The audit committee, which consists of the chair and two independent directors, is chaired by Nick Backhouse. 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 divisions wholly owned by the Group.
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.