Holiday Inn 2014 Annual Report Download - page 67

Internal controls and risk management
The Committee supports the Board in reviewing the effectiveness
of the Group’s internal control and risk management system,
having oversight of the risk and control activities in operation
across the Group. Processes have been established which test
and monitor:
• strategic plan achievement, through a comprehensive series
of Group and regional strategic reviews;
• financial performance, within a comprehensive financial
planning and accounting framework;
• capital investment performance, with detailed appraisal
and authorisation processes; and
• risk management processes relying upon a Major Risk Review
and assurance mapping process (through reports from the
Head of Global Risk Management, the Head of Global Internal
Audit (GIA), and, as appropriate, from management) providing
assurance that the significant risks faced by the Group are being
identified, assessed, prioritised, evaluated and appropriately
managed and mitigated, having regard to the balance of risk,
cost and opportunity.
Our approach to risk management and key risk mitigating activities in
respect of the Major Risks are set out on pages 26 to 29 and the wider
set of risk factors are set out on pages 162 to 165.
Financial reporting
The key financial controls across our business have been identified
and evaluated, in particular, to comply with our US obligations,
arising from SOX. The Committee reviews the approach to SOX
compliance each year, and, in 2014, it took into consideration
changes in legislation, and the transition from the 1992 to the 2013
Internal Control – Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO).
The Committee regularly reviews reports on the progress of the
SOX programme and this has enabled appropriate representations
regarding the effectiveness of internal financial controls to be
made, concluding that no material weaknesses had been found
in the internal control environment.
Internal Audit
The Committee is responsible for reviewing and monitoring
the activities of the GIA department. In December each year,
the Committee discusses the GIA Plan and approves its nature
and scope for the forthcoming year. GIA also undertakes an
agreed schedule of audits during which the Group’s internal
controls are assessed and reported back to the Committee.
Fraud and whistleblowing
Fraud and whistleblowing reports are collated from information
provided by the Group’s independent external provider, who
facilitates the Group’s confidential disclosure process for
employees with whistleblowing and fraud concerns, and fraud
data from Global Risk Management, and are presented to the
Committee biannually.
The Committee is advised, as appropriate, of any significant
matters to ensure a proportionate and independent investigation
is performed.
Dear Shareholder
The Audit Committee continues to focus on the integrity of internal
financial controls and risk management systems. As the new
Chairman of the Committee, I have also sought to ensure that the
Committee (i) has oversight of the Group’s risk management and
assurance processes, looking at the processes and structures in
place across the Group as a whole and how key projects are being
delivered; and (ii) probes the significant risks, particularly in the
area of technology, through a balance of presentations, papers
and discussion.
Roles and responsibilities
The Committee’s responsibilities fall into five areas: (i) internal
controls and risk management; (ii) financial reporting; (iii) internal
audit; (iv) fraud and whistleblowing; and (v) external audit and
compliance. While the Board has overall responsibility for the
management of business risks, the Committee assists the Board
in a number of ways.
Our main role and responsibilities are set out in our terms of
reference (ToR), which are reviewed annually and no changes were
made for 2015. The ToR are available on the Company’s website
at www.ihgplc.com/investors under corporate governance/
committees or from the Company Secretary’s office on request.
Governance
All members have the experience and expertise necessary
to meet the Committee’s responsibilities and all members are
independent Non-Executive Directors as required under the ToR.
During the year, Jo Harlow joined the Committee, and I replaced
David Kappler as the Chairman of the Committee on 1 April 2014.
The Board is satisfied that both David (during his time on
the Committee) and I are independent. The Code requires
the Committee has at least one member with recent and
relevant financial experience and Sarbanes-Oxley Act 2002
(SOX) necessitates a designated financial expert. The Board
is satisfied that both David and I meet these requirements –
David is a qualified accountant and former Chief Financial Officer
of Cadbury Schweppes plc and I am also a qualified accountant
and was formerly Group Finance and Operations Director at
Marks and Spencer Group plc.
As Chairman of the Committee, after each meeting, I report
to the Board on any key matters arising.
“ Our priority is ensuring that standards
of good governance are maintained
across all areas of the business.”
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STRATEGIC REPORT GOVERNANCE
GROUP FINANCIAL STATEMENTS
PARENT COMPANY FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Audit Committee Report