Aviva 2005 Annual Report Download - page 64

Aviva plc 2005 Governance
Governance continued
Audit committee report
This report provides details of the role of the Audit Committee and
the work it has undertaken during the year.
The purpose of the Committee is to assist the Board in discharging
its responsibilities for the integrity of the Company’s financial
statements, the assessment of the effectiveness of the systems of
internal control and monitoring the effectiveness of the internal
and external auditors and the objectivity of the external auditor.
The full terms of reference for the Committee can be found on
the Company’s website www.aviva.com and are available from
the Group Company Secretary.
The Audit Committee
The Audit Committee currently comprises the following
independent non-executive directors, appointed by the Board:
Derek Stevens (Chairman)
Richard Karl Goeltz
Carole Piwnica
Russell Walls
There were no changes to the membership of the Committee
during 2005. The Committee met on five occasions in 2005 and
each member attended every meeting. The Group Company
Secretary acts as the secretary to the Committee.
Derek Stevens, a Chartered Accountant, is a member of the
financial sector committee of the Accounting Standards Board and
is a former Chief Financial Officer of British Airways plc and the
TSB Group plc. Richard Karl Goeltz is a former Chief Financial
Officer of American Express Company, NatWest Group plc and
The Seagram Company Ltd. Russell Walls, a Fellow of the Chartered
Certified Accountants, is a former Group Finance Director of BAA
plc, Wellcome plc and Coats Viyella plc. The Board is satisfied that
all these directors have recent and relevant financial experience.
The Group Chief Executive, Group Finance Director, Group Audit
Director and the external auditor normally attend, by invitation,
all meetings of the Committee. Other members of senior
management are also invited to attend as appropriate to present
reports. In performing its duties, the Committee has access to the
services of the Group Audit Director, the Group Company Secretary
and external professional advice.
The Committee follows an agreed annual work plan. It reviews,
with members of management and the internal and external
auditors, the Company’s financial announcements including the
annual report and accounts to shareholders and associated
documentation. It places particular emphasis on their fair
presentation and the reasonableness of the judgemental factors
and appropriateness of significant accounting policies used in their
preparation. At each meeting, the Committee receives a report
from the Group Audit Director concerning the Company’s systems
of internal control, including any significant new issues and actions
taken on previously reported issues. Twice each year, the
Committee receives reports on the adequacy of the Group’s life
assurance and general insurance reserves. The Committee also
reviews the annual work plan for the Group’s internal
audit function.
During 2005, the Committee received regular reports on risk
management, fraud, anti money laundering, “whistle blowing”,
legal and corporate governance matters to help it assess the
effectiveness of the risk management and control frameworks.
The Group Tax and Regulatory Director reported on the Group’s
compliance with appropriate rules and regulations, highlighting
significant regulatory developments and compliance issues. During
the early part of 2006 the responsibility for overseeing governance,
regulatory and compliance issues, as well as the oversight of the
non-financial internal controls will be transferred to the Governance
and Regulatory Committee which was established in January 2006.
In addition the Committee reviewed the Group’s capital and risk
frameworks against the regulatory reforms incorporated in the
Financial Services Authority’s Prudential Sourcebook (PSB)
concerning individual capital assessments (ICA). The Committee
considered the proposed assumptions, methodology and process
followed in determining the amount of capital required to support
the Group’s business plans, and the adequacy of its capital
resources. It recommended the Group’s ICA for 2005 to the Board
for submission to the Financial Services Authority.
For the past three years a major programme has been in place
to manage the transformation of the Group’s financial reporting
framework and the Committee has received quarterly reports on
the progress being made. In August 2005, the Committee agreed
that with the successful introduction of the European Embedded
Value as the basis for the supplementary reporting of the Group’s
life assurance results and the publication of the Group’s 2005
interim results on an IFRS basis, the programme had achieved its
major objectives. Accordingly, the programme was terminated and
the remaining developments are being managed in business units
as part of their normal operations.
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