These Terms of Reference have been drafted having regard to the requirements of the Audit Firm Governance Code (the “Code”) and other items that the Public Interest Body might reasonably consider. The Terms of Reference will continue to evolve as the Code evolves.
1.1 The purpose of the Public Interest Body is to enhance stakeholder confidence in the public interest aspects of the Firm’s activities, through the involvement of Independent Non-Executives. In particular the Independent Non-Executives shall have oversight of the Firm’s policies and procedures for promoting audit quality, helping the Firm to secure its reputation more broadly including in its non-audit business, and reducing the risk of firm failure.
2.1 The membership of the Public Interest Body comprises up to eight Independent Non-Executives (at least one of whom has appropriate audit or accounting experience), at least one member from the Firm’s Management Board, and at least one member of the Firm’s Supervisory Board. The membership of the Public Interest Body is as follows:
Dame Fiona Kendrick, Chair (Independent Non-Executive)
Victoria Raffe (Independent Non-Executive)
Philip Rycroft (Independent Non-Executive)
Chris Burns (Chair of the Supervisory Board)
Kevin Ellis (Senior Partner)
2.2 Each Independent Non-Executive shall hold office for a term not exceeding four years. Any Independent Non-Executive holding office for more than nine years in aggregate should be subject to rigorous review.
2.3 The Supervisory Board approves the Independent Non-Executives from candidates nominated by the Senior Partner, following consultation between the Senior Partner and the Chair of the Public Interest Body and thereafter with the Supervisory Board.
2.4 The members of the Management Board that sit on the Public Interest Body are chosen by the Senior Partner.
2.5 The members of the Supervisory Board that sit on the Public Interest Body are chosen by the elected members of the Supervisory Board.
2.6 The membership of the Public Interest Body shall include equal numbers of members of the Management Board and of the Supervisory Board.
2.7 The Independent Non-Executives shall be the majority on the Public Interest Body.
2.8 Only members of the Public Interest Body have the right to attend Public Interest Body meetings. Other individuals may be invited to attend for part or all of any Public Interest Body meeting, as and when appropriate.
2.9 Any Member of the Firm must attend meetings (including meetings of the Non-Executives) if requested to do so by the Public Interest Body.
2.10 A majority of the Non-Executives may require any person who is not a Non-Executive to absent themselves from the meeting for the discussion of any specific items.
3.1 The Chair of the Public Interest Body shall be an Independent Non-Executive. The Chair of the Public Interest Body shall from time to time be elected by the members of Public Interest Body from among the Independent Non-Executives upon the nomination of the Senior Partner after consultation with the members of the Public Interest Body.
3.2 The Chair of the Public Interest Body shall be elected on any occasion for a term not exceeding three years or the remaining length of their appointment but may offer themselves for re-election for additional terms. The Chair of the Public Interest Body will continue in office for the term for which they were elected or until they cease to be a member of the Public Interest Body if that takes place earlier.
3.3 In the absence of the Chair at a meeting of the Public Interest Body, the members present shall appoint by a simple majority, an Independent Non-Executive in attendance to act as Chair of the meeting. If there is a tied vote, the Chair will be selected by lot from those between whom there is the tie.
4.1 The Secretary to the Public Interest Body is Philip Patterson, the Head of Secretariat. In the absence of the Secretary, another member of the Secretariat of the Firm may act as Secretary of the Public Interest Body.
4.2 The Secretary will ensure that the Public Interest Body receives information and papers in a timely manner to enable full and proper consideration to be given to matters, and will be responsible for maintaining accurate records of meetings.
5.1 The quorum for a meeting of the Public Interest Body is a majority of the members of the Public Interest Body, provided this also includes a majority of Independent Non-Executives.
6.1 A decision of the Public Interest Body taken by vote at a meeting shall require a simple majority of those present in order to be passed, except where otherwise stated. The chair of any such meeting will have the casting vote.
7.1 The Chair of the Public Interest Body determines a rolling programme of ordinary meetings, which must provide for at least four ordinary meetings in each calendar year.
7.2 The Independent Non-Executives shall also meet a separate group to discuss matters relating to their remit.
8.1 Meetings of the Public Interest Body will be called by the Secretary at the request of the Chair, with notice of such meetings being provided at the earliest opportunity.
8.2 Unless otherwise agreed, notice of each Public Interest Body meeting confirming the venue, time and date together with an agenda of items to be discussed, shall be forwarded to each Public Interest Body member in a timely manner. Supporting papers shall be sent to the Public Interest Body members and other attendees, as appropriate, at the same time.
8.3 A special Public Interest Body meeting may be convened by the Chair, and at the request of any two other members of the Public Interest Body, by giving a minimum of two working days notice to all members of the Public Interest Body.
9.1 The Secretary will minute the proceedings and decisions of all Public Interest Body meetings, including recording the names of those present and in attendance.
9.2 Draft minutes of Public Interest Body meetings will be circulated first to the Chair, and then to all other Public Interest Body members for review.
9.3 Once approved, minutes will be shared with the Firm’s Management Board and Supervisory Board, unless it would be inappropriate to do so.
10.1 The Public Interest Body enables the Firm to fulfil certain responsibilities set out in the Code, as described in Annex 1. In carrying out its responsibilities under the Code, the Public Interest Body will take into account insofar as they impact on the public interest aspects of the Firm’s activities, the following:
10.1.1 the Firm’s strategy;
10.1.2 the Firm’s policies and procedures for risk management and internal control, which the Independent Non-Executives shall be involved in reviewing;
10.1.3 the Firm’s culture, values and behaviour;
10.1.4 the Firm’s policies and procedures relating to quality and compliance with regulation;
10.1.5 the Firm’s people policies;
10.1.6 the Firm’s external public-interest reporting;
10.1.7 compliance with the Firm’s Code of Conduct;and
10.1.8 any other matters that may affect the public interest, including relevant matters relating to the global network.
10.2. The Public Interest Body may delegate any duties or responsibilities to committees, including any relevant public interest duties or responsibilities which may be ascribed by the Audit Firm Governance Code. A committee may appoint, and further delegate its duties or responsibilities to, a subcommittee.
10.2.1 The Public Interest Body delegates responsibility to the Audit Oversight Body (a committee of the Public Interest Body) to oversee the FRC’s objective to improve audit quality by ensuring that people in the audit practice are focused above all on delivery of high-quality audits in the public interest, to promote a culture supportive of the public interest and to support (as appropriate) the Firm’s senior management in the execution of their responsibilities under the FRC’s objectives, outcomes and principles for operational separation of audit practices through robust oversight and constructive challenge.
11.1 The Public Interest Body’s principal point of contact with the Firm is the Senior Partner. The Independent Non-Executives shall also have regular contact with the Firm’s Ethics Partner.
12.1. The procedure for dealing with any fundamental disagreement that cannot otherwise be resolved between the Independent Non-Executives and members of the Firm’s management team and/or governance structures is set out in Annex 2.
Approved by the Public Interest Body on: 4th November 2021
London, PwC United Kingdom