EasyJet 2012 Annual Report Download - page 48

Governance
Corporate governance
continued
The terms of reference of the Audit Committee are documented
and agreed by the main Board. The full text of the terms of
reference is available in the governance section of easyJet’s
corporate website, http://corporate.easyJet.com. The key terms
set out that the Audit Committee will:
→Serve as an independent and objective party to monitor the
quality and timeliness of the financial reporting process and
monitor the internal financial control system
→Review and appraise the audit efforts of the external auditors
→Provide an open avenue of communication among the
external auditors, financial and senior management and
the Board
→Confirm and assure the independence and objectivity of the
external auditors (in particular, in the context of the provision
of additional services to the Company)
→Review and ensure the effectiveness of the risk management
processes of the Company
→Review and monitor the effectiveness of the internal audit
function and management’s responsiveness to any findings
and recommendations
→Assess potential conflicts of interest of Directors on behalf of
the Board and
→Report to the Board on how it has discharged its responsibilities
The Audit Committee has the responsibility for appointing the
external auditors. PricewaterhouseCoopers LLP were reappointed
auditors of the Group at the Annual General Meeting held in
February 2012. The Company currently has no set frequency
for tendering the external audit however notes the September
2012 Corporate Governance Code, which applies to its next
reporting period, and includes a provision to put the external audit
out to tender at least every ten years. The Company’s external
audit was last tendered in 2005 and resulted in a change of
external auditors in February 2006 to the current external
auditors, PricewaterhouseCoopers LLP.
In order to preserve auditor objectivity and independence,
PricewaterhouseCoopers LLP will not be asked to provide
consulting services unless this is in the best interests of the
Company. The Audit Committee’s terms of reference set out
that they are responsible for the formal policy on the award
of non-audit work to the auditors. To assess the effectiveness
of the external audit process, the auditors are asked on an annual
basis to articulate the steps that they have taken to ensure
objectivity and independence. easyJet monitors the auditors’
performance, behaviour and effectiveness during the exercise
of their duties, which informs, on an annual basis, the Audit
Committee’s decision to recommend reappointment.
This included this year obtaining a report on the auditors own
quality control procedures and a consideration of their
annual quality and transparency report. In the current and
prior financial year, easyJet did not incur any costs with
PricewaterhouseCoopers LLP in respect of non-audit services.
There are no contractual obligations which restrict the choice
of external auditors.
Both external and internal auditors are given the opportunity
to meet privately with the Audit Committee without any member
of management present. It is standard practice for the external
auditors to meet with the Audit Committee without the Executive
Directors being present at each Audit Committee meeting.
The Board is satisfied that the Directors who are currently
members of this Committee are those who are best able to
contribute to the Committee’s objectives. David Bennett has
served as the Chairman of the Committee during the year. David
has previously been an Executive Director of Abbey National plc,
prior to which he was Chief Executive Officer and Finance
Director of Alliance & Leicester plc, financial experience which the
Board considers to be recent and relevant for the purposes of
undertaking the role as Chairman of the Committee.
During the year the Audit Committee’s business has included the
following items:
→Half Year Results
→Annual Results
→Principal judgemental accounting issues affecting the Group
based on reports from both the Group’s management and the
external auditors
→External audit plans and reports
→Risk and assurance plans and reports, including:
→key internal audit reports
→control themes
→follow ups
→fraud and loss prevention
→revenue protection
→risk assessment
→internal controls
→Information Security and Business Continuity
→Delegated authorities
→Audit Committee terms of reference
→Whistleblower reports
→Internal audit effectiveness and independence
→Maintenance accounting
→Specific investigations as required
The Board as a whole, including the Audit Committee members,
debated risks and risk management on which basis we believe
that the Board has fulfilled its obligations under the Code.
The Audit Committee continues to be responsible for reviewing
the adequacy and effectiveness of the Company’s risk
management process.
easyJet plc
Annual report and accounts 2012
46