Holiday Inn 2013 Annual Report Download - page 68

At each Committee meeting the internal and external Auditors
meet without the presence of management. Atthe invitation of
the Committee, the Chairman (Patrick Cescau), the Chief Executive
Officer, ChiefFinancial Officer, Head of GIA, Group Financial
Controller andexternal Auditor, Ernst & Young LLP (EY), attend
meetings. EY attended each meeting in 2013 and provided a report on
key activities. PwC, who provide co-assurance for global technology
projects andprocesses, also present key findings at every meeting.
Otherattendees are invited to meetings as appropriate, to provide
adeeperinsight into, and understanding of, key decisions.
Key issues discussed in 2013 meetings
The Committee discussed, amongst others, the following matters:
Date Key issues discussed
14 February • Appraised EY and recommended their
re-appointment
• Examined an analysis of EY’s audit and non-audit
fees and assessed that fees incurred to date were
in accordance with IHG’s Audit and Non-Audit
Services Pre-Approval Policy
• Evaluated the 2013 Group Major Risk Review and
Global Risk Management Report 2012
• Assessed the annual SOX review concluding that
no material weaknesses had been found in the
internal control environment. One significant
deficiency was discussed and noted
• Considered recommendations on the preliminary
announcement of the annual results, Annual
Report and Review 2012 to the Board
• Considered EY’s Audit Results Report and made
enquiries on key auditing and accounting items and
control observations arising from the 2013 audit
2 May • Received an update on the 2013 GIA strategy
following external review
• Considered and made recommendations on
the first quarter interim management statement
to the Board
• Discussed the principal areas of change for the
2013 SOX compliance review
• Considered the regulations proposing audit tender
and rotation, and agreed to conduct a full review of
audit services in 2015
• Received an update on treasury activities including
the Group’s funding strategy, credit rating strategy,
the maturity and profile of the Group’s facilities
and the cashflow positions
1 August • Received an update on the new accounting
standards which were effective from 1 January 2013
• Considered and recommended the Half-Year
Results to the Board
• Approved the EY 2013 Audit Planning Report
• Received an update on PwC’s approach to
technology assurance, agreed a number of
technology audits on information security and
requested an update on the same at each meeting
• Considered and made enquiries of EY on key
matters arising from their interim review on the
Group’s Half-Year Results
31 October • Received an overview of the System Fund
accounting and IHG Rewards Club points liability
• Considered and recommended the third quarter
interim management statement to the Board
• Received the annual update on the Group’s tax
position, strategy and focus areas
9 December • Discussed the 2014 Major Risks review
• Considered the GIA 2014 Audit Plan and agreed
to undertake an effectiveness review of GIA
• Completed the Audit and Non-Audit Services
Pre-Approval Policy annual review and proposed
no changes
• Reviewed and made enquiries of EY on the key
findings in their Audit Update Report
Dear Shareholder
Roles and responsibilities
The Audit Committee’s responsibilities fall in to five areas:
(i)internal controls and risk management; (ii) financial reporting;
(iii)internal audit; (iv) external audit and compliance;
and(v) whistleblowing and fraud.
Terms of reference (ToR)
The Committee’s main role and responsibilities are set out in its
ToR which have been drafted to be fully compliant with the Code
provisions. A copy of the ToR can be found on the Company’s
website at www.ihgplc.com/investors under corporate governance/
committees or from the Company Secretary’s office on request.
Governance
The Committee was in place throughout 2013 and all Committee
members remained independent, as determined annually by the
Board. During the year, Ian Dyson and Jill McDonald joined the
Committee. Each member has been appointed as they have
theexperience and expertise necessary to meet the
Committee’sresponsibilities.
The Board is satisfied that David Kappler continues to remain
independent. Having served on the Board since June 2004,
he will step down as Audit Committee Chairman on 1 April 2014
and Ian Dyson will be appointed Chairman of the Committee.
The Code requires the Committee to have at least one member with
recent and relevant financial experience and the US Sarbanes-Oxley
Act (SOX) necessitates a designated financial expert. The Board is
satisfied that David Kappler and Ian Dyson meet the requirements of
the Code and are financial experts – David is a qualified accountant
and former Chief Financial Officer of Cadbury Schweppes plc and
Ian is also a qualified accountant and former Group Finance and
Operations Director at Marks & Spencer Group plc.
Committee meetings
In 2013, the Committee met five times and the following regular
papers were received: an analysis of the audit and non-audit
fees; anupdate on items discussed by the Disclosure Committee;
an update on material litigation; a report on significant incidents
of fraud and whistleblowing; a report on risk management; an
update on SOX compliance; a report from the external Auditor;
and a quarterly report on Global Internal Audit (GIA) activities.
Committee membership
David Kappler Chairman
Members
Ian Dyson, Jennifer Laing, Jill McDonald, Dale Morrison
For full biographies see pages 57 to 59.
66 IHG Annual Report and Form 20-F 2013
Corporate Governance continued
Audit Committee Report