Vodafone 2008 Annual Report Download - page 71

Disclosure controls and procedures
The Company maintains “disclosure controls and procedures”, as such term is
defined in Exchange Act Rule 13a-15(e), that are designed to ensure that
information required to be disclosed in reports the Company files or submits
under the Exchange Act is recorded, processed, summarised and reported within
the time periods specified in the Securities and Exchange Commission rules
and forms, and that such information is accumulated and communicated to
management, including the Company’s Group Chief Executive and Chief Financial
Officer, as appropriate, to allow timely decisions regarding required disclosure.
The directors, the Chief Executive and the Chief Financial Officer have evaluated
the effectiveness of the disclosure controls and procedures and, based on that
evaluation, have concluded that the disclosure controls and procedures are
effective at the end of the period covered by this Annual Report.
Auditors
Following a recommendation by the Audit Committee and, in accordance with
Section 384 of the Companies Act 1985, a resolution proposing the reappointment
of Deloitte & Touche LLP as auditors to the Company will be put to the 2008 AGM.
In its assessment of the independence of the auditors and in accordance with the
US Independence Standards Board Standard No. 1, “Independence Discussions
with Audit Committees”, the Audit Committee receives in writing details of
relationships between Deloitte & Touche LLP and the Company that may have a
bearing on their independence and receives confirmation that they are independent
of the Company within the meaning of the securities laws administered by the SEC.
In addition, the Audit Committee pre-approves the audit fee after a review of both
the level of the audit fee against other comparable companies, including those
in the telecommunications industry, and the level and nature of non-audit fees,
as part of its review of the adequacy and objectivity of the audit process.
In a further measure to ensure auditor independence is not compromised, policies
provide for the pre-approval by the Audit Committee of permitted non-audit
services by Deloitte & Touche LLP. For certain specific permitted services, the
Audit Committee has pre-approved that Deloitte & Touche LLP can be engaged
by Group management subject to specified fee limits for individual engagements
and fee limits for each type of specific service permitted. For all other services,
or those permitted services that exceed the specified fee limits, the Chairman of
the Audit Committee, or in his absence another member, can pre-approve services
which have not been pre-approved by the Audit Committee.
In addition to their statutory duties, Deloitte & Touche LLP are also employed
where, as a result of their position as auditors, they either must, or are best placed
to, perform the work in question. This is primarily work in relation to matters such
as shareholder circulars, Group borrowings, regulatory filings and certain business
acquisitions and disposals. Other work is awarded on the basis of competitive tender.
During the year, Deloitte & Touche LLP and its affiliates charged the Group £7 million
(2007: £7 million, 2006: £4 million) for audit and audit-related services and a further
£2 million (2007: £3 million, 2006: £4 million) for non-audit assignments. An analysis
of these fees can be found in note 4 to the Consolidated Financial Statements.
provisions of the Companies Act 1985 and, consequently, to avoid any confusion,
the directors, on a precautionary basis, are bringing this matter again to
shareholders and the terms of this year’s resolution have been adjusted to reflect
the different technical requirements of Part 14 of the Companies Act 2006.
It remains the policy of the Company not to make political donations or incur
political expenditure as those expressions are normally understood. However, the
directors consider that it is in the best interests of shareholders for the Company
to participate in public debate and opinion-forming on matters which affect its
business. To avoid inadvertent infringement of the Companies Act 2006, the
directors are seeking shareholders’ authority for the Company and its subsidiaries
to make political donations and to incur political expenditure during the period
from the date of the AGM to the conclusion of the AGM in 2012 or 29 July 2012,
whichever is the earlier, up to a maximum aggregate amount of £100,000 per year.
Internal control
The Board has overall responsibility for the system of internal control. A sound
system of internal control is designed to manage rather than eliminate the risk
of failure to achieve business objectives and can only provide reasonable and
not absolute assurance against material misstatement or loss. The process of
managing the risks associated with social, environmental and ethical impacts is
also discussed under “Performance – Corporate Responsibility” on pages 59 to 61.
The Board has established procedures that implement in full the Turnbull Guidance
“Internal Control: Revised Guidance for Directors on the Combined Code” for
the year under review and to the date of approval of the Annual Report. These
procedures, which are subject to regular review, provide an ongoing process for
identifying, evaluating and managing the significant risks faced by the Group.
See page 83 for management’s report on internal control over financial reporting.
Monitoring and review activities
There are clear processes for monitoring the system of internal control and
reporting any significant control failings or weaknesses together with details
of corrective action. These include:
a formal annual confirmation provided by the Chief Executive Officer and Chief
Financial Officer of each Group company certifying the operation of their
control systems and highlighting any weaknesses, the results of which are
reviewed by regional management, the Audit Committee and the Board;
a review of the quality and timeliness of disclosures undertaken by the Chief
Executive and the Chief Financial Officer which includes formal annual
meetings with the operating company or regional chief executives and chief
financial officers and the Disclosure Committee;
periodic examination of business processes on a risk basis including reports
on controls throughout the Group undertaken by the Group Internal Audit
Department who report directly to the Audit Committee; and
reports from the external auditors, Deloitte & Touche LLP, on certain internal
controls and relevant financial reporting matters, presented to the Audit
Committee and management.
Any controls and procedures, no matter how well designed and operated, can
provide only reasonable and not absolute assurance of achieving the desired
control objectives. Management is required to apply judgement in evaluating the
risks facing the Group in achieving its objectives, in determining the risks that are
considered acceptable to bear, in assessing the likelihood of the risks concerned
materialising, in identifying the Company’s ability to reduce the incidence and
impact on the business of risks that do materialise and in ensuring that the costs
of operating particular controls are proportionate to the benefit.
Review of effectiveness
The Board and the Audit Committee have reviewed the effectiveness of the
internal control system, including financial, operational and compliance controls
and risk management, in accordance with the Code for the period from 1 April
2007 to the date of approval of this Annual Report. No significant failings or
weaknesses were identified during this review. However, had there been any such
failings or weaknesses, the Board confirms that necessary actions would have
been taken to remedy them.
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Vodafone Group Plc Annual Report 2008 69