Corporate governance statement
Report on the audit and risk committee
Members and attendance
The members and their attendance at committee meetings in 2008 were as follows:
| Name | Number of meetings | Number attended |
|---|---|---|
| Nick Page (Chairman) | 6 | 6 |
| Tony Hales | 6 | 6 |
| Ray Miles | 6 | 5 |
In addition to the members, at the invitation of the committee, meetings are attended by both the internal and external auditors as required and by the Finance Director and the director of risk and compliance. The committee has a session at meetings with the internal and external auditors without an executive director or member of the Company’s senior management being present.
Remit
Its remit is:
- to make recommendations to the board, for the board to put to shareholders in general meeting, in relation to the appointment of the external auditors, PricewaterhouseCoopers (‘PwC’), and the internal auditors, Ernst & Young, and to approve their terms of appointment;
- to review and monitor the objectivity of the external auditors and the effectiveness of the audit process, taking into consideration relevant UK professional and regulatory requirements;
- to develop and implement policy on the engagement of the external auditors to supply non-audit services;
- to monitor the integrity of the financial statements of the Company and the formal announcements relating to the Company’s financial performance, reviewing significant financial reporting judgments contained in them;
- to keep under review the effectiveness of the Group’s system of internal controls, including operational and compliance controls and risk management;
- to keep under review the Group risk register and to consider the most important risks facing the Group and their mitigation; and
- to keep under review the Group’s whistle-blowing policy.
Work in 2008
During 2008 the committee:
- reviewed an internal audit activity report at each meeting and considered 13 reports on specific areas of the business;
- considered a report by PwC on the results of its audit work (February) and considered a review by PwC of the financial information in the half-year report (July);
- received a presentation from PwC on the audit strategy for 2009 and agreed this (October);
- agreed the internal audit plan for 2009 – this provides broad coverage of the business activities and includes reviews in each of the countries, together with the key corporate functions in the UK (December);
- reviewed the Group risk register and considered the top risks facing the Group and their mitigation;
- received presentations on different areas of the business from senior managers and considered the internal controls / risks; and
- decided to establish internal audit functions in all the businesses under the direction of the director of risk and compliance.
Independence of auditors
The committee is conscious of the need to ensure that the external auditors are, and are perceived to be, independent and has taken various steps to seek to ensure that this is and remains the case.
PwC provides a letter of independence for the committee to consider once a year.
The committee has adopted a policy on the appointment of employees from the auditors to positions within the various Group finance departments. This prevents key members of the audit engagement team from being employed as Finance Director or in certain other senior Group finance roles.
The committee has adopted a policy on the use of the external auditors for non-audit work.
- The award of non-audit work to the auditors is managed in order to ensure that the auditors are able to conduct an independent audit and are perceived to be independent by the Group’s shareholders and stakeholders.
- The performance of non-audit work by the auditors is minimised and work is awarded only when, by virtue of their knowledge, skills or experience, the auditors are clearly to be preferred over alternative suppliers.
- The Group maintains an active relationship with at least two other professional accounting advisers.
- No information technology, remuneration, recruitment, valuation or general consultancy work may be awarded to the auditors without the prior approval of the Chairman of the audit and risk committee, such approval to be given only in exceptional circumstances.
- The Chairman of the committee must approve in advance any single award of non-audit work with an aggregate cost of £125,000 or more.
- The auditors may not perform internal audit work.
- The committee keeps under review the non-audit work carried out by PwC. Fees paid to PwC in 2008 are set out in note 4 of the notes to the financial statements.