National Grid 2016 Annual Report Download - page 57

Examples of Committee focus during the year included:
Areas of focus Commentary
Risk management The Committee has been delegated responsibility by the
Board for monitoring and assessing the effectiveness of
our risk management processes. During the year, the risk
team undertook a review of our risk processes to make
sure we have effective systems and processes in place
to meet the requirements of the 2014 UK Corporate
Governance Code and the FRC guidance on Risk
Management, Internal Control and Related Financial
and Business Reporting. Going forwards, the Committee
will also receive reports to be considered by the Board
on risk process developments to enable the Committee
to keep fully appraised of changes in the risk profile of
the Company and to allow it to monitor the management
of risk throughout the year.
The Committee continues to monitor the effectiveness
of the risk management and internal control processes
during the year and reports to the Board on the outcome
of its annual review which covers all material controls,
including financial, operational and compliance controls.
You can read more about our risk management process
and the review of effectiveness on pages 26 to 29. Details
of our internal control systems, including those relating
to the financial reporting process, can be found on pages
29 and 183.
Viability statement Following the new requirement in the Code, the Annual
Report and Accounts must now include a viability
statement, which you can find on page 30.
The viability statement requires the Board to confirm that
it has assessed the Company’s principal risks and viability.
At its meeting in September, the Committee considered
the outcome of a review of the Company’s
risk processes and proposed improvements to make
sure there were effective systems and processes in place
to support the Board in making this statement.
At the Committee meeting in May, it considered the
viability statement and recommended the statement
to the Board for approval at its May meeting.
Going concern
statement
In addition, the Committee considered the Group’s
short-term liquidity and capital and considered it
appropriate to adopt the going concern basis in the
financial statements. The Board considered and
approved the Committee’s recommendation at its
May meeting. The Company’s going concern statement
is set out on page 102, note 1A.
Fair, balanced and
understandable
The Committee considered the requirement of the Code
to ensure that the Annual Report and Accounts, taken as
a whole, is fair, balanced and understandable in the
context of the applicable accounting standards and
confirmed this view to the Board.
Financial reporting The Committee monitors the integrity of the Company’s
financial information and other formal documents relating
to its financial performance and makes appropriate
recommendations to the Board before publication.
An important factor in the integrity of financial statements
is making sure that suitable and compliant accounting
policies are adopted and applied consistently on a
year-on-year basis and across the Company. In this
respect, the Committee also considers the estimates
and judgements made by management when accounting
for non-standard transactions, including the treatment
of exceptional items. See page 57 for further details.
Disclosure
Committee reports
When reviewing the half and full-year announcements, the
Committee considers reports of the Disclosure Committee.
The Disclosure Committee also reports the results of its
evaluation of the effectiveness of the Company’s
disclosure controls to the Audit Committee. See page 63
for more information on the role of the Disclosure
Committee.
Sarbanes-Oxley Act
2002 testing and
attestations
The Committee receives regular updates on the status of
testing and considers the impact of deficiencies reported
in the past year.
See page 29 for the Company’s statement on the
effectiveness of internal control over financial reporting.
Cyber security
risk management
Responsibility for reviewing the governance processes
in relation to cyber security has been delegated to the
Committee by the Board. An update on the status of our
cyber security risk management process and cyber
security strategy was presented to the Committee
in September.
Compliance
management
Compliance management is part of the Global Assurance
function, which incorporates ethics, risk management, licence
management and records management. Biannual reports
to the Committee focus on compliance with external legal
obligations and regulatory commitments. Additional detail has
been added to the reports this year, providing information on
trends, root cause of incidents, and action tracking to help
prioritise and prevent recurrence.
The Committee also received an update on the compliance
improvement programme in September. The objective of
the programme is to make sure the Company understands
its external compliance obligations, that effective control
frameworks are in place, and that compliance issues are
managed with the right level of priority. The paper also set
out the steps to help further embed compliance activities
within the business. Strengthening existing control
frameworks will be an important part of progressing
compliance performance improvements in the business.
55National Grid Annual Report and Accounts 2015/16
Corporate Governance
Audit Committee