BT 2012 Annual Report Download - page 73

70 Governance
to what non-audit services can be provided
by the external auditors and the approval
process related to them. Under those policies,
work of a consultancy nature is not to be
offered to the external auditors unless there
are clear efficiencies and value-added benefits
for the company. The overall policies and
processes to implement them were reviewed
and appropriately modified in the light of the
provisions of the Sarbanes-Oxley Act relating
to non-audit services that external auditors
may not perform.
Internal audit
We review internal audit and its relationship
with the external auditors, including plans and
performance. Additionally we monitor, review
and report on risk management processes
and the standards of risk management and
internal control, including the processes and
procedures for ensuring that material business
risks, including risks relating to IT security, fraud
and related matters, are properly identified and
managed. On behalf of the Board, we review
the group’s risk profile, endorse a programme
of testing of the risk mitigations and controls
that underpin the group’s assessment of
residual risk and review the group’s current risk
exposure and capability to identify new risks.
Internal controls and risks
We review the disclosures made by the Chief
Executive and Group Finance Director during
the certification process for the Annual
Report & Form 20-F about the design and
operation of internal controls or weaknesses
in the controls, including any fraud involving
management or other employees who have
a significant role in the company’s financial
controls. The Board, as required by UK law,
takes responsibility for all disclosures in
the Annual Report & Form 20-F. We also
receive reports on the processes for dealing
with complaints received by the company
regarding accounting, internal accounting
controls or auditing matters. This includes
the confidential, anonymous submission
by employees of concerns regarding
questionable accounting or auditing matters,
ensuring arrangements are in place for the
proportionate, independent investigation and
appropriate follow up of such matters.
Financial reporting
We review BT’s published financial results,
the Annual Report & Form 20-F and other
published information for statutory and
regulatory compliance and report our views
Nick Rose
Our role
The Committee’s terms of reference
are available on our website at
www.bt.com/committees
External audit
We recommend the appointment and
re-appointment of the external auditors
and consider their resignation or dismissal,
recommending to the Board appropriate
action to appoint new auditors.
We assess the performance of the external
auditors annually by seeking views on their
performance from key stakeholders across
the group. The results of the assessment are
reported to the Committee. The external
auditors are required to rotate the lead partner
every five years, and other partners that are
responsible for the group and subsidiary audits
every seven years. The lead partner currently
responsible for BT’s audit is completing his
third year. No contractual obligations exist that
restrict the group’s choice of external audit firm.
We discuss with the auditors the scope of their
audits before they commence, review the
results and consider the formal reports of the
auditors and report the results of those reviews
to the Board.
Independence of the external
auditor
As a result of regulatory or similar
requirements, it may be necessary to
employ the external auditors for certain
non-audit services. In order to safeguard the
independence and objectivity of the external
auditors, the Board has determined policies as
Who we are
I took over from Phil Hodkinson as Chairman
of the
Audit & Risk Committee on 1 January
2012. The membership of the Committee and
attendance at meetings is set out opposite.
Although not members of the Committee, the
Group Finance Director, Company Secretary,
Director Internal Audit and Director Group
Financial Control attend each meeting as
does the lead audit partner from our external
auditors. The external auditors are not
present when we discuss their performance
and/orremuneration.
The Board considers that the Committee’s
members have broad commercial knowledge
and extensive business leadership experience,
having held between them various roles
in major business, Government, financial
management, treasury and financial function
supervision and that this constitutes a broad
and suitable mix of business and financial
experience. The Board has determined that
Phil Hodkinson and I have recent and relevant
financial experience as required by the
provisions of the Code and that we constitute
‘audit committee financial experts’ for the
purposes of the Sarbanes-Oxley Act.
After each Committee meeting I report
to the Board on the main issues that the
Committeediscussed.
Committee members
Meetings
Member
Eligible
to attend Attended
Nick Rose (Chairman) 6 6
Clay Brendisha33
Rt Hon Patricia Hewitt 6 5
Phil Hodkinson 6 6
Carl Symonb55
Jasmine Whitbreadc11
a Clay Brendish retired from the Committee on 31 August
2011.
b Carl Symon retired from the Committee on 13 January
2012.
c Jasmine Whitbread joined the Committee on
14 December 2011.
Reports of the Board Committees
Audit & Risk Committee Chairman’s report
Overview
BusinessStrategy
Performance
Governance
Financial statements
Additional information Overview
BusinessStrategy
Performance
Governance
Financial statements
Additional information