VALLE VERDE COUNTRY CLUB, INC.
AUDIT COMMITTEE CHARTER
(2025)
I. CREATION
The Audit Committee (“Audit Committee”) of the Valle Verde Country Club, Inc. (the “Club”) is established pursuant to the Club’s Manual on Corporate Governance (the “Corporate Governance Manual”) which was approved by the Board of Directors on 06 February 2016. The creation of the Audit Committee is also in accordance with Section 23 of the Club’s By-Laws.
II. PURPOSE
The Corporate Governance Manual stipulates that the Club’s Board of Directors (“Board”), management, executives, officers and staff adopt and commit themselves to the principles and best practices on corporate governance, specifically: transparency, accountability, fairness, and integrity. They acknowledge that these basic principles are geared in helping the Club: (i.) achieve its strategic objectives, (ii.) create value for all stakeholders, (iii.) sustain its long-term viability, and (iv.) attain its corporate goals.
In line with the current best practices on corporate governance and to ensure the Board’s effective management and monitoring of the Club’s finances, strategic objectives, enterprise risks, operations, and control measures, the Board constituted the Audit Committee.
Thus, the fundamental purpose of the Audit Committee is to provide support to the Board in the performance of the latter’s oversight functions on:
A. the Club’s financial statements and reporting system;
B. the Club’s compliance to legal and regulatory requirements;
C. the external auditor’s qualifications, independence, and performance;
D. the performance of the Club’s internal audit function and internal auditor; and
E. the Club’s audit and risk management activities through continuous evaluation and feedback on the effectiveness of the Club’s audit, risk management, and control systems/processes.
III. MANDATE
The principal role of the Audit Committee is to strengthen good governance, enhance accountability, and safeguard the Club’s financial and operational integrity. In particular, the Audit Committee shall ensure rigorous oversight in the following areas:
A. Financial Reporting Integrity & Internal Controls
1. Oversee the accuracy, completeness, and reliability of financial statements, ensuring they comply with applicable accounting standards and regulatory requirements.
2. Evaluate significant accounting policies, judgments, and estimates, particularly for complex transactions (e.g., asset valuations, revenue recognition, internal processes, etc.).
3. Monitor the adequacy and effectiveness of internal controls, including but not limited to fraud prevention mechanisms, financial reporting safeguards, and IT systems security.
4. Review management’s processes for identifying and mitigating financial reporting and operational risks.
B. Internal and External Audit Oversight
1. Assess the independence, qualifications, and performance of the internal audit function, including its scope, resources, and adherence to professional standards.
2. Review and approve the internal audit plan, ensuring alignment with the Club’s key risks and operational priorities.
3. Recommend the appointment, compensation, or removal of the external auditor.
4. Evaluate and review the internal auditor’s and external auditor’s independence, and ensure that their audit findings are addressed by management.
C. Compliance with Laws & Regulations
1. Review the effectiveness of the system for monitoring compliance with laws, regulations, and ethical standards (e.g., Revised Corporation Code and relevant SEC- issued Regulations, tax laws, anti-corruption policies, data privacy regulations, ordinances), including the monitoring of the results of management’s investigation and action on instances of non-compliance.
2. Review the findings of any examinations by regulatory agencies and any audit observations.
3. Review the Club’s code of conduct and the process for communicating the code of conduct to company personnel, and for monitoring compliance therewith.
4. Develop and Propose to the Board a whistleblowing policy, that ensures confidentiality and non-retaliation, for unethical conduct and/or violations of any laws, regulations, or ordinances.
5. Review investigations into misconduct (e.g., fraud, conflicts of interest) and recommend to the Board or Management for corrective actions.
D. Enterprise Risk Management (ERM) and Internal Controls
1. Oversee the Club’s ERM framework, ensuring risks are identified, assessed, and mitigated across all operations (e.g., financial, operational, reputational, strategic).
2. Evaluate risk appetite and tolerance levels, reviewing major risk exposures (e.g., liquidity risks, cybersecurity threats, natural disasters).
3. Assess the effectiveness of risk mitigation strategies and contingency plans.
4. Collaborate with the Club’s management in reviewing the auditors’ findings regarding the adequacy and effectiveness of internal controls. This includes assessing recommendations aimed at enhancing the internal control environment across financial, operational, compliance, and information technology (IT) security domains. Evaluate the suggested audit procedures implemented in response to any material control deficiencies identified.
5. Coordinate with the appropriate committee for the review of financial statement, corporate governance, operational, legal, and other related risks.
For any knowledge of any suspected fraud or irregularity, or suspected violation of any laws or regulations, which has or is likely to have a material impact on the Club’s operating results or financial position, the Audit Committee must discuss such matter with the external auditor and report the matter to the Board.
E. Related Party Transactions (RPTs)
1. Develop and enforce an RPT Policy to ensure transparency, fairness, and arm’s-length dealings in transactions involving the Club’s directors, officers, employees, members, or their relatives.
2. Determine materiality thresholds for RPTs requiring endorsement from the relevant committee and eventual Board approval.
3. Review and approve/disapprove material RPTs, ensuring:
a.) That no conflicts of interest exists;
b.) The terms of the dealings are comparable to market rates;
c.) That proper disclosures are made to the members of the Club.
4. Maintain a Related Party Registry to track affiliations and update such record quarterly.
F. Corporate Governance
1. Promote adherence to governance best practices, including ethical conduct, accountability, and member’s protection.
2. Report regularly to the Board on critical issues (e.g., audit findings, compliance breaches, emerging risks).
3. Conduct an annual self-assessment of the Committee’s performance and recommend improvements.
4. Ensure inclusion in the Annual Report of key Audit Committee activities (audit matters, risk oversight) including corporate governance report (RPT approvals and independent assessments).
IV. AUTHORITY
To effectively fulfill its mandate, the Audit Committee is clothed with authority:
A. To obtain information and have access to personnel.
1. Access to all Club records, including financial data, internal reports, meeting minutes, contracts, and compliance documentation, subject to limitations set forth by R.A. 10173 otherwise known as the Data Privacy Act of 2012, and all relevant laws thereto;
2. Authority to call on any officer, employee, or external party (e.g., auditors, consultants) to provide information or explanations relevant to the Committee’s duties.
3. Direct communication channels with the internal audit team, external auditors, and senior management.
B. To investigate fraud, misconduct, or material breaches of policy.
1. Initiate independent investigations into suspected fraud, misconduct, or material breaches of policy (e.g., financial misreporting, conflicts of interest).
2. Delegate fact-finding tasks to internal audit or third parties while retaining oversight of the process.
3. Upon approval by the Board, require corrective actions and monitor implementation by management.
C. To manage Related Party Transactions (RPTs)
1. Review, approve, or reject material RPTs (as defined in the Club’s RPT Policy) to ensure:
a.) Arm’s-length terms: Transactions must be commercially reasonable and comparable to market rates.
b.) Conflict mitigation: Interested parties must abstain from voting.
c.) Documentation & Disclosure: All RPTs exceeding materiality thresholds must be recorded in the Related Party Registry and disclosed to the Board.
d.) Disapprove Non-Compliant RPTs: Authority to disapprove non- compliant RPTs and escalate unresolved issues to the Board.
D. To oversee audit governance
1. Direct oversight of the internal audit function, including:
a.) Approving the annual audit plan and budget, in coordination with the Finance Committee, and thereby further elevating the approval of the annual audit plan and budget to the Board.
b.) Evaluating the performance and independence of the Internal Auditor.
c.) Reviewing audit findings and ensuring management’s timely remediation.
2. Recommend the appointment/removal of the external auditor to the Board, with authority to interview candidates and assess audit quality.
E. To report/escalate findings and recommend appropriate action
1. Report findings and submit recommendations to the Board. Reports shall also include dissenting views of members if consensus is not reached.
2. Authority to convene special Board meetings to address urgent risks or compliance failures in accordance with the Club’s By-Laws.
V. COMPOSITION OF THE COMMITTEE
A. Audit Committee Membership
1. Number of Members – The Audit Committee shall be comprised of five (5) members, as follows:
The Chairperson plus two (2) other members of the Audit Committee shall all be incumbent members of the Board of Directors. However to ensure independence of the Audit Committee, no Club officer as defined in the Club’s By-Laws shall qualify as Chairperson or a member of the Audit Committee.
To complete the five (5) members of the Audit Committee, the Chairperson of the Audit Committee shall appoint two (2) more members. For each to qualify, they shall either be a: (i.) regular proprietary member, (ii.) spouse of a regular proprietary member, (iii.) a dependent of a regular proprietary member who is more than 21 years of age, or (iv.) assignee of a corporate proprietary member.
The Audit Committee may invite consultants as may be necessary and needed in the course of the performance of its functions.
2. Term of Office – The term of the Members of the Audit Committee shall be co- terminus with the term of the Chairperson of the Audit Committee.
3. The Chairperson of the Audit Committee shall perform the following functions and roles:
a.) Set meeting agendas focused on high-risk areas (e.g., financial reporting, RPTs).
b.) Ensure that Audit Committee members receive timely, accurate, and actionable information.
c.) Lead annual performance evaluations of the Audit Committee.
B. Members’ Competencies
1. Collective Expertise: The Committee as a whole shall possess –
a.) Financial Literacy: All members must understand financial statements, accounting standards, and internal controls.
b.) Risk Management Proficiency: At least one (1) member of the Committee should have undergone a formal training or experience in risk frameworks.
c.) Comprehensive Understanding of Corporate Governance Principles: All members must have a thorough knowledge and clear understanding of good corporate governance principles/policies and their positive results on the viability and sustainability of the Club.
2. Disclosure Conflict of Interest – Members must disclose any potential conflict of interest (e.g., related party relationships) annually and recuse themselves when appropriate.
3. Vacancies in the Committee- Vacancies shall be filled within thirty (30) days at most, to maintain a quorum.
VI. MEETINGS & PROCEDURES OF THE AUDIT COMMITTEE
A. Conduct of Meetings & Schedule
1. Regular Meetings: The Committee shall convene at least quarterly, with additional meetings scheduled as needed to address:
a.) Financial reporting cycles (e.g., pre-approval of quarterly/annual statements)
b.) Emerging risks or compliance issues
c.) Significant related-party transactions
2. Ad Hoc Meetings: Special meetings may be called by:
a.) The Committee Chairperson
b.) A majority of Committee members
c.) Request of internal/external auditors for urgent matters
3. Notice of Meetings: Notice of all meetings shall be disseminated or made to all members of the Audit Committee within seven (7) days prior to the conduct thereto, except for urgent and exceptional circumstances.
B. Quorum & Voting
1. Quorum Requirement: A majority of the members of the Audit Committee must be present (in person or via teleconference) to:
a.) Approve financial statements
b.) Make recommendations to the Board
c.) Approve material RPTs
2. Audit Committee Voting:
a.) Decisions shall be made by majority vote of the members of the Audit Committee.
b.) The Chairperson of the Audit Committee shall vote only when there is a deadlock.
c.) Interested members must recuse themselves from relevant votes to be casted.
C. Meeting Materials & Preparation
1. Materials for meetings shall be distributed by the Audit Committee secretariat at least five (5) days prior to the conduct of the meeting and shall include, but not limited to the following materials:
a.) Draft financial statements
b.) Internal audit reports
c.) Risk assessment updates
d.) RPT disclosures
D. Minutes & Reporting
1. Proper Documentation
a.) The minutes of the meeting shall contain all substantive discussions, decisions, and action items.
b.) Dissenting opinions shall be documented, unless such statement of a member or vote of a member shall be requested to be off the record.
c.) Attendance of members shall be recorded and maintained.
2. Review & Approval of Minutes:
a.) Draft of the minutes of meeting shall be circulated within seven (7) days after adjournment of the said the meeting.
b.) Approval of the minutes of a meeting shall be approved by the Audit Committee in the immediately following Audit Committee meeting.
3. Board Reporting:
a.) Approved minutes of the Audit Committee shall be submitted to the Board of Directors during the nearest regular board meeting or any special board meeting called for that purpose.
b.) The Chairperson of the Audit Committee shall highlight key issues during the said board meeting.
VII. EFFECTIVITY, SCOPE AND LIMITATION OF THE CHARTER
Upon approval and adoption of this Audit Committee Charter, the authorities, powers, duties, and responsibilities conferred upon the Audit Committee herein shall be construed and applied prospectively, and shall govern acts, transactions, and occurrences from the date of effectivity onwards.
The primary purpose of the Audit Committee is to provide oversight, promote sound governance, and strengthen internal controls and audit practices. In line with this mandate, the Audit Committee shall have no retroactive authority to amend, revoke, or invalidate acts or transactions consummated prior to the effectivity of this Charter. While the Committee may, in the prudent exercise of its oversight function, review historical transactions for the purpose of institutional learning, identifying control weaknesses, and enhancing governance and audit practices, such review shall not be construed as granting the Committee the power to revoke, revise, or otherwise alter contracts or transactions validly entered into prior to the Charter’s effectivity.
The Board of Directors expressly reserves the right to amend, modify, or repeal this Charter and any proposal initiated by the Audit Committee, including the proposed and approved Audit Plan, in whole or in part, at any time and under such circumstances as it may deem necessary, appropriate, or in the best interest of the Club. Such authority may be exercised in response to changes in law or regulation, developments in best practices, organizational needs, or any other circumstances that the Board, in its judgment, deems to warrant such action.