BT 2013 Annual Report Download - page 73

Governance
Governance 71
Governance
Governance 71
No contractual obligations exist that restrict the
group’s choice of external audit firm. We discuss
with the auditors the scope of their audits
before they start. We review the results and
consider the auditors’ formal reports, and we
report the results of those reviews to the Board.
Independence of the
external auditors
As a result of regulatory or similar requirements,
we may need to employ the external auditors
for certain non-audit services. The Board
has agreed policies (in line with the relevant
provisions of the Sarbanes-Oxley Act) on what
non-audit services can be provided by the
external auditors and the relevant approval
process. This safeguards the independence
and objectivity of the external auditors. Work
of a consultancy nature is not to be offered
to the external auditors unless there are clear
efficiencies and value-added benefits for the
company.
Internal audit
We monitor internal audit and its relationship
with the external auditors, as well as internal
audit’s plans, performance and effectiveness.
Internal controls and risk
management
On behalf of the Board, we review the group’s
risk profile, endorse a programme for testing of
the risk mitigation and controls that underpin
the group’s assessment of residual risk and
review the group’s current risk exposure
and capability to identify new risks. Our role
supports the Board’s responsibilities in respect
of the monitoring, review and reporting on
internal control and risk management.
We review the disclosures made by the Chief
Executive and Group Finance Director during
the certification process for the Annual Report &
Form 20-F. You can read more about this process
on page 95. The Board takes responsibility for
all disclosures in the Annual Report & Form
20-F. We also consider any whistleblowing
reports (including the confidential, anonymous
submission by employees) regarding accounting,
internal accounting controls or auditing matters,
ensuring arrangements are in place for the
proportionate, independent investigation and
appropriate follow-up of such matters.
Financial reporting
We review BT’s published financial results,
the Annual Report & Form 20-F and other
published information for statutory and
regulatory compliance. We report our views to
the Board to assist in its review and approval
of the results announcements and the Annual
Report & Form 20-F.
The Board has agreed that I have recent and
relevant financial experience as required by
the provisions of the Code and that I constitute
an ‘audit committee financial expert’ for the
purposes of the Sarbanes-Oxley Act.
After each meeting I report to the Board on
the main issues that we discuss.
Committee members
Meetings
Member
Eligible
to attend Attended
Nick Rose (Chairman) 6 6
Rt Hon Patricia Hewitt 6 5
Phil Hodkinsona22
Karen Richardsonb44
Jasmine Whitbread 6 6
a Phil Hodkinson retired from the committee on 30 June
2012.
b Karen Richardson joined the committee on 13 June 2012.
Our role
You can view our terms of reference
on our website at
www.bt.com/committees
We have clear terms of reference which set out
our authorities and duties. We review these
annually and they are approved by the Board.
External audit
We recommend the appointment and
re-appointment of the external auditors
and consider their resignation or dismissal,
recommending to the Board appropriate
actionto appoint new auditors.
We assess the performance of the external
auditors annually. The evaluation focuses on:
audit scope and planning; performance of the
lead audit partner and the audit team; audit
reporting and communications; added value;
and the audit fee. PricewaterhouseCoopers
LLP and its predecessor firms have been BT’s
auditors since BT listed on the London Stock
Exchange in 1984. The external auditors are
required to rotate the lead partner every five
years and other partners that are responsible
for the group and subsidiary audits change
at least every seven years. Such changes are
carefully planned to ensure business continuity
without undue risk or inefficiency. The partner
responsible for BT’s audit is completing his
fourth year within the group audit team and
his first year as lead partner, which is a role he
can continue for a further three years.
Who we are
I chair the Audit & Risk Committee , and our
membership and meeting attendance are set
out opposite.
Although not members of the committee,
the Group Finance Director, Group Controller,
Company Secretary, Director Internal Audit
and Director Group Financial Control attend
each meeting, as does the lead audit partner
and other representatives from our external
auditors. The external auditors are not present
when we discuss their performance and/or
remuneration.
The Board considers that our members have
broad commercial knowledge and extensive
business leadership experience. We have held
between us various roles in major business,
Government, financial management, and
financial function supervision, and the Board
considers that this constitutes a broad and
suitable mix of business and financial experience.
Reports of the Board Committees
Audit & Risk Committee Chairman’s report
Nick Rose
“Over the past year we have
paid particular attention to
increasing our understanding
beyond group level risks.
We have attended line
of business audit & risk
committees, received deep-
dive risk presentations from
the line of business CEOs, and
undertaken in depth reviews
of specific markets such as
Italy. All of this has served to
enhance our understanding
of BT’s overall control
environment.”