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Business review Performance Governance Financials Additional information
69
Vodafone Group Plc
Annual Report 2012
Audit and Risk Committee
“ Having broadened our scope during the year, the
Committee will focus on risk management in addition
to its existing role in relation to the
integrity of the Group’s nancial
reporting, the external audit process
and the appropriateness of the Group’s
system of internal controls. It will
continue to evolve its activities in
light of guidance from regulators
and market conditions.”
Chairman and nancial expert:
Nick Land (Independent non-executive director)
Members:
Sir John Buchanan (Deputy Chairman and Senior Independent Director)
Alan Jebson (Independent non-executive director)
Anne Lauvergeon (Independent non-executive director)
Key objective:
to provide effective nancial governance over the appropriateness of
the Group’s nancial results, the performance of both the internal
audit function and the external auditor, and the management of the
Group’s systems of internal control, business risks and related
compliance activities.
Responsibilities:
a reviewing our nancial results announcements and nancial
statements;
a monitoring compliance with relevant statutory and listing
requirements;
a reporting to the Board on the quality and acceptability of our
accounting policies and practices including critical accounting
policies and practices;
a overseeing the relationship with the external auditor;
a reviewing correspondence from regulators regarding our nancial
reporting;
a reviewing the scope, extent and effectiveness of the activity of the
Group internal audit department;
a playing an active role in monitoring our compliance efforts in
respect of section 404 of the Sarbanes-Oxley Act;
a consider and make recommendations to the Board on the nature
and extent of the signicant risks the Group is willing to take in
achieving its strategic objectives;
a overseeing the Group’s compliance processes; and
a performing in-depth review of specic areas of nancial reporting,
risk and internal controls, as determined by the Committee.
Membership
The Committee comprises independent non-executive directors under
my chairmanship and meets at least four times during the year. The
Committee members have been selected to provide the wide range of
nancial and commercial expertise necessary to full the Committee’s
duties. The Board considers that I have recent and relevant nancial
experience, as required by the Code, and has designated me as its
nancial expert on the Committee for the purposes of the US Sarbanes-
Oxley Act. With effect from the close of the AGM in July, Sir John
Buchanan will retire and Anthony Watson will join the Committee.
Meetings are attended by the independent non-executive directors and,
by invitation, the Chief Executive, the Chief Financial Ofcer, the Group
Financial Controller, the Group Financial Reporting Director and the
Group Audit Director. The Group Compliance Director and other relevant
people from the business are also invited to attend certain meetings
inorder to provide insight and enhance the Committee’s awareness of
key issues and developments. I also invite our external auditor, Deloitte
LLP, to each meeting. The Committee regularly meets separately with
Deloitte LLP, the Chief Financial Ofcer and the Group Audit Director
without other management being present.
Main activities of the Committee during the year
The Committee assists the Board in carrying out its responsibilities in
relation to nancial reporting requirements, risk management and the
assessment of internal controls. It also reviews the effectiveness of the
Company’s internal audit function and manages the Company’s
relationship with the external auditor.
Following agreement with the Board in July 2011, the scope of the
Committee’s work was broadened and it is now responsible for
considering and making recommendations to the Board on the
natureand extent of the signicant risks the Group is willing to take in
achieving its strategic objectives. Its role in relation to the review of risk
management processes has also been extended. Here the Committee
aims to focus both on monitoring the Company’s approach to the
management of existing risks together with emerging risks that arise
byvirtue of the dynamic markets in which the company operates.
Inaddition, the Committee’s activities in the year have placed
additionalfocus on the Group’s processes for monitoring and sustaining
compliance with the laws and regulations applicable to the Group as
well as its own internal policies. As a result of the above, the Committee’s
terms of reference have been updated and can be found on our website
www.vodafone.com/governance.
At its four meetings during the year, the Committee focused on:
Financial reporting
The primary role of the Committee in relation to nancial reporting is
the review with both management and the external auditor of the
appropriateness of the half-year and annual nancial statements
concentrating on, amongst other matters:
a the quality and acceptability of accounting policies and practices;
a the clarity of the disclosures and compliance with nancial reporting
standards and relevant nancial and governance reporting
requirements;
a material areas in which signicant judgements have been applied or
there has been discussion with the external auditor; and
a any correspondence from regulators in relation to our nancial
reporting.
To aid our review, the Committee considered reports from the Group
Financial Controller and the Group Financial Reporting Director and also
reports from the external auditor on the outcomes of their half-year
review and annual audit. As a Committee we support Deloitte LLP in
displaying the necessary professional scepticism their role requires. The
primary areas of judgement considered by the Committee in relation to
the 2012 accounts were:
a the assumptions underlying impairment testing of the Group’s
goodwill and intangible assets, particularly in relation to the Group’s
interests in southern Europe;
a in relation to taxation, both the provisioning for potential current tax
liabilities and the appropriateness of deferred tax asset recognition in
relation to accumulated tax losses; and
a the level of provisioning appropriate for contingent and other
liabilities in a number of our markets.