PSH-Annual-Report

Annual Report Year Ended December 31, 2014Report of the Audit CommitteeAn Audit Committee was established uponadmission of the Company to trading on EuronextAmsterdam, consisting of the independentDirectors of the Company. Mr Battey is theChairman of the Audit Committee. As Ms Farlow isan independent non-executive Director, theDirectors consider it appropriate for her to be amember of the Audit Committee.Between October 13, 2014 and the end of thefinancial reporting period, the Audit Committee metonce. All of the members of the Audit Committeeattended the meeting, with the exception of LordKestenbaum. All members of the Audit Committeeare expected to attend each Board and AuditCommittee meeting and to arrange their schedulesaccordingly, although non-attendance may beunavoidable in certain circumstances.The Audit Committee has written terms ofreference with formally delegated duties andresponsibilities. The terms of reference of the AuditCommittee are available on the Company’swebsite or, on request, from the Company’sAdministrator.The Audit Committee considers the appointment,independence and remuneration of the auditorsand reviews the annual accounts, half-yearlyreports and interim management statements.Where non-audit services are to be provided by theauditors, full consideration of the financial andother implications on the independence of theauditors arising from any such engagement will beconsidered before proceeding.FINANCIAL STATEMENTS ANDSIGNIFICANT REPORTING MATTERSThe principal duties of the Audit Committee are tomonitor the integrity of the financial statements ofthe Company, including its annual and half-yearlyreports and interim management statements andformal announcements relating to the Company’sfinancial performance, reviewing and reporting tothe Board on significant financial reporting issuesand judgements communicated to the Committeeby the auditors. In particular, the Audit Committeereviews and assesses, where necessary: The consistency of, and any changes to,significant accounting policies both on a year onyear basis and across the Company; The methods used to account for significant orunusual transactions where differentapproaches are possible; Whether the Company has followed appropriateaccounting standards and made appropriateestimates and judgements, taking into accountthe views of the external auditors; The clarity of disclosure in the Company’sfinancial reports and the context in whichstatements are made; All material information presented with thefinancial statements, such as the Chairman’sStatement, Investment Manager’s Report,Report of the Directors and the CorporateGovernance Report; andAs part of the December 31, 2014 audit, prior tothe year end, the Audit Committee was involved inthe planning and preparation for the AnnualReport, Financial Statements and the audit. TheAudit Committee met with the InvestmentManager, Administrator and the auditors anddiscussed the auditors’ audit plan. The Chairmanand the Chairman of the Audit Committee were inregular contact with the Investment Manager,Administrator and auditors throughout the process.The Audit Committee reviewed and discussed themost relevant issues for the Company andreceived a report from the auditors. The auditorsfocused on the risks faced by the Company, withfocus on the valuation of investments and thecalculation of incentive fees.The Audit Committee also considered the valuationof investments and the calculation of incentivefees, along with compliance of the financialstatements with International Financial ReportingStandards (“IFRS”). The Audit Committeeconsidered the processes surrounding theproduction of the financial statements and obtainedcomfort from these processes.Members of the Audit Committee met with theauditors a number of times during the auditprocess and, after considering various discussionswith the auditors, Investment Manager andAdministrator, are satisfied that the audit wasundertaken in an effective manner and addressedthe main risks.PERSHING SQUARE HOLDINGS, LTD. 33