HSBC 2010 Annual Report Download - page 197

195
Overview Operating & Financial Review Governance Financial Statements Shareholder Information
B Robertson, P A Thurston and P T S Wong, all of
whom are Group Managing Directors.
The GMB exercises the powers, authorities and
discretions of the Board in so far as they concern the
management and day-to-day running of HSBC
Holdings. Matters reserved for approval by the
Board are described on page 189.
The Group Chief Executive reports to each
meeting of the Board on the activities of the GMB.
Group Audit Committee
The Report of the Group Audit Committee is set out
below.
Role and membership of the Group Audit
Committee
The Group Audit Committee (‘GAC’), whose
members are all independent non-executive
Directors, is responsible for advising the Board on
the effectiveness of our systems of internal controls
and compliance in relation to financial matters and
on meeting financial reporting obligations. The
GAC also has responsibilities in relation to risk
governance and oversight and internal controls.
The members of the Committee throughout
2010 were J D Coombe (Chairman), R A Fairhead
and J R Lomax. On 1 March 2010, M K T Cheung
was appointed a member of the Committee in
succession to J W J Hughes-Hallett. On 30 July
2010, J D Coombe was appointed chairman of the
Committee in succession to R A Fairhead who
remains a member of the Committee.
Appointments to the Committee are made for
periods of up to three years, extendable by no more
than two additional three-year periods, so long as
members continue to be independent.
The Board has determined that M K T Cheung,
J D Coombe, R A Fairhead and J R Lomax are
independent according to SEC criteria and may be
regarded as audit committee financial experts for the
purposes of section 407 of the Sarbanes-Oxley Act
and have recent and relevant financial experience.
The terms of reference of the Committee,
which are reviewed annually, are available at
www.hsbc.com/boardcommittees.
To ensure consistency of scope and approach by
subsidiary company audit committees, the GAC has
established core terms of reference to guide
subsidiary companies when adopting terms of
reference for their audit committees. The
Committee’s endorsement is required for any
proposed changes to subsidiary audit committee
terms of reference and for appointments to such
committees. The chairmen of our principal
subsidiary audit committees attended a forum in
November 2010 led by the chairman of the GAC to
ensure a common understanding and approach to the
way in which subsidiary audit committees operate
throughout the Group; understand and share the key
issues we face as an organisation and as audit
committee members; and discuss current market
conditions and the lessons to be learned from the
financial crisis.
Historically the GAC has provided non-
executive oversight of risk as well as financial
reporting. The Group Risk Committee (‘GRC’)
was established in February 2010 to focus on risk
governance and to provide an increasingly forward-
looking view of risks and their mitigation. The GAC
currently has certain responsibilities in relation to
risk governance and oversight of internal controls in
order to comply with the Hong Kong and UK
Corporate Governance Codes.
There is therefore currently a degree of overlap
between the responsibilities of the GAC and the
GRC in relation to risk matters. For example, a
review of the effectiveness of our systems of risk
management and internal controls was undertaken by
the GAC and by the GRC. Each of the committees is
reviewing its terms of reference with the aim of
minimising the overlap.
The governance structure for the oversight of
our financial reporting and governance is set out
below: