FINANCIAL REPORTING

Introduction

Under the ASX Listing Rule 4.10, companies are required to disclose in their Annual Report the extent to which they have followed the best practice recommendations of the ASX Corporate Governance Council.

Corporate governance is the system by which companies are directed and managed. It influences how the objectives of the Company are achieved, how risk is monitored and assessed, and how performance is optimised.

Good corporate governance structures encourage companies to create value and provide accountability and control systems commensurate with the risks involved.

Brainytoys Limited’s Policy

The Company Secretary must state in writing to the Board that the Company’s financial reports present a true and fair view, in all material respects, of the Company’s financial condition and operational results and are in accordance with relevant accounting standards.

The Board has established an Audit Committee whose primary objective is to facilitate the proper execution of the responsibilities of the Board of Directors relating to accounting and reporting practices of the Company.

The Audit Committee consists of two non-executive members of the Board of Directors and the Company Secretary. External auditors are able to attend by invitation. The Audit Committee elects the Chairman, who is not the Chairman of the Board.

The Audit Committee meets at least twice each year and at such additional times as the Audit Committee decides. The Chairman of the Audit Committee may convene a meeting at any reasonable time.

The duties and responsibilities of the Audit Committee are to:

	Evaluate the overall effectiveness of the external audit through review meetings with the auditors.
	Evaluate the adequacy and effectiveness of the Company’s accounting and administrative policies and internal control systems by regular communication with management and external auditors.
	Review all final draft financial statements, reports and announcements related thereto with Chairman of the Board and auditors, and recommend on their adequacy to the Board prior to release to members and other public forums.
	Review and determine the effects of any proposed changes to accounting policies and make recommendations to the Board on their acceptance or otherwise.
	Review all statutory regulatory, trustee or lender reports submitted to or made by the Company, and to report or recommend to the Board as appropriate.
	Report to the board of Directors on Committee activities.