Carphone Warehouse 2016 Annual Report Download - page 55

Dixons Carphone plc Annual Report and Accounts 2015/16
Corporate Governance
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Matters of significance and
areas of judgement How the issue was addressed by the Committee
Fair, balanced and understandable In ensuring that the Group’s reporting is fair, balanced and understandable the Committee reviewed the
classification of items between Headline and Non-Headline, including consideration of the £184 million
pre-tax Non-Headline charges disclosed in note 4 in the Group financial statements. This assessment
considered whether items fell within the Group’s definition of Non-Headline as well as the consistency of
treatment of such items year on year.
In addition the Committee gave due consideration to the integrity and sufficiency of information disclosed
in the Annual Report and Accounts 2015/16 along with other relevant matters to ensure that it explains
the Group’s position, performance, business model and strategy. This included an assessment of
narrative reporting to ensure consistency with the financial reporting section and appropriate balance and
prominence of statutory and non-statutory performance measures. The Committee concurred that the
measures used and disclosures provided were appropriate to provide users of the Annual Report and
A
ccounts 2015/16 with a meaningful assessment of the performance of the underlying operations of the
Group, and the Board was advised of this conclusion.
Going concern The Committee was presented by management with an assessment of the Group’s future cash forecasts
and profit projections, available facilities, facility headroom, banking covenants and the results of a
sensitivity analysis. The Committee discussed the assessment with management and was satisfied that
the going concern basis of preparation continues to be appropriate for the Group and advised the Board
accordingly. The going concern statement is set out on page 29.
Viability statement In addition to those factors assessed by the Committee in consideration of the going concern
assessment discussed above, the Committee also noted the new requirement to produce a viability
statement in this year’s Annual Report and Accounts. Management presented a report that considered
the appropriateness of the three-year time period under assessment noting the consistency between this
period and the period of focus of the annual strategic planning process. The report included stress
testing of the strategic three-year plan with reference to those principal risks and mitigating actions as
described on pages 20 to 23 to the Annual Report and Accounts 2015/16. The Committee concurred
with management’s conclusions that the viability statement disclosed on page 29 of the Annual Report
and Accounts 2015/16 is appropriate. The Board was advised accordingly.
Risk management and internal control
The Committee is responsible for reviewing the Group’s
internal control and risk management systems. In order to
discharge its responsibilities in this area the Committee
reviewed the following key items:
•the assessment of the Group’s response to information
security and data protection risks;
•the Group’s responsibilities relating to those aspects of the
Group that are regulated;
•the Group-developed financial and IT controls framework
and its subsequent assessment by internal audit;
•common control themes identified throughout the business,
and where themes were identified, ensuring subsequent
action has been taken to minimise the risk;
•the annual Audit Committee agenda; and
•the new governance and risk management framework,
including a definition of risk appetite by risk category and
principal risk, put in place throughout the Group.
Internal audit
During the period the following significant risk areas of the
business were included within internal audit reviews:
•information security and data protection;
•regulatory compliance;
•IT resilience, integrity and disaster recovery;
•business continuity management; and
•relationships with networks.
In addition, as part of the three-year rolling assurance
programme, audits were performed over the following financial
processes to provide assurance to the Committee that controls
were operating within these areas:
•network revenue and commissions;
•supplier funding;
•treasury; and
•capital expenditure.
Whilst considering any significant issues arising from the
results of the audits shown above, the Committee also formally
reviewed the effectiveness of internal audit and the adequacy
of its resources.
External audit
The external auditor is appointed by shareholders to provide
an opinion on the Annual Report and Accounts and certain
disclosures prepared by Group management. Deloitte LLP
acted as the external auditor to the Group throughout the year.
The Committee is responsible for oversight of the external
auditor, including approving the annual audit plan and all
associated audit fees.
The key matters in relation to external audit that were
considered by the Committee were:
•The annual audit plan including the appropriateness of the
key risks identified and materiality levels applied.
•The annual audit fee and fees for non-audit services which
are set out in note 3 to the Annual Report and Accounts
2015/16, with due regard to the balance between audit and
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