2.10). The information needs of the board to perform its monitoring responsibilities must be defined in writing, and regularly monitored by the audit committee;
(c) Review the licensee's compliance with legal requirements;
(d) Recommend the appointment, compensation and oversight of the licensee's external auditor; and
(e) Recommend the appointment of the internal auditor.
January 2014