Ramsay Health Care Ltd Charter of Audit Independence

Purpose

The purpose of this Charter is to ensure that the Audit Committee of Ramsay Health Care Ltd (RHC) are satisfied that RHC’s statutory auditor is at all times independent as well as being seen to be independent.

The Charter sets out procedures that need to be followed to ensure this independence as well as identifying the various obligations of the statutory auditor, RHC’s management and RHC’s Audit Committee.

Corporate Governance and Independence

A high quality, independent statutory audit is fundamental to the maintenance of sound corporate governance within individual companies and the proper functioning of the capital markets, in providing investors with reliable, open and clear financial information upon which to base their decisions.

In adopting this Charter of Audit Independence, RHC restates their absolute commitment to observe the very highest standards of Corporate Governance. RHC also commit to the maintenance of the highest quality financial reporting standards and the essential integrity of a high quality, independent statutory audit. RHC also commit to a series of guidelines and procedures to ensure the provisions of this Charter are observed on a day-to-day practice.

RHC’s commitment to this Charter of Audit Independence reflects the desire to address issues of actual and perceived independence of the statutory audit process. The Charter goes above and beyond any current regulatory or professional requirements. In so doing, it is RHC’s aim to create a new standard of excellence in the area of audit independence that will address both perceived and actual issues, and therefore provide a solid platform of financial reporting for RHC that will underpin confidence in the security in and reliability of its financial reports.

Audit Characteristics

RHC are responsible for the preparation and presentation of their statutory financial reports and believe that a high quality statutory audit adds to the credibility of these reports. RHC believe there are several core characteristics to a high quality audit, namely:

• High levels of professional competence by the auditors, including appropriate industry experience and audit expertise.
• Complete confidentiality and professional behaviour by the auditor.
• Fulfilment of all technical standards.
• The maintenance of both actual and perceived independence at all times.
• The maintenance of absolute integrity and objectivity by the auditor.
• For all key decisions, appropriate consultation and quality control reviews within the audit firm with those who have appropriate subject matter knowledge and industry expertise.
• Restrictions on the statutory auditor’s financial interests in, and employment relationships with, RHC.
• Regular monitoring of compliance with all independence policies and procedures.
• Adoption of an appropriate attitude of professional scepticism by the auditor.
• No limitations on the scope of the audit imposed by RHC.

The Provision of Non-Statutory Audit Services

RHC recognises that their statutory auditor has a unique relationship with RHC, based upon the statutory auditor’s access to confidential information, knowledge of RHC and the industry within which RHC operates, as well as the statutory auditor’s corporate memory of RHC. These elements give the statutory auditor insight into RHC’s business and culture, which means there are certain services which the auditor is well placed to provide as well as ensuring that these services are provided in the most effective manner.

This Charter provides guidelines under which RHC can obtain the benefit of these services without impairing the statutory auditor’s objectivity or independence.

CHARTER OF AUDIT INDEPENDENCE: KEY COMMITMENTS

As a reflection of RHC’s absolute commitment to best practice corporate governance, the maintenance of meaningful financial reporting, and the essential integrity of a high quality independent statutory audit, RHC acknowledge the following:

1. The Audit Committee of RHC are responsible for the appointment of the statutory auditor. The statutory auditor is required to have regular communications with the Audit Committee.

2. The statutory auditor will report to the Audit Committee its assessment of how RHC’s accounting practices and reporting procedures compare with best practice.

3. RHC requires that the statutory auditor provide suitably qualified personnel to ensure an effective audit. They should provide audit personnel who are appropriately trained, capable of meeting the required technical standards, will maintain confidentiality and behave in a professional manner at all times.

4. To ensure audit quality at RHC, and to allow for an effective audit service by suitably qualified professionals, RHC commits that the statutory auditor will be fairly rewarded for the agreed scope of the statutory audit and audit-related services.

5. RHC considers that the level of non-audit fees paid to the statutory auditor can give rise to an actual or perceived loss of objectivity. RHC will prepare a list of all potential services that the statutory auditor may have the technical competence to provide. Each of these potential services will be classified into four categories as follows:

Category A:-	Services where existing knowledge of the statutory auditor brings insight and synergy to RHC without impacting the actual or perceived independence of the quality of the auditor’s ongoing assurance engagements.
Category B:-	Services which can be provided without impacting actual or perceived independence of the auditor’s ongoing assurance engagements
Category C:-	Services which may impact the actual or perceived independence of the auditor’s ongoing assurance engagements.
Category D:-	Services which would impact the actual or perceived independence of the auditor’s ongoing assurance engagements.

6. The statutory auditor will be allowed to perform Category A and Category B services but these would be required to be reported to RHC Audit Committee on a periodical basis. Any Category C service will require prior approval of the Audit Committee. As part of the request for approval, RHC management will be required to list the reasons as to why such approval will not compromise the independence of the statutory auditor. The request for approval should also include a schedule showing fees paid to the statutory auditor year to date as well a forecast for the full year split into the various categories of services. The statutory auditor will be prohibited from performing any Category D services.

7. RHC will require the statutory auditor to commit to rotating the senior audit partner for RHC every seven years.

8. No employee or former employee of the statutory auditor will be permitted to serve as a director or senior executive of RHC unless a minimum of two years has passed since leaving the employment of the statutory auditor. In addition, no employee of the statutory auditor will be employed by RHC if that member has been a member of the assurance team of the statutory auditor at any time in the two years prior to the planned appointment.

9. The Audit Committee will require the statutory auditor to confirm annually that it has complied with all legislated or professional regulations or guidance issued by the Australian accounting profession relating to Auditor Independence. Specifically, the statutory auditor will be required to confirm that they have maintained their independence and in particular will need to confirm the following:

• The statutory auditor and its partners do not have any financial interest in RHC.
• The current service team members of the statutory auditor do not have any financial interest in RHC.
• There are no business interests between RHC and the statutory auditor.
• The superannuation fund of the partners of the statutory auditor does not hold any direct financial interest in RHC.
• The staff superannuation fund of the statutory auditor does not hold any direct financial interest in RHC.
• No portion of fees paid by RHC to the statutory auditor is paid on a contingency basis.
• The total fees received by the statutory auditor from RHC do not have a material impact on its operations or financial conditions.
• RHC has not withheld fees from the statutory auditor.
• To the best of the statutory auditor’s knowledge, there is no litigation between RHC and the statutory auditor.

10. RHC requires its statutory auditor to maintain quality control processes whereby all key accounting and auditing decisions are arrived at after appropriate consultation with technical and subject matter experts within the firm.