Aviva 2009 Annual Report Download - page 96

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Aviva plc Audit committee report
Annual Report and Accounts 2009
This report provides details of the role of the Audit Committee
and the work it has undertaken during the year. The purpose
of the Committee is to assist the Board in discharging its
responsibilities for the integrity of the Group and Company’s
financial statements, the assessment of the effectiveness of the
systems of internal financial controls and monitoring the
effectiveness and objectivity of the internal and external
auditors. The full terms of reference for the Committee can be
found on the Company’s website, www.aviva.com, and are also
available from the Group Company Secretary.
The following independent non-executive directors, served
on the Committee during the year:
Period
Member From To
Russell Walls (Chairman) 1 July 2004 To date
Mary Francis 1 January 2007 To date
Richard Goeltz 1 July 2004 To date
Euleen Goh 1 January 2009 To date
The Committee met on nine occasions in 2009 and the
members’ attendance record is set out in the Corporate
Governance report on page 88. In addition, the Committee held
separate meetings with members of senior management for the
purpose of induction and training. The Group Company
Secretary acts as the secretary to the Committee.
Russell Walls, a Fellow Chartered Certified Accountant, is
a former group finance director of BAA plc, Wellcome plc and
Coats Viyella plc. Richard Goeltz is a former chief financial
officer of American Express Company and NatWest Group plc
and a former member of the Accounting Standards Board.
Euleen Goh, a Chartered Accountant and member of the
Chartered Institute of Taxation, is a former financial controller of
Pontiac Land and chief executive of Standard Chartered Bank,
Singapore. The Board is satisfied that these directors have recent
and relevant financial experience. The Group Chief Executive,
Chief Financial Officer, Chief Audit Officer, Chief Accounting
Officer, Chief Risk Officer and the external auditor normally
attend, by invitation, all meetings of the Committee. Other
members of senior management are also invited to attend as
appropriate to present reports. In performing its duties, the
Committee has access to the services of the Chief Audit Officer,
the Group Company Secretary and external professional
advisers. During 2009 the Committee appointed Keith
Nicholson, a former partner at KPMG LLP, as an external adviser
to the Committee.
The Committee follows an agreed annual work plan. It
reviews, with members of management and the internal and
external auditors, the Company’s financial announcements
including the annual report and accounts to shareholders and
associated documentation. It places particular emphasis on their
fair presentation and the reasonableness of the judgemental
factors and appropriateness of significant accounting policies
used in their preparation. At each meeting, the Committee
receives a report from the Chief Audit Officer concerning the
Company’s systems of internal financial control, including any
significant new issues and actions taken on previously reported
issues. The Committee also reviews, approves and monitors
the annual work plan for the Group’s internal audit function.
Twice each year, the Committee receives reports on the
adequacy of the Group’s life assurance and general insurance
reserves. The Committee reports to the Board regarding the
effectiveness of the Group’s overall systems of internal
financial control including the risk management systems in
relation to the financial reporting process. The Committee
works closely with the Risk and Regulatory Committee, which
reviews the Company’s overall internal controls and risk
management systems.
The Committee receives reports from the external auditor
and, at all scheduled meetings, holds discussions with both the
Chief Audit Officer and external auditors in the absence of
management. The chairman of the Committee reports to the
subsequent meeting of the Board on the Committee’s work and
the Board receives a copy of the minutes of each meeting of
the Committee.
During the year, the Committee was integrally involved in
the SEC registration and NYSE listing of the Company and
received regular updates on progress of the project. The
Committee reviewed and approved the registration document
and the Company’s financial reporting control framework
was developed to ensure compliance with the United States
Sarbanes-Oxley Act 2002. This included ensuring all the risks
associated with the project were understood and within
risk appetite.
The Committee held two joint meetings with the Risk and
Regulatory Committee and one with the members of the
business unit audit committees in the Asia Pacific region.
This meeting allowed the Committee to gain a deeper
understanding of the relevant local issues and assess the
effectiveness of the systems of internal financial controls and
the effectiveness and objectivity of the internal and external
auditors in those businesses.
Each of the Group’s major business units has an audit
committee that provides an oversight role for its business.
The Chief Audit Officer reviews the papers and minutes from
these committees and brings all significant matters to the
Committee’s attention. The Chief Audit Officer also attends
local audit committee meetings on a regular basis and reports
back on the effectiveness of these local committees to the
Committee. In addition, during 2009 the members of the
Committee attended several local audit committee meetings,
including those in Aviva USA, Aviva UK Life, Aviva UKGI, Aviva
Investors and the Europe Region Oversight Committee. This
programme of attendance at local audit committee meetings
will continue during 2010.
Internal audit
The Group’s internal audit function reports to management on
the effectiveness of the Company’s systems of internal controls,
the adequacy of these systems to manage business risk and to
safeguard the Group’s assets and resources. The internal audit
function is fully centralised and each country/region head has a
full reporting line to the Chief Audit Officer (with the exception
of Delta Lloyd). The Chief Audit Officer reports to the Group
Chief Executive and to the chairman of the Group Audit
Committee. Through the Chief Audit Officer, the internal audit
function provides objective assurance on risks and controls to
the Committee. The plans, the level of resources, the budget of
the internal audit function and the remuneration of the Chief
Audit Officer are reviewed and approved at least annually by
the Committee, which also undertakes an annual review of the
effectiveness of the Group’s internal audit function against
guidance criteria provided by the Institute of Chartered
Accountants in England and Wales and by the Institute of
Internal Auditors (IIA). Every five years the review is performed
by an independent party as required by the IIA standards.
The last independent review was performed in 2008.
The continuing deteriorating economic and market
environment required even greater attention to internal controls
in 2009. During 2009 the Group internal audit function carried
out assurance reviews of the Group’s capital and liquidity