Carphone Warehouse 2014 Annual Report Download - page 43

The systems of internal control described in this report were in place
throughout the year and up to the date of approval of the annual
report and financial statements. The effectiveness of these systems
is periodically reviewed by the Audit Committee in accordance with
the UK Corporate Governance Code, Internal Control: Guidance to
Directors (formerly known as the Turnbull Guidance). These systems
are also refined as necessary to meet changes in the Group’s business
and associated risks. They can only provide reasonable and not
absolute assurance against material errors, losses, fraud or
breaches of laws and regulations.
The Company has conducted an annual review of the effectiveness
of the systems of risk management and internal control in operation
during the year and up to the date of the approval of the annual
report and financial statements and this was approved by the
AuditCommittee and the Board.
At each of its meetings the Audit Committee reviewed and
considered reports on the status of the Group’s risk management
systems, findings from reviews of internal controls and reports on
the status of any weaknesses in internal controls identified by the
internal or external auditors.
C. JOINT VENTURE CONTROL PROCESSES
The Board places reliance as far as possible on the risk management
processes of the Virgin Mobile France joint venture board. The risk
management processes of Virgin Mobile France have involved
assessments of significant business risks which are wide-ranging,
covering risks arising from the regulatory environment, strategy,
counterparties and organisational change associated with major
projects. The output from each assessment is a list of strategic,
financial, operational and compliance risks. Associated action
plans and controls to mitigate them are also put in place where
thisis possible and to the extent considered appropriate, taking
account of costs and benefits.
Reports, action plans and any changes to the status of significant
risks and risk matrices are reported at each Audit Committee
meeting and at Board meetings where applicable. During the year
the Board has not identified or been advised of any significant
control failings.
Other controls in place for Virgin Mobile France are as follows:
+Roger Taylor and Nigel Langstaff are directors of Virgin Mobile
France. Its board ordinarily meets monthly and has ultimate
responsibility for strategic, operational, risk and compliance
matters for the business.
+There is frequent informal interaction between shareholders
andmanagement on strategic and operational matters.
D. INTERNAL AUDIT
The Group has an internal audit department which conducts reviews
of selected business processes each year. The internal audit programme
for the 2013–14 financial year consisted of reviews across a range of
areas documented and prioritised in the Group’s internal audit plan,
which was prepared and approved with input from management and
the Committee. The plan is designed each year to test the robustness
of mitigating controls and procedures are designed to identify any areas
of improvement. Part of the approval process of this plan involves the
Committee’s consideration of alignment of the proposed test plan with
the principal risks faced by the Group.
The Committee receives and reviews reports from the internal audit
department detailing its material findings from testing performed
and any recommendations for improvement. The progress and
implementation of ensuing action plans are tracked to completion
by the internal audit department, and areas where additional controls
have been put in place are subsequently re-tested to ensure the
process is fully complete.
The Committee considered the effectiveness of the internal audit
department through holding discussions with management, considering
the quality of reports submitted to the Committee, thetimeliness of
the clearance of action points, and the perceived impartiality of the
audit team itself. The Committee concluded that the internal audit
department has in all respects been effective during the 2013–14
financial year.
3. EXTERNAL AUDIT
The external auditors are appointed by shareholders to provide
anopinion on the financial statements and certain disclosures
prepared by Group management. Deloitte LLP acted as the external
auditors to the Group throughout the year. The Committee is
responsible for oversight of the external auditors, including
approving the annual audit plan and allassociated audit fees.
A. OVERSIGHT OF EXTERNAL AUDIT PROCESS
On an annual basis the Committee receives a detailed audit plan
from Deloitte LLP, which outlines their assessment of the significant
Group audit risks, and how their audit procedures will address these
risks. The Committee assesses the effectiveness of the audit process
through consideration of formal reports received from Deloitte LLP
at the conclusion of the year-end audit. The Committee also obtains
feedback on the effectiveness of the audit process in addressing
areas of key audit risk. Feedback is sought from employees who
have the most exposure to the external audit team, such as the
financial management team at corporate and business levels, the
Company Secretary, and the tax and internal audit departments.
Thefollowing points are also considered:
+the external auditors’ progress against the agreed audit plan
andcommunication of changes to the plan;
+the competence with which the external auditors handle key
accounting and audit judgements and the way in which these
matters are communicated to management and the Committee;
+the qualifications, expertise, resources and composition ofthe
audit team; and
+the cost effectiveness of the engagement, weighing up the extent
and quality of services received against agreed fees.
The results of all of these considerations are subsequently reviewed
by the Committee.
Carphone Warehouse Group plc
Annual Report 2014 41
CORPORATE GOVERNANCE