Vodafone 1999 Annual Report Download - page 38

Corporate Governance
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, where possible.
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;
• A Group 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
The directors believe that the Group’s system of internal financial control provides reasonable, but not absolute,
assurance that problems are identified on a timely basis and dealt with appropriately.
The directors confirm that they have reviewed the effectiveness of the system of internal financial control through the
monitoring process set out above and are not aware of any significant weakness or deficiency in the Group’s system of
internal financial control during the period covered by this report.
Relations with shareholders
The Company holds briefing meetings with its major institutional shareholders in the UK, the USA and in Continental
Europe, usually twice each year after the interim and preliminary final results’ announcements, to ensure that the investing
community receives a balanced and complete view of the Group’s performance and the issues faced by the business.
Telecommunications analysts of stockbrokers are also invited to presentations of the financial results and to visit the
Company in the summer months for discussions on matters relating to the Group’s operations.
The principal communication with private investors is through the provision of the annual report and accounts, the interim
statement and the Annual General Meeting, an occasion which generally is attended by all the Company’s directors and
at which all shareholders are given the opportunity to question the Chairman and the Board. As it was not then a Code
requirement, the proxy votes cast in relation to the resolutions proposed at the 1998 Annual General Meeting were not
announced to shareholders at the meeting. However, the proxy voting at the Company’s Extraordinary General Meeting
held on 24 May 1999 were disclosed to those in attendance at the meeting and the Company will follow this policy at
future general meetings.
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