Vodafone 1998 Annual Report Download - page 27

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Annual Report and Accounts 1998 - Directors Information - Report of the Directors
been designed to provide the directors with reasonable assurance that assets are safeguarded, transactions are authorised
and recorded properly and that material errors and irregularities are either prevented or detected within a timely period.
Control environment
The directors have established an organisation structure with clear operating procedures, lines of responsibility and
delegated authority. The directors have delegated to executive management the establishment and implementation of
financial control systems appropriate for the various businesses.
Assessment of business risk
Major business risks are identified and evaluated by the directors when setting strategy, approving budgets and monitoring
progress against budget. Subsidiary management identifies and evaluates business risks when allocating resources to
minimise those risks.
Financial reporting system
The Group's operating procedures include a comprehensive system for reporting financial information to the directors. The
principal elements of this include the formal review by the directors of:
● Detailed budgets prepared by subsidiary management and reviewed by the executive directors before formal
adoption;
● Forecasts, revised on a quarterly basis, compared against budget;
● Monthly management accounts with a comparison against latest quarterly forecast and budget.
Main control procedures
Written financial policies and procedures have been issued which specify the minimum requirements for financial and
administrative matters within the Group. These policies and procedures address the areas of significant business risk and
include:
● Financial limits on delegated authority;
● Detailed policies and procedures regulating treasury activities, approved annually.
Associated undertakings are monitored closely through attendance at their board meetings and review of key financial
information. It is the Group's policy that its auditors be appointed as auditors of associated undertakings. Detailed post
investment reviews of all the Group's investments are conducted on a regular basis.
Monitoring process
There are clear procedures for monitoring the system of internal financial control. The significant components of these are:
● Formal annual confirmation by subsidiary managing directors concerning the operation of financial control systems for
which they are responsible;
● An internal audit department, reporting directly to the Audit Committee, which on a risk assessment basis undertakes
periodic examination of business processes and reports on financial controls throughout the Group;
● Reports from the external auditors, Deloitte & Touche, on internal controls and relevant financial reporting matters.
Review of effectiveness
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