Barclays 2006 Annual Report Download - page 145

Barclays PLC
Annual Report 2006 141
Governance
2
Going concern
The Directors confirm they are satisfied that the Company and the
Group have adequate resources to continue in business for the
foreseeable future. For this reason, they continue to adopt the ‘going
concern’ basis for preparing the accounts.
Internal control
The Directors have responsibility for ensuring that management
maintain an effective system of internal control and for reviewing its
effectiveness. Such a system is designed to manage rather than
eliminate the risk of failure to achieve business objectives, and can
only provide reasonable and not absolute assurance against material
misstatement or loss. Throughout the year ended 31st December 2006,
and to date, the Group has operated a system of internal control which
provides reasonable assurance of effective and efficient operations
covering all controls, including financial and operational controls and
compliance with laws and regulations. Processes are in place for
identifying, evaluating and managing the significant risks facing the
Group in accordance with the guidance ‘Internal Control: Guidance for
Directors on the Combined Code’ published by the Financial Reporting
Council. The Board regularly reviews these processes through the
Board Committees.
The Directors review the effectiveness of the system of internal control
semi-annually. An internal control compliance certification process is
conducted throughout the Group in support of this review. The
effectiveness of controls is periodically reviewed within the business
areas. Regular reports are made to the Board Audit Committee by
management, Internal Audit and the compliance and legal functions
covering particularly financial controls, compliance and operational
controls. The Board Audit Committee monitors resolution of any
identified control issues of Group level significance through to a
satisfactory conclusion.
The key document for the Group’s internal control processes is the
Group Internal Control and Assurance Framework (GICAF) which
describes the Group’s approach to internal control and details Group
policies and processes. The GICAF is reviewed and approved on behalf
of the Group Chief Executive by the Group Governance and Control
Committee.
Quarterly risk reports are made to the Board covering risks of Group
significance including credit risk, market risk and operational risk,
including legal and compliance risk. Reports covering risk measurement
standards and risk appetite are made to the Board Risk Committee.
Further details of risk management procedures are given in the Risk
management section on pages 68 to 107.
Management’s report on internal control over
financial reporting
The management of Barclays PLC is responsible for establishing and
maintaining adequate internal control over financial reporting. Barclays
PLC’s internal control over financial reporting is a process designed
under the supervision of Barclays PLC’s principal executive and principal
financial officers to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external reporting purposes in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the
European Union and for the purposes of preparation of reconciliations
to Generally Accepted Accounting Practices in the United States
(US GAAP).
Barclays PLC’s internal control over financial reporting includes policies
and procedures that pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect transactions and
dispositions of assets; provide reasonable assurances that transactions
are recorded as necessary to permit preparation of financial statements
in accordance with IFRSs and of reconciliations under US GAAP, and
that receipts and expenditures are being made only in accordance with
authorisations of management and the Directors of Barclays PLC; and
provide reasonable assurance regarding prevention or timely detection
of unauthorised acquisition, use or disposition of Barclays PLC’s assets
that could have a material effect on Barclays PLC’s financial statements.
Internal control systems, no matter how well designed, have inherent
limitations and may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are
subject to the risk that internal controls may become inadequate
because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
Management has assessed the effectiveness of Barclays PLC’s internal
control over financial reporting as of 31st December 2006. In making
its assessment, management has utilised the criteria set forth by the
Committee of Sponsoring Organisations of the Treadway Commission
in Internal Control – Integrated Framework. Management concluded
that based on its assessment, Barclays PLC’s internal control over
financial reporting was effective as of 31st December 2006.
PricewaterhouseCoopers LLP, an independent registered public
accounting firm which has audited the consolidated financial
statements of the Group for the fiscal year ended 31st December 2006,
has also audited management’s assessment of the effectiveness of
Barclays PLC’s internal control over financial reporting and the
effectiveness of Barclays PLC’s internal controls over financial reporting;
their report is included herein on page 150.
The system of internal financial and operational controls is also subject
to regulatory oversight in the United Kingdom and overseas. Further
information on supervision by the financial services regulators is
provided under Supervision and Regulation in the Risk Factors section
on page 66.
Statement of Directors’ responsibilities for accounts
The following statement, which should be read in conjunction with
the Auditors’ report set out on page 149, is made with a view to
distinguishing for shareholders the respective responsibilities of the
Directors and of the auditors in relation to the accounts.
The Directors are required by the Companies Act 1985 to prepare
accounts for each financial year and, with regards to Group accounts,
in accordance with Article 4 of the IAS Regulation. The Directors have
prepared individual accounts in accordance with IFRS as adopted by the
European Union. The accounts are required by law and IFRS to present
fairly the financial position of the Company and the Group and the
performance for that period; the Companies Act 1985 provides, in
relation to such accounts, that references in the relevant part of the law
to accounts giving a true and fair view are references, to their achieving
fair presentation.
The Directors consider that, in preparing the accounts on pages 151
to 274, and the additional information contained on pages 275 to 301,
the Group has used appropriate accounting policies, supported by
reasonable judgements and estimates, and that all accounting
standards which they consider to be applicable have been followed.
The Directors have responsibility for ensuring that the Company and
the Group keep accounting records which disclose with reasonable
accuracy the financial position of the Company and the Group and
which enable them to ensure that the accounts comply with the
Companies Act 1985.
Corporate governance
Accountability and audit