The audit committee, which consists of the chair and two independent directors, is chaired by Giles Coode-Adams. The chief executive, group finance director, company secretary, controller of internal audit and senior representatives of the external auditors normally attend the committee’s meetings. At least once a year the committee or the committee chair meets with the external auditors and separately with the controller of internal audit, without executive members of the Board present.
The committee makes recommendations to the Board in relation to the appointment, re–appointment and removal of the external auditors and agrees their scope of work and fees prior to the commencement of the annual audit. The committee has a written policy on the engagement of the external auditor to supply non–audit services, which clearly sets out areas where the external auditor cannot provide non-audit services, for example accounting or managing internal audit work, as it could impact on their objectivity and independence.
The committee considers issues arising from the external audit and reviews the annual financial statements and written reports from the external auditors; it monitors internal financial control procedures and reviews the operation and output of the internal audit function. The committee reviews arrangements by which Group employees may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters. The committee has an agreed annual calendar of activities, which includes meeting in turn with the divisional chief executive and divisional finance director of each of the main divisions.
The committee’s proceedings are minuted and circulated to all Board members by the company secretary. The audit committee chair formally reports on the outcome of audit committee meetings to the Board.
During the financial year ended 1 April 2007 the activities of the audit committee included:
- monitoring the integrity of the Group’s financial statements and reviewing the significant and financial reporting judgments they contained
- review of the external audit strategy and subsequent report by the external auditors
- receipt and review of periodic reports from the controller of internal audit
- review of the committee’s terms of reference
- the biennial review of the effectiveness of the committee. As a result of the review, the committee instigated a project to review and refresh risk management processes across the Group and to ensure, following Andrew Karney’s retirement, that a new member appointed to the committee had recent and relevant financial experience, satisfied by the appointment of Nick Backhouse in April 2007
- pre–approval, where required, of non–audit work performed by the external auditors
meeting with the divisional chief executive and divisional finance director of all main divisions, other than Trader Media Group, to discuss:
- divisional risk registers
- internal and external audit issues
- IT investment plans
- timetable adherence
- resources
- assistance from the Group
- review of divisional and Group risks.