Audit Committee Charter

Purpose

The primary function of the St.George Audit Committee is to assist the Board of Directors of St.George Bank Ltd (“St.George Board”) in fulfilling its oversight responsibilities to shareholders by reviewing the:

Integrity of the financial statements;
External auditor’s qualifications, performance and independence;
Oversight and performance of the internal audit function; and
Financial reporting regulatory compliance. In conjunction with Westpac’s Board Risk Management Committee, this includes an oversight of the Australian Prudential Regulation Authority’s statutory reporting requirements.

The St.George Audit Committee will primarily fulfil these responsibilities by carrying out the activities outlined in Section E of this Charter.

Composition

The St.George Audit Committee shall be comprised of three or more directors as determined by the St.George Board, each of whom shall be a non-executive independent director and free from any business or other relationship that, in the opinion of the Board, would materially interfere with the exercise of his or her independent judgment as a member of the Committee.
The St.George Audit Committee shall be chaired by an independent non-executive director, who is not the Chairman of the St.George Board.
All members of the Committee shall have a working familiarity with basic finance and accounting practices, and at least one member of the Committee shall be an audit committee financial expert.
Committee members shall not serve on the audit committees of more than two other public companies unless the St.George Board determines such service does not impair the member’s ability to serve on the Committee.
New Committee members will receive induction training from the Chairman of the Committee and the management team.

Westpac Group

On 1 December 2008, St.George became a subsidiary of Westpac Banking Corporation.
The operations of St.George are progressively being integrated into the wider group. In that context, the role of the St.George Audit Committee includes informing itself in respect of the Westpac Group and its operations in order to assess their impact on financial reporting, processes, assurance and controls for St.George.
Accordingly there will be significant overlap in the role and functions of this Committee and Westpac’s Board Audit Committee.

Meetings

The Committee shall meet at least four times annually, or more frequently as circumstances dictate.
As part of its role to foster open communication, the Committee should meet regularly with management, the General Manager Group Assurance and the external auditors in separate executive sessions to discuss any matters the Committee or each of these groups believe should be discussed privately.
The Committee may request any officer or employee, outside legal counsel or any person or group with relevant experience or expertise to attend meetings of the Committee or to meet with any members or consultants to the Committee.
Other Directors of the St.George Board are entitled to attend Committee meetings and will receive copies of the papers.
A quorum of any meeting will be two members.
The secretary of the Committee will be Westpac’s Group Executive, Counsel and Secretariat or his/her designated representative.
The agenda and supporting documentation will be circulated to the Committee members within a reasonable period in advance of each meeting. The secretary of the Committee will circulate minutes of meetings to members of the Committee and the St.George Board.
The external auditor is entitled to be invited and to attend all meetings of the Committee. The Committee may request the external auditor to meet with any member or consultant to the Committee.

Reporting

The Committee shall regularly update the St.George Board about Committee activities and make appropriate recommendations. The Chairman of the Committee will report to the St.George Board, at the Board meeting next following a meeting of the Committee, on any matters under consideration by it within its Charter.
The Committee will refer to Westpac’s Board Risk Management Committee (to which the St.George Board has delegated certain responsibilities) any matters that have come to the attention of the Committee that are relevant for Westpac’s Board Risk Management Committee.
If required, the Committee will provide relevant periodical assurances to Westpac’s Board Risk Management Committee.
At the discretion of the Chairman and members of the Committee, matters considered to be of major importance will be referred to the St.George Board for its attention.
The Committee will review any reports required by law or requested by the St.George Board.

Responsibilities and Duties

To fulfil its responsibilities and duties the St.George Audit Committee shall:

Financial Reporting Processes

Review and discuss with management and the external auditor the half year unaudited and annual financial statements, and recommend to the St.George Board whether the financial statements should be issued.
Discuss with management and the external auditor significant financial reporting issues and judgments made in connection with the preparation of financial statements, including significant changes in the selection or application of accounting principles.
Review with the external auditor their report regarding significant findings in the conduct of their audit and the adequacy of management’s response.
Discuss with management, Westpac’s General Manager Group Assurance and the external auditor any major issues as to the adequacy and effectiveness of internal controls over financial information, reporting and disclosure as well as any special steps adopted in light of material control deficiencies.
Discuss with management and the external auditor, judgments on the quality and appropriateness of the accounting principles applied in financial reporting, including use of alternative disclosures and accounting principle treatment.
Review the process by which management controls the information reported in earnings press releases, analysts presentations and public disclosure.
Discuss with management and the external auditor the process surrounding and the disclosures made in connection with the certification of the half yearly and annual financial statements.
Discuss with management and the external auditor St.George’s major financial risk exposures and the steps management has taken to monitor and control such exposures including risk assessments and risk management policies.
Regularly discuss and receive reports from the Chairman of Westpac’s Board Risk Management Committee on relevant risk matters that should come to the attention of the St.George Audit Committee.

External Audit

Recommend to the St.George Board the selection and termination of the external auditor, subject to shareholder ratification, considering independence and effectiveness of the external audit and annually approve the terms of engagement and fees and other compensation to be paid to the external auditor. Quarterly, the Committee should review and discuss with the external auditor all significant relationships the external auditor has with St.George and the Westpac Group to provide reasonable assurance that the external auditor’s independence is maintained. The external auditor shall report directly to the Committee.
Regularly review the audit plan to ensure that all material risks and financial reporting requirements are appropriately addressed.
Discuss with the external auditor matters relating to the conduct of the audit including any difficulties encountered in the course of the audit work, any restrictions on scope of activities or access to requested information, significant disagreements with management (if any) and adequacy of management’s response.
Review and approve a pre-approval framework for Non –audit services performed by the external auditor.
Review the performance of the external auditor. Obtain and review a report from the external auditor at least annually on (i) the auditor’s internal quality control procedures, and (ii) the quality and capabilities of the lead engagement staff.
Periodically consult with the external auditor out of the presence of management about internal controls over financial information, reporting and disclosure and the fullness and accuracy of the financial statements.
Review annually the policy on maintaining the independence of the external auditor and recommend any policy changes to the St.George Board.

Oversight of Group Assurance

The Westpac General Manager Group Assurance has a reporting line to the Chairman of the Committee. Periodically, meet with Westpac’s General Manager Group Assurance without management being present.
Review significant reports to management on financial information, reporting and disclosure matters prepared by Westpac Group Assurance and management’s responses. Also, discuss with the Westpac General Manager Group Assurance potential issues which could impact the financial information, reporting and disclosure.
Review and approve the annual audit plan.

Financial Reporting Regulatory Compliance

Obtain reports from management, and the external auditor that St.George and its subsidiary affiliated entities are in conformity with applicable financial information, reporting and disclosure regulatory requirements. Advise the St.George Board with respect to policies and procedures regarding compliance with applicable laws and regulations over financial information, reporting and disclosure.
Review periodic presentations from management and the external auditor on the identification and resolution status of material weaknesses and reportable conditions in the internal control environment, including any significant deficiencies in the design or operation of internal controls that could adversely affect St.George’s ability to record, process, summarise and report financial data.
Review and approve the procedures that exist for the receipt, retention and treatment of complaints received on accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding accounting or auditing matters.
Discuss with management and the external auditor any correspondence with regulators or government agencies and any published reports which raise material issues or could impact on matters regarding financial statements or accounting policies.
Discuss with the Westpac Group Executive, Counsel and Secretariat legal matters that may have a material impact on the financial statements or compliance with regulatory policies.

Other Responsibilities

This Charter should be reviewed and updated at least annually and changes required should be recommended to the St.George Board for approval. The Committee should annually review its own performance.
To the extent the Committee deems necessary, retain independent legal, accounting or other advisors. The Committee should have the resources and authority appropriate to discharge its duties and responsibilities, including authority to select, retain, terminate and approve the fees and other retention terms of special or independent counsel, accountants or other experts and advisors as it deems necessary or appropriate, without seeking approval of the St.George Board or Management.
Members of the Committee must be available to meet with representatives of the Australian Prudential Regulation Authority on request.

Limitation of St.George Audit Committee’s Role

While the St.George Audit Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the St.George Audit Committee to plan or conduct audits or to determine that the financial statements and disclosures are complete and accurate and are in accordance with generally accepted accounting principles and applicable rules and regulations. It is the external auditor’s responsibility to plan and conduct the audit. It is management’s responsibility to determine the financial statements and disclosures are complete and in accordance with generally accepted accounting principles and applicable rules and regulations.

Approved by the Board on 3 February 2009