Chair of the Audit Committee
I am pleased to present the Audit Committee Report for 2018. This report provides shareholders with an overview of the activities carried out by the Committee during the year. The Committee is responsible for ensuring that the financial performance of the Group is properly measured and reported on. Its role includes monitoring the integrity of the financial statements (including annual and interim accounts and results announcements), reviewing any changes to accounting policies, reviewing and monitoring the extent of the non-audit services undertaken by external auditors, advising on the appointment of external auditors and meeting with external auditors without management present.
Membership and attendance
The Committee consists of two independent Non-executive Directors: myself (as Chairman) and Simon Bennett. It is expected that either of the two new Non-executive Directors; Laure Duhot and Brian Johnson, will join the Committee during the current financial year. Other members of the Board or management may attend Committee meetings by invitation if required.
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The main duties of the Audit Committee are described in the Corporate Governance framework. It is intended that these will be kept under continuous review to ensure they remain appropriate and reflect any changes in legislation, regulation or best practice.
The main items of business considered by the Audit Committee during the year included:
- review of the 2018 financial statements and annual report;
- consideration of the external audit report and management representation letter;
- going concern review;
- review of the 2018 audit plan;
- review of suitability of the external Auditor;
- review of the interim results; and
- assessment of the need for an internal audit function.
The Committee reviews from time to time the need for an internal audit function and remains of the opinion that the systems of internal financial control are appropriate to the Group's present activities and that such a function is unnecessary.
On behalf of the Board we monitor the Group's system of internal controls to ensure they remain robust and are effectively implemented. Such a system is designed to manage, but not eliminate, the risk of failure to achieve business objectives. There are inherent limitations in any control system and, accordingly, even the most effective system can provide only reasonable, not absolute, assurance against material misstatement or loss. These controls include those financial and operational controls to manage risk. A discussion of these risks can be found on Our principal risks.
Role of the external Auditor
The Audit Committee monitors the relationship with the external Auditor, BDO LLP, to ensure that auditor independence and objectivity are maintained. As part of its review the Committee monitors the provision of non-audit services by the external auditor. The breakdown of fees between audit and non-audit services is provided in note 5 of the Group's financial statements. BDO LLP no longer provides any tax services to the Group but continues to do so to the Group's joint ventures. The non-audit fees relate to tax compliance for the Group's joint ventures and a review of the interim results. Having reviewed the auditor's independence and performance, the Committee recommends that BDO LLP be reappointed as the Group's Auditor at the next AGM.
External audit process
The external Auditor prepares an audit plan for its review of the full year financial statements. The audit plan sets out the scope of the audit, areas to be targeted and audit timetable. This plan is reviewed and agreed in advance by the Committee. Following the audit, the Auditor presented their findings to the Audit Committee for discussion. No major areas of concern were highlighted by the Auditor during the year, however, areas of significant risk and other matters of audit relevance are regularly communicated.
The Group has in place a whistleblowing policy which sets out the formal process by which an employee of the Group may, in confidence, raise concerns about possible improprieties in financial reporting or other matters.
This report was approved by the Board on 19 September 2018 and signed on its behalf by:
Chair of the Audit Committee