Barclays 2003 Annual Report Download - page 23

Combined Code Statement of Compliance
As a Company listed on the official list of the London Stock Exchange,
Barclays is required to state how it has applied the principles in the
United Kingdom Listing Authority’s Combined Code on Corporate
Governance or, where these have not been applied, to provide an
explanation accordingly.
For the year ended 31st December 2003, Barclays complied with the
existing Combined Code save for the formal appointment of a Senior
Independent Director. As set out in our letter to shareholders on
6th November 2003, making such an appointment is a priority for the
Board during 2004. However, the Group has in Sir Brian Jenkins a Deputy
Chairman and independent non-executive Director who is available as a
point of contact for shareholders if required.
The Board annually reviews the independence of its non-executive
Directors, taking into account developing best practice and regulation.
For 2003, the Board has determined that all the non-executive Directors
are independent under the existing Combined Code and after taking into
account all the independence factors outlined in the revised Combined
Code. There is a strategic alliance between Barclaycard and Xansa, of
which Hilary Cropper was, until recently, Chairman. Mrs Cropper has not,
and will not, participate in discussions relating to this alliance at Barclays
Board meetings. Mrs Cropper also refrained from discussing and voting
on the alliance at meetings of the Xansa Board. Mrs Cropper is no longer
a Director of Xansa although she is now Honorary President. Having
considered the matter carefully, the Board has concluded that Hilary
Cropper remains independent for these purposes under the existing
and the revised Combined Codes and demonstrates her independence
at every Board meeting.
Although the standards in the revised Combined Code will only apply
to the Group from the 2004 financial year, Barclays has used its best
endeavours to comply with it so far as possible. The Board’s view is that
the Group already complies with the principles set out in the revised
Code. However, work will be done in the coming year to ensure
compliance with the specific provisions, principally the appointment
of a senior independent non-executive Director and a non-executive
Director with recent and relevant financial experience to serve on the
Board Audit Committee.
Board Committees
Specific responsibilities have been delegated to Board committees.
All Board Committees have access to independent expert advice at the
Group’s expense and, as explained above, are or will be subject to an
annual self-assessment, the results of which are or will be reported to
the Board. The terms of reference for the principal Board committees are
also available on request from the Group Secretary. The four principal
Board committees are:
Board Audit Committee
Chairman’s Statement
The Board Audit Committee has continued to play an important role in
reviewing the Group’s controls and financial reporting systems. Its role is
becoming increasingly complex and high profile given the focus on the
work of audit committees over the last two years. Barclays is fully
committed to ensuring its Board Audit Committee fulfils its new duties
and responsibilities effectively.
The Committee is made up entirely of independent non-executive
Directors. While the Committee has collectively the skills and experience
required to fully discharge its duties, and has access to independent
expert advice at the Group’s expense, the Board has determined that no
single member is a ‘financial expert’, as defined by the US Sarbanes-
Oxley Act 2002, or fully meets the requirements of the revised
Combined Code in respect of ‘recent and relevant financial experience’.
The appointment to the Board and to the Board Audit Committee of
an individual who meets both tests is a priority for the Board in 2004.
However, Sir Brian Jenkins, a member of the Committee, is a chartered
accountant and an ex-senior partner of Coopers & Lybrand.
Members of the Committee during 2003, together with a record of
their attendance at Committee meetings, are set out below:
Meetings Attended
Stephen Russell, Chairman 5/5
Sir Brian Jenkins 5/5
Dr Jürgen Zech (appointed on 11th February 2003) 3/4
Professor Dame Sandra Dawson 1/2
(appointed on 1st August 2003)
Sir Nigel Mobbs (until 24th April 2003) 2/2
During 2003, the Committee has met five times, with the Group’s senior
management, the internal audit team and the external auditors,
PricewaterhouseCoopers LLP. In preparing for each of these meetings
I also held discussions with each of them to ensure that the meetings
of the Committee were as effective as possible. The Committee also met
privately with the external and internal auditors after each Committee
meeting and at other times, where appropriate.
The Committee is responsible for approving and reviewing the
appointment and retirement of the external auditors, as well as
overseeing their relationship with the Group. This includes conducting
an annual review of the independence and effectiveness of the external
auditors and the recommendation to the Board as to the level of fees to
be paid to the external auditors.
During the course of the year, the Committee reviewed and approved
a comprehensive and robust policy to regulate the Group’s use of the
external auditors for non-audit services. The policy sets out in detail
what services may or may not be provided to the Group by the external
auditors. The Committee must approve individual assignments which are
not pre-approved or which exceed a certain value and sets aside time at
each Committee meeting to discuss the external auditors’ independence,
the level of non-audit fees being paid to them and the types of services
being provided by them, including a summary of all assignments pre-
approved since the last meeting. In addition, the Committee has
approved a Code of Ethics applicable to the Group Chief Executive and
the Group’s senior financial officers.
The responsibility for ensuring that management maintain an effective
system of internal control and for reviewing its effectiveness rests
with the Board. The Group Chief Executive and the Group Executive
Committee is responsible for the management of risk and the Group
Governance and Control Committee is responsible for monitoring the
Group’s assurance process and the risk governance framework to ensure
that it is complete and effective. The Board Audit Committee reviews the
effectiveness of risk management standards and reviews reports on
control issues of Group level significance.
The Committee has a pivotal role in reviewing the Group’s annual and
interim financial statements, including the effectiveness of the Group’s
disclosure controls and procedures and systems of internal control. The
remit of the Committee also extends to reviewing the work undertaken
by the internal audit team and reports produced by senior management
on control issues, reporting its findings to the Board as appropriate.
Barclays PLC Annual Report 2003 21