Vodafone 2014 Annual Report Download - page 66

Governance of the External Audit relationship
The Committee considers the reappointment of the external auditor
and also assesses their independence on an ongoing basis. The external
auditor is required to rotate the audit partner responsible for the Group
audit every ve years and the year ended 31 March 2014 will be the
current lead audit partner’s fth year. Accordingly, and in compliance
with the provisions outlined in the UK Corporate Governance Code and
the notes on best practice issued by the Financial Reporting Council
in July 2013, the Committee decided to put the audit for the 2015
nancial year out to tender in November 2013.
The tender process and the Committee’s involvement in that process
is outlined in the diagram on page 63. All of the ‘big 4’ audit rms
were invited to participate in the tender. Deloitte LLP withdrew
at a preliminary stage noting the longevity of their appointment, having
been the Group’s auditors since its stock market listing in 1988.
Having concluded the process in February 2014, the Committee
recommended to the Board that PricewaterhouseCoopers
LLP be appointed as the Group’s statutory auditor for the 2015
nancial year. Accordingly, a resolution proposing the appointment
of PricewaterhouseCoopers LLP as our auditor will be put to the
shareholders at the 2014 AGM. There are no contractual obligations
restricting the Committee’s choice of external auditor and we do not
indemnify our external auditor.
The Committee will continue to review the auditor appointment and
the need to tender the audit, ensuring the Group’s compliance with the
UK Corporate Governance Code and any reforms of the audit market
by the UK Competition Commission and the European Union.
In its assessment of the independence of the auditor and in accordance
with the US Public Company Accounting Oversight Board’s standard
on independence, the Committee receives details of any relationships
between the Company and Deloitte LLP that may have a bearing
on their independence and receives conrmation that they are
independent of the Company within the meaning of the securities laws
administered by the US Securities & Exchange Commission (‘SEC’).
During the year, Deloitte LLP and related member rms charged the
Group £9 million (2013: £8 million, 2012: £7 million) for statutory
audit services. The Committee approved these fees following review
of audit scope changes for the 2014 nancial year, including the
impact of business acquisitions and disposals which were primarily
in relation to Kabel Deutschland, the disposal of Verizon Wireless
and the acquisition of the remaining 23% interest in Vodafone Italy.
The Committee also received assurance from Deloitte LLP that the fees
were appropriate for the scope of the work required.
Non-audit services
As a further measure to protect the objectivity and independence of the
external auditor, the Committee has a policy governing the engagement
of the external auditor to provide non-audit services. This precludes
Deloitte LLP from providing certain services such as valuation work
or the provision of accounting services and also sets a presumption that
Deloitte should only be engaged for non-audit services where there
is no legal or practical alternative supplier. No material changes have
been made to this policy during the nancial year.
For certain specic permitted services, the Committee has
pre-approved that Deloitte LLP can be engaged by management,
subject to the policies set out above, and subject to specied fee limits
for individual engagements and fee limits, for each type of specic
service. For all other services or those permitted services that exceed
the specied fee limits, I, as Chairman, or in my absence another
member, can pre-approve permitted services.
In addition to the statutory audit fee, Deloitte LLP and related member
rms charged the Group £4 million (2013: £1 million) for audit-related
and other assurance services. These fees were materially higher than
in prior years as Deloitte acted as the Reporting Accountant in relation
to a number of shareholder and regulatory lings in connection with the
disposal of our interest in Verizon Wireless and the related acquisition
of the remaining 23% interest in Vodafone Italy. Further details of the
fees paid, for both audit and non-audit services, can be found in note 3
to the consolidated nancial statements.
For a number of years, PricewaterhouseCoopers LLP has provided
the Group with a wide range of consulting and assurance services.
Following the decision to appoint them as auditors for the 2015
nancial year, it was agreed by the Committee that any existing
permitted non-audit service engagements which were not in line
with the Group’s non-audit services policy should cease by 30 June
2014. This decision was made to allow a timely transition of these
services and minimise the impact on the business. From 1 April 2014,
PricewaterhouseCoopers LLP will only be engaged for non-audit
services which are in line with the Group’s non-audit services policy.
Nick Land
On behalf of the Audit and Risk Committee
20 May 2014
Vodafone Group Plc
Annual Report 201464
Corporate governance (continued)