National Grid 2014 Annual Report Download - page 27

Strategic Report Corporate Governance Financial Statements Additional Information
Our internal control process
We have a number of processes to support our
internal control environment. These processes
aremanaged by dedicated specialist teams, as
described in the box on the right. Oversight of these
activities is provided through regular review and
reporting to the appropriate Board committees as
outlined in the Corporate Governance section on
pages 44 to 57.
Reviewing the effectiveness
of our internal control
Each year the Board reviews the effectiveness of our
internal control process, including financial reporting,
to make sure it remains robust. The latest review
covered the financial year to 31 March 2014 and the
period to the approval of this Annual Report and
Accounts. It included:
• the Certificate of Assurance for noting following
approval by the Audit Committee to provide
overall assurance around the effectiveness of
National Grid’s risk management and internal
controls systems;
• where appropriate, assurance from our
committees, with particular reference to the
reports received from the Audit, and Safety,
Environment and Health Committees on reviews
undertaken at their meetings; and
• assurances about the certifications required
under Sarbanes-Oxley as a result of our US
reporting obligations.
Our risk management and internal control
processescomply with the Turnbull guidance on
internal control and the requirements of the UK
Corporate Governance Code. They are also the
basis of our compliance with obligations set by the
Sarbanes-Oxley Act 2002 and other internal
assurance activities.
Internal control over financial reporting
We have specific internal mechanisms to govern
thefinancial reporting process and the preparation
of the Annual Report and Accounts. Our financial
controls guidance sets out the fundamentals of
internal control over financial reporting, which are
applied across the Company.
Our financial processes include a range of system,
transactional and management oversight controls.
Inaddition, our businesses prepare detailed monthly
management reports that include analysis of their
results along with comparisons to relevant budgets,
forecasts and prior year results. These are
presented to and reviewed by senior management
within our Finance function.
These reviews are supplemented by quarterly
performance reviews, attended by the Chief
Executive and Finance Director which consider
historical results and expected future performance
and involve senior management from both
operational and financial areas of the business.
Each month the Finance Director presents a
consolidated financial report to the Board.
As part of our assessment of financial controls, we
have identified a number of weaknesses in our US
financial control framework. Plans are in place to
remediate these. For more information, including our
opinion on internal control over financial reporting,
see page 170.
Our internal control environment
Our specialist teams that manage the processes supporting our internal
control environment are described below.
Risk management:
• works with the Board to determine risk appetite and establish and
implement risk management policies;
• is responsible for the independent review and challenge of risk information
throughout the business, compilation and analysis of risk profiles and
monitoring risk management processes within the Company; and
• regularly reports on risks to the regional level and Board level
oversightcommittees.
Ethics and compliance management:
• maintains our standards of ethical business conduct;
• promotes ethical behaviour and monitors compliance with external
legaland regulatory requirements; and
• operates our whistle-blower helplines and supports activities to prevent
anddetect bribery.
Corporate audit:
• develops and executes a risk-based audit plan; and
• provides independent, objective assurance to the Audit Committee,
SEHCommittee and the Executive Committee on the extent towhich
control and governance frameworks are operating effectively.
Safety, environment and health:
• develops policy recommendations for the Board;
• monitors safety, environment and health performance; and
• works with process owners to deliverour safety, environment and
healthobjectives.
Internal controls:
• works with process owners to identify, document and test the design
andoperation of internal control over financial reporting; and
• helps refine and improve controls where required.
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