BT 1999 Annual Report Download - page 46

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45
Principal Board committees
The Chief Executive, Sir Peter Bonfield, chairs the Group
Executive Committee. The other members are the Group
Finance Director, the Group Managing Director BT UK, the
President and Chief Executive BT Worldwide, the Group
Commercial Director and Secretary, the Group Personnel
Director, the Group Director Strategy and Development,
the Director of Corporate Communications, the Group
Engineering and Technology Director, and the Managing
Director, BT Cellnet and UK Mobility. The Committee
develops the group’s strategy, for Board approval, and
oversees its implementation. It also finalises, before Board
approval, annual operating and capital expenditure plans
and budgets, reviews operational activities and agrees and
monitors group-wide policies, where these are not reserved
to the Board.
The Nominating Committee, consisting of the Chairman,
Deputy Chairman and three other non-executive directors,
ensures the Board has an appropriate balance of expertise
and ability. For this purpose it has agreed, and regularly
reviews, a profile of the required skills and attributes. This
profile is used to assess the suitability as non-executive
directors of candidates put forward by the directors and
outside consultants. Candidates short-listed for appointment
are met by the Committee before it recommends an
appointment to the Board.
The Nominating Committee also assesses candidates for
executive directorships before it recommends an
appointment.
The Audit Committee, comprising solely non-executive
directors, is chaired by Lord Marshall. Its terms of
reference, which are in writing, include reviewing BT’s
internal controls and published financial reports for
statutory compliance and against standards of best practice,
and recommending appropriate disclosure in these reports
to the Board. It also reviews annually the performance
of the company’s auditors to ensure that an objective,
professional and cost-effective relationship is maintained.
It recommends to the Board the auditors’ fees for their
audit services. The Group Finance Director and the
Group Commercial Director and Secretary attend these
meetings. Each year, the Committee sets aside time to
seek the views of the company’s auditors in the absence
of executives.
The Remuneration Committee comprises solely non-
executive directors and is chaired by Lord Marshall.
Further details about the Committee are included in
the Report on directors’ remuneration.
Committee membership is identified in the table of
directors on pages 40 and 41.
Internal financial control
The Board is responsible for the group’s systems of internal
financial control.
Any system can provide only reasonable and not absolute
assurance against material financial misstatement or loss.
Key elements are:
•Formal 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.
•Experienced and suitably qualified staff take
responsibility for important business functions. There
are rigorous recruitment policies and annual appraisal
procedures which assess performance against agreed
objectives and identify necessary training to maintain
and enhance standards of performance.
•Forecasts 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.
•All investment projects are subject to formal
authorisation procedures. The Board considers major
investment projects, with other projects being approved
by the Group Investment Committee (a sub-committee of
the Group Executive Committee) or senior management
within delegated authorities approved and reviewed by
the Board.
•The 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.
•Formal procedures have been established for instituting
appropriate action to correct weaknesses identified from
the above reports.
The Audit Committee has conducted its annual review of the
effectiveness of the systems of internal financial control in
existence in the group for the year ended 31 March 1999
and for the period up to the date of approval of the financial
statements.
The Board recognises the importance of non-financial
controls. However, specific guidance on the scope, extent,
nature and review of internal non-financial controls is not
CORPORATE GOVERNANCE