Barclays 2014 Annual Report Download - page 42

40 I Barclays PLC Annual Report 2014 barclays.com/annualreport
‘I see our activity as directly supporting the embedding of
Barclays’ Values and playing an important part in
changing the culture’.
Dear Shareholders
In my report last year I spoke about the level of change Barclays is
undergoing, driven by both internal and external factors, and the need
to ensure that the effectiveness of Barclays’ control environment is
maintained and reflects the increasing expectations of our
shareholders. The pace of change has continued unabated and the
Committee placed significant focus during 2014 on the control
environment, in particular, on encouraging and supporting measures to
ensure that there is senior level accountability and ownership of control
issues and their remediation. I see our activity as directly supporting
the embedding of Barclays’ Values and playing an important part in
changing the culture and driving accountability.
This emphasis on internal control does not mean we have focused any
less on the other important matters within our remit in a year when the
role of audit committees in ensuring the integrity of financial reporting
continued to be scrutinised. The Committee continued to debate and
challenge the assumptions and estimates made by management,
particularly in respect of valuations and provisions, the key judgements
applied to Barclays’ financial statements and how Barclays’
performance is presented to ensure that it is reported in a fair,
balanced, understandable and transparent way. We also placed
appropriate weight on ensuring that both the internal and external
audit processes were effective, with particular support for the internal
audit function in embedding its Management Control Approach (MCA)
assessments. You can read more below about the significant matters
we addressed during the year.
On a more personal level, during 2014 I had significant interaction
with our regulators in the UK and the US and also took opportunities
to visit Barclays’ business operations, including those in the US, Africa,
Hong Kong and Singapore.
Committee performance
As part of the annual Board Effectiveness Review, a separate exercise
was conducted to assess the Committee’s performance. The
assessment found that the Committee is performing effectively. Please
see the Board evaluation report on pages 60 and 61 for more details.
I have been well-supported by my colleagues on the Committee and
thank them for their contribution during 2014.
Looking ahead
2015 will see the Committee occupied with the significant task of
overseeing the tender of the external audit. My recent connection with
KPMG means that I will not be involved in the assessment and
selection. More detail about the audit tender process and its
governance can be found on page 47. We will also continue our focus
on embedding the Enterprise Risk Management Framework, the first
and second lines of defence and developing a holistic assurance
framework for controls. The Committee will also have a role in
supporting Barclays’ compliance with the revised UK Corporate
Governance Code, which applies to Barclays for the 2015 financial year.
Amongst other things, the Board will be required to make a statement
of Barclays’ longer-term viability. The current intention is that the
required viability statement will cover the three year period of Barclays’
Medium Term Plan and the Committee will be working with
management to ensure that there is a robust process in place to
support the statement to be made by the Board. Likewise, we will work
with management to ensure that the current processes underpinning
our oversight of internal controls provide appropriate support for the
required Board statement on the effectiveness of risk management and
internal controls.
Mike Ashley
Chairman, Board Audit Committee
2 March 2015
Committee composition and meetings
The Committee is composed solely of independent non-executive
Directors. There were a number of changes to Committee composition
in 2014. Fulvio Conti and Simon Fraser retired from the Committee on
24 April 2014, when they retired from the Board. Dambisa Moyo joined
the Committee with effect from 17 April 2014 and Crawford Gillies
joined the Committee with effect from 1 June 2014. Mike Ashley is the
designated financial expert on the Committee for the purposes of the
US Sarbanes-Oxley Act, although each member of the Committee has
financial and/or financial services experience. You can find more details
of the experience of Committee members in their biographies on
pages 34 and 35.
The Committee met 13 times in 2014 and the chart on page 47 shows
how the Committee allocated its time. Committee meetings were
attended by management, including the Group Chief Executive, Group
Finance Director, Chief Internal Auditor, Chief Risk Officer and General
Counsel, as well as representatives from the businesses and other
functions. The lead audit partner of the external auditor attended each
meeting and the Committee held regular private sessions with each of
the Chief Internal Auditor or the lead auditor partner, which were not
attended by management.
Member Meetings attended/eligible to attend
Mike Ashley 13/13
Tim Breedon* 12/13
Fulvio Conti (to 24 April 2014)* 3/4
Simon Fraser (to 24 April 2014) 4/4
Crawford Gillies (from 1 June 2014)* 7/8
Dambisa Moyo (from 17 April 2014) 10/10
Diane de Saint Victor* 12/13
* Unable to attend certain meetings owing to prior business commitments
Committee role and responsibilities
The Committee is responsible for:
Q Assessing the integrity of the Group’s financial reporting and
satisfying itself that any significant financial judgements made by
management are sound;
Q Evaluating the effectiveness of the Group’s internal controls,
including internal financial controls; and
Q Scrutinising the activities and performance of the internal and
external auditors, including monitoring their independence and
objectivity.
The Committee’s terms of reference are available at
barclays.com/corporategovernance
The Committee’s work
The significant matters addressed by the Committee during 2014 and
in evaluating Barclays 2014 Annual Report and Financial Statements,
are described on the following pages.
What we did in 2014
Board Audit Committee Report
Governance: Directors’ report