relationships between the auditors and the Company and confirming compliance with all professional and regulatory requirements relating to auditor independence; and  In order to ensure that truth  and fairness is reflected in the preparation and publication of the Company’s financial reports, the Audit Committee reviews the written statement of the CEO and CFO to the Board that the Consolidated Financial Report presents a true and fair view,  in all material respects, of the financial condition and operational results of the Santos Group and is in accordance with Accounting Standards. This Statement also confirms that: The Chairman of the Audit Committee provides, and addresses, a written report together with the minutes and recommendations of the Audit Committee at the next Board Meeting. Similar procedures apply to all other Committees  of the Board. These provisions reflect the current behaviours expected of the world’s leading corporations and are consistent with the ethical values and integrity of the Company. The Chairman of the Audit Committee provides the Board with a statement clarifying that the provision of non-audit services by the external auditors is compatible with the general standard of independence for auditors. audit function is independent of the external auditor and reports to the Audit Committee.  The CEO and CFO have stated  to the Board in writing that:  The Board has adopted a policy in relation to the provision of non-audit services by the Company’s external auditor that is based on the principle that work that may detract from the external auditor’s independence and impartiality, or be perceived as doing so, should not be carried out by the external auditor. The Audit Committee Charter clearly identifies those services that the external auditor may not provide, those that may be supplied and those that require specific approval of the Chairman of the Audit Committee, in consultation with other members of the Committee.  The role of the Finance Committee is documented in a Charter, approved by the Board, and includes responsibility for considering and making recommendations to the Board on the Company’s capital management strategy and the Company’s funding requirements and specific funding proposals. The Committee also has responsibility for formulating and monitoring compliance with treasury policies and practices and the management of credit, liquidity and commodity market risks. It also provides that: This approach is incorporated in the Company’s Risk Management Policy, and aims to ensure that major business risks facing the Company have been consistently identified, analysed and evaluated, and that active management plans and controls are in place for the ongoing management of these risks. Independent validation of controls is undertaken by internal audit as part of its risk based approach. The internal The Board has in place a number of arrangements and internal controls intended to identify  and manage areas of significant business risk. These include  the maintenance of: Examples of management of specific risks are as follows: • the Consolidated Financial Report is founded on a sound system of risk management and internal compliance and control, which implements the policies adopted by the Board; and • the Company’s risk management and internal control systems, to the extent they relate to financial reporting, are operating effectively in all material respects. • the Board will not invite any past or present lead audit partner of the firm currently engaged as the Company’s external auditor to fill a vacancy on the Board;  • the lead audit partner will be required to rotate off the audit after a maximum of five years and there will be a period of at least three years before that partner can again be involved in the Company’s audit; and  • internal audit function, if outsourced, will be provided by a firm other than the external audit firm.  • Board Committees;  • detailed and regular budgetary, financial and management reporting;  • established organisational structures, procedures, manuals and policies;  • audits (including internal and external financial, environmental and safety audits); • comprehensive insurance programmes; and  • the retention of specialised staff and external advisors. • MANAGEMENT OF ENVIRONMENTAL AND SAFETY RISK – environmental and safety risk is managed An Enterprise Wide Risk Management approach forms the cornerstone of Risk Management activities of the Company and is based on the relevant Australian Standard (AS/NZS 4360 : 2004).  The current members of the Finance Committee, all of whom are independent non-executive Directors, are: Mr S Gerlach (Chairman), Mr P C Barnett and Mr G W McGregor. 6.3 Audit Committee Charter and Independence of Auditors 7. FINANCE COMMITTEE 8. RISK MANAGEMENT • the Consolidated Financial Report is founded on a sound system of risk management and internal compliance and control systems, which implements the policies adopted by the Board; and • the Company’s risk management and internal control systems, to the extent they relate to financial reporting, are operating efficiently and effectively in all material respects. 32 Annual Report 2004 • referring matters of concern to the Board, as appropriate, and considering issues which may impact on the financial reports of the Company.