Aviva 2006 Annual Report Download - page 86

Aviva plc
Annual Report and Accounts 2006 82
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
financial controls and monitoring the effectiveness and objectivity
of the internal and external auditors. 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 following independent non-executive directors, served on the
Committee during the year:
Period
Member From To
Russell Walls 1 July 2004 To date
(Chairman from
1January 2007)
Richard Karl Goeltz 1 July 2004 To date
Carole Piwnica 24 September 2003 To date
Derek Stevens 8August 1995 31 December 2006
Russell Walls succeeded Derek Stevens as the chairman of the
Committee on 1 January 2007 and Mary Francis became a
member from that date. The Committee met on four occasions in
2006 and each member attended every meeting. The Group
Company Secretary acts as the secretary to the Committee.
Russell Walls, a Fellow Chartered Certified Accountant, is a former
Group Finance Director of BAA plc, Wellcome plc and Coats
Viyella plc. Richard Karl Goeltz is a former Chief Financial Officer of
American Express Company, NatWest Group plc and The Seagram
Company Ltd. The Boardis satisfied that 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. It is the Committee’s practice at each meeting to meet
separately with the Group Audit Director and the external
auditor without any members of management being present.
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 financial 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. The Committee reports to the Board regarding the
effectiveness of the Group’s overall systems of internal control.
The Committee itself reviews the financial controls and works
closely with the Risk and Regulatory Committee which reviews
the non-financial controls.
Prior to 2006, the Committee received regular reports on risk
management, financial malpractice (including fraud, anti-money
laundering and “whistleblowing”), regulatory and compliance
matters. The responsibility for overseeing these matters as well as
the oversight of the non-financial internal controls was transferred
to the Risk and Regulatory Committee following its establishment
in January 2006. A separate report from that committee is set
out below.
In addition, the Committee reviewed the Group’scapital and
risk frameworks against the regulatory reforms incorporated in
the Financial Services Authority’s Prudential Sourcebook (PSB)
concerning the Group’s 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.
Each of the Group’smajor business units has an audit committee
that provides an oversight role for its business. All such committees
include members who areindependent of the relevant business.
The Group Audit Director reviews the papers and minutes from
these committees and brings all significant matters to the
Committee’sattention.
The Committee receives reports from the external auditor and
regularly holds discussions with both the internal and external
auditors in the absence of management. The chairman of the
Committee reports to the subsequent meeting of the Board
on the Committee’s work and the Board receives a copy of the
minutes of each meeting of the Committee.
Governance continued