Aviva 2014 Annual Report Download - page 81

Aviva plc Annual report and accounts 2014
77
I am pleased to present the Audit
Committee’s report for the year ended 31
December 2014.
The principal purpose of the committee
is to assist the Board in discharging its
responsibilities for monitoring the integrity
of the Group’s financial statements. In
addition, we review the adequacy and
effectiveness of the Group’s systems of
internal control and monitor the
effectiveness, performance and objectivity
of the internal and external auditors.
During the year the committee
welcomed Scott Wheway as a member and
the committee is now comprised of five
independent NEDs. I have been Chairman of
the committee since May 2013.
Committee responsibilities
—
The committee acts independently of
management, to ensure that the interests of
shareholders are properly protected in
relation to the financial reporting and the
effectiveness of the Group’s systems of
internal control.
The main responsibilities of the
committee are to:
• Review the significant issues and
judgements of management, and the
methodology and assumptions used in
relation to the Group’s financial
statements and formal announcements
on the Group’s financial performance,
including the reserving position relating to
the Group’s life assurance and general
insurance operations
• Review the Group’s going concern
assumptions
• Assess the effectiveness of the Group’s
systems of internal control, including
financial reporting, financial controls and
the Internal Audit function
• Consider and review the performance of
the Chief Audit Officer (CAO), and agree
his remuneration
• Consider and make recommendations to
the Board on the appointment,
reappointment, dismissal or resignation,
effectiveness and remuneration of the
external auditor
• Assess the independence and objectivity
of the External Auditor
• Approve and monitor the application of
the External Auditor Business Standard
• Approve and monitor the application of
the Internal Audit Charter and Business
Standard
Revised committee Terms of Reference were
adopted in February 2015 following an
annual refresh. The full Terms of Reference
for the committee can be found on the
Company’s website at
www.aviva.com/terms-of-reference, and are
also available from the Group Company
Secretary.
Committee membership and
attendance
—
The table below shows the committee
members during the year and their
attendance at committee meetings.
Membership and attendance
Committee member
Number of
meetings
attended
Percentage
attendance1
Glyn Barker (Chairman) 11 100%
Patricia Cross210 91%
Michael Hawker 11 100%
Sir Adrian Montague310 91%
Scott Whewa
y
4778%
1 This shows the percentage of meetings which the
committee member attended during the year whilst a
member of the committee.
2 Patricia Cross was unable to attend one meeting called
at short notice due to a prior commitment.
3 Sir Adrian was unable to attend one ad hoc meeting
due to technological difficulties but did receive the
papers for the meeting.
3 Scott Wheway joined the committee on 20 February
2014 and had prior commitments which prevented
him being able to attend meetings in late March and
April 2014.
The committee met on 11 occasions in 2014
of which one meeting was called at short
notice. The Chairman of the Company,
Group CEO, CFO, CAO, the Chief
Accounting Officer and a representative of
the external auditor regularly attended
committee meetings. Other members of
senior management were also invited to
attend as appropriate to present reports.
During the year the committee regularly held
private sessions to discuss issues to be raised
with management in the main meeting, and
met separately with senior management, the
CAO and the external auditor without
management present. The Group Company
Secretary acted as the Secretary to the
committee.
The committee Chairman reported to
subsequent meetings of the Board on the
committee’s work and the Board received a
copy of the agenda and the minutes of each
meeting of the committee.
There is cross-membership between
each of the Board committees to ensure
that audit issues were appropriately
communicated and taken into account in
the decisions of each committee.
In performing its duties, the committee had
access to the services of the CAO, the
Group Company Secretary, senior financial
management and external professional
advisers.
During the year committee members
attended meetings of business unit Audit
Committees in Poland, France and Spain.
In November 2014, the committee
Chairman together with the Chairmen of
the Risk and Governance Committees co-
hosted a two-day conference for the
Chairmen of the Board, Risk, Governance
and Audit Committees of the Group’s
principal subsidiaries, their Chief Risk
Officers, Chief Audit Officers and Chief
Financial Officers. In addition the Non-
Executive Directors of the Company were
invited, together with representatives of the
External Auditor. The agenda included
discussions on Aviva’s strategy; Aviva’s
control environment and the role of Internal
Audit; Aviva’s ‘Digital First’ strategy; and the
Integrated Assurance Implementation (IAI)
programme.
Committee expertise and independence
—
The Board is satisfied that Glyn Barker,
Michael Hawker and Patricia Cross each
meet the US requirements to be an audit
committee financial expert.
Glyn Barker is a chartered accountant
and has held a number of senior positions at
PricewaterhouseCoopers LLP (PwC) where,
most recently, he was UK-Vice Chairman.
The committee is satisfied that Glyn Barker
meets the US Securities and Exchange
Commission’s and Auditing Practices
Board’s Ethical Standards on auditor
independence. In addition the Board is
satisfied that he has recent and relevant
financial experience in accordance with the
Code and satisfies the requirements for
competence in accounting and/or auditing
under the Disclosure and Transparency
Rules.
Michael Hawker, a senior fellow of the
Financial Services Institute of Australasia, is a
former Chief Executive Officer and
Managing Director of Insurance Australia
Group, and therefore has the necessary
financial expertise to meet the US
requirements.
Patricia Cross has financial experience
gained through a number of senior
executive roles at National Australia Bank,
Chase Manhattan Bank and Banque
Nationale de Paris and non-executive roles
at a number of financial services companies.
She has also held honorary roles on the
Australian Financial Centre Forum and
Financial Sector Advisory Council and meets
the US financial expertise requirements.
Sir Adrian Montague has significant
financial services industry experience
through his former roles as Chairman of
Friends Provident plc and Deputy Chairman
of UK Green Investment Bank plc.
Audit Committee
report
Glyn Barker
Chair of the Audit
Committee
Audit Committee
report
Glyn Barker
Chair of the Audit
Committee
Governance
Aviva plc Annual report and accounts 2014 |77