BT 1997 Annual Report Download - page 25

CORPORATE GOVERNANCE
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Non-executive directors’ remuneration
In line with the recommendations contained in the
Greenbury Report, the remuneration of the non-executive
directors is set by the Board, on the recommendation
of the Board Committee on Non-Executive Remuneration.
The non-executive directors’ remuneration is discussed
in the report of the Board Committee on Executive
Remuneration on page 29.
Internal financial control
The directors are responsible for the group’s systems of
internal financial control. Such systems can provide only
reasonable and not absolute assurance against material
financial misstatement or loss. Key elements are:
3Formal policies and procedures are in place, including
the documentation of key systems and rules relating
to the delegation of authorities, which allow the
monitoring of controls and restrict the unauthorised
use of the group’s assets.
3Experienced and suitably qualified staff take
responsibility for important business functions.
Annual appraisal procedures have been established to
maintain standards of performance.
3Forecasts and budgets are prepared which allow
management to monitor the key business and financial
activities and risks and the progress towards financial
objectives set for the year and the medium term;
monthly management accounts are prepared promptly
providing relevant, reliable and up-to-date financial
and other information; significant variances from
budget are investigated as appropriate.
3All investment projects are subject to formal
authorisation procedures, with an investment
committee, comprising members of the Board,
considering major investment projects.
3The Board Audit Committee reviews reports from
management, from the internal auditors and from
the external auditors, to provide reasonable
assurance that control procedures are in place and
are being followed.
3Formal procedures have been established for
instituting appropriate action to correct weaknesses
identified from the above reports.
The Board Audit Committee has reviewed the
effectiveness of the systems of internal financial control in
existence in the group for the year ended 31 March 1997
and for the period up to the date of approval of the
financial statements.
Statement of BT Business Practice
BT’s policy is to achieve best practice in our standards
of business integrity for all of our activities around the
world. To reinforce our determination to live up to these
standards BT has adopted a Statement of Business Practice
which sets out the principles the group will observe.
A copy has been sent to every employee. We also require
our agents and contractors to apply these principles when
representing BT.
Pension fund
BT’s main pension fund – the BT Pension Scheme – is
not controlled by the Board, but by trustees, who are
company and union nominees, with an independent
chairman. The trustees look after the assets of the
pension fund, which are held separately from those of the
company. The pension scheme funds can only be used in
accordance with its rules and for no other purpose.
Reporting
A statement by the directors of their responsibilities for
preparing the financial statements is included on page 34.
A report to the company by the auditors, Coopers &
Lybrand, on corporate governance matters is set out
on page 26.