Audit Committee
The Committee is chaired by Nigel Moore. The other members
of the Committee are David Bell, Michael Harper, John Potter
and Will Wyatt. Each member of the Committee is required to
be, and is, independent. The Company’s external auditors are
invited to attend meetings of the Committee on a regular basis.
During 2004 the Committee met three times. At two of those
meetings the executive directors were not present for part of the
meeting so that members of the Committee could meet with the
auditors. The practice of the Committee meeting alone with the
auditors will continue in the future.
Duties of the Committee:
Financial Reporting
Monitoring the integrity of the financial statements of the
Company, including its annual and interim reports, preliminary
results’ announcements and any other formal announcement
relating to its financial performance, reviewing significant
financial reporting issues and judgements which they contain.
Reviewing the annual financial statements of the pension funds
where not reviewed by the Board as a whole.
Internal Controls and Risk Management Systems
Keeping under review the effectiveness of the Company’s
internal controls and risk management systems; and reviewing
and approving the statements to be included in the annual
report concerning internal controls and risk management.
Whistleblowing
Reviewing the Company’s arrangements for its employees to
raise concerns, in confidence, about possible wrongdoing in
financial reporting or other matters. The Committee ensures that
these arrangements allow proportionate and independent
investigation of such matters and appropriate follow up action.
Internal Audit
The Company does not have an internal audit function.
However, the need for such a function is regularly reviewed and
considered by the Committee. (Refer to the final paragraph of
Internal Control and Risk Management).
External Audit
Considering and making recommendations to the Board, to be
put to shareholders for approval at the annual general meeting,
in relation to the appointment, re-appointment and removal of
the Company’s external auditors. The Committee oversees the
selection process for new auditors and, if the auditors resign,
the Committee is required to investigate the issues leading to
this and decide whether any action is required.
Overseeing the relationship with the external auditors including,
but not limited to:
- approving its remuneration, whether fees for audit or non audit
services and that the level of fees is appropriate to enable an
adequate audit to be conducted;
- approving its terms of engagement, including any engagement
letter issued at the start of each audit and the scope of the
audit;
- assessing annually its independence and objectivity taking into
account relevant professional and regulatory requirements and
the relationship with the auditors as a whole, including the
provision of any non audit services;
- satisfying itself that there are no relationships (such as family,
employment, investment, financial or business) between the
auditors and the Company (other than in the ordinary course
of business);
- agreeing with the Board a policy on the employment of former
employees of the Company’s auditors, then monitoring the
implementation of this policy;
- monitoring the auditors’ compliance with relevant ethical and
professional guidance on the rotation of audit partners, the
level of fees paid by the Company compared to the overall fee
income of the firm, office and partner and other related
requirements;
- assessing annually its qualifications, expertise and resources
and the effectiveness of the audit process which shall include
a report from the external auditors on their own internal
quality procedures;
- meeting regularly with the external auditors, including at the
planning stage before the audit and after the audit at the
reporting stage. The Committee meets the external auditors at
least once a year, without executive directors being present, to
discuss their remit and any issues arising from the audit;
- reviewing and approving the annual audit plan and ensuring
that it is consistent with the scope of the audit engagement;
- reviewing the findings of the audit with the external auditors.
This includes but is not limited to the following;
- a discussion of any major issues that arose during the audit,
- any accounting and audit judgements, and
- levels of errors identified during the audit.
- reviewing the effectiveness of the audit and reviewing any
representation letter requested by the external auditors before
it is signed by management;
- reviewing the management letter and management’s response
to the auditors’ findings and recommendations;
- developing and implementing a policy on the supply of non
audit services by the external auditors, taking into account any
relevant ethical guidance on the matter.
Reporting Responsibilities
- The Committee Chairman reports to the Board on its
proceedings after each meeting on all matters within its duties
and responsibilities.
- The Committee makes whatever recommendations to the
Board it deems appropriate on any area within its remit where
action or improvement is needed.
Other Matters
The Committee has access to sufficient resources in order to
carry out its duties, including access to the Company Secretary
for assistance as required;
The Committee members are provided with training as and
when required, both in the form of an induction programme for
new members and on an ongoing basis for all members;
The Committee may oversee any investigation of activities which
are within its terms of reference and act as a court of the last
resort; and
At least once a year, reviewing its own performance, constitution
and terms of reference to ensure it is operating at maximum
effectiveness and recommending any changes it considers
necessary to the Board for approval.
Authority
The Committee is authorised to seek any information it requires
from any employee of the Company in order to perform its
duties and to obtain, at the Company’s expense, outside legal or
other professional advice on any matter within its terms of
reference. It is also authorised to call any employee to be
questioned at a meeting of the Committee as and when
required.