Statement of Corporate Governance Practices (continued)  Code of Conduct (continued)  The Company has introduced a share trading policy. Directors and senior management (and their associates) are  prohibited from engaging in short-term trading of Company securities. The policy also restricts the buying or selling of  Company securities to three "window" periods (between 24 hours and 30 working days following the release of the  annual results, the release of the half-yearly results and the close of the annual general meeting) and such other times  as the Board permits. In addition, directors and senior management must notify the Company chairperson before they  or their close relatives buy or sell Company securities.  The Company has put in place a structure of review and authorisation designed to ensure the truthful and factual  presentation of the financial position of the Company. The structure includes:  Safeguard Integrity in Financial Reporting  The Board requires the Managing Director and the Finance Director to state in writing to the Board that the financial  reports of the Company present a true and fair view, in all material respects, of the financial condition and operational  results of the Company and are in accordance with relevant accounting standards.  The Board has established an audit committee.  The audit committee is structured so that the Committee consists of:  Audit Committee  (i)  review and consideration of the accounts by the audit committee; and  (ii) a process to ensure the independence and competence of the external auditors of the Company.  (a) only non-executive  directors;  (b) prior to 1 July 2005, at least one member of the Committee must be an independent director;  (c) after 30 June 2005, the majority of the members of the Committee must be independent directors; and  (d) not less than three members.  The chairman of the audit committee must not be the chairman of the Board of Directors.  At least one member of the audit committee must have financial expertise (i.e. is a qualified accountant or other  financial professional with experience of financial and accounting matters), and some members who have an  understanding of the industry in which the Company operates.  The audit committee shall meet at least four times each year. The purpose of these meetings shall be to:  1.  Review and approve internal audit and external audit plans.  2.  Review and approve the half-year financial report.  3.  Update the internal and external audit plans.  4.  Review and approve the annual financial report.  5.  The audit committee shall meet in private session at least annually to assess the effectiveness of management.  The audit committee shall provide assistance to the Board of Directors in fulfilling the corporate governance and  oversight responsibilities of the Board to verify and safeguard the integrity of the financial reporting of the Company.  The audit committee shall maintain free and open communication between the audit committee, external auditors, the  internal auditors, and management of the Company.  The audit committee is empowered to investigate any matter brought to the attention of the audit committee with full  access to all books, records, facilities, and personnel of the Company and the authority to engage independent  counsel and other advisers as the audit committee determines necessary to carry out the duties of the audit  committee.  The audit committee has a formal charter.  13  HARVEY NORMAN HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES – ANNUAL REPORT 2003 