Barclays 2004 Annual Report Download - page 26

reported to the Committee. The lead audit partner is also rotated on
a five-year basis and consequently a new lead audit partner will take
over following the publication of this Annual Report.
The Committee has put in place a detailed policy on the provision of
services by the external auditors. Under the policy, the Committee has
agreed which services the external auditors are allowed to carry out on
behalf of the Group and which ones they are prohibited from doing. This
policy aims to safeguard the independence of the external auditor.
The external auditors are prohibited from providing bookkeeping or
other services related to the Group’s accounting records or financial
statements, financial information systems design and implementation,
appraisal or valuation services, fairness opinions or contribution-in-
kind reports, actuarial services, internal audit outsourcing,
management functions or other secondments, human resource
functions (including recruitment/selection), broker or dealer,
investment adviser or investment banking services, legal and expert
services and tax services involving advocacy.
Allowable services that may be provided by the external auditors are
statutory audit services, regulatory audit services, other attest and
assurance services, regulatory non-audit services and taxation services
(not involving advocacy). They may also provide accountancy advice,
risk management and controls advice and carry out transaction
support and business support and recoveries. For these allowable
services, the Committee has pre-approved all assignments where the
expected fee does not exceed £100,000, or £25,000 in the case of
taxation services, although such assignments must be reported to the
next meeting of the Committee. Any assignment where the expected
fee is above the relevant threshold requires specific approval from the
Committee. The Committee has delegated authority to the Chairman
of the Committee, or, in his absence an authorised member of the
Committee, to approve such assignments in between meetings of
the Committee.
A proposed service that does not fall either within the definition of
prohibited or allowable services requires the approval of the Committee.
A member of the Group Executive Committee must explain the business
case for the provision of that service by the external auditor to the
Committee. A breakdown of the fees paid to the external auditor during
the year is set out on page 142. Where any service requires approval
from the Committee, management must set out the reasons why the
external auditor has been chosen, rather than an alternative provider.
Details of all services carried out by the external auditor are recorded
centrally and reported to the next meeting of the Committee, which
spends time at each meeting considering the independence of the
external auditor based on this information.
For the year ended 31st December 2004, the Committee has
concluded that the external auditor remains independent and is
effective. The Committee has recommended to the Board that they
propose the re-appointment of the external auditors to shareholders
at the 2005 AGM.
Financial Reporting
The Committee has continued to play a pivotal role in reviewing the
Group’s annual and interim financial statements, including reviewing
the effectiveness of the Group’s disclosure controls and procedures
and systems of internal control.
Corporate governance
Corporate governance report
For the disclosures made in the 2004 Annual Report, the Committee,
having reviewed the report of the Disclosure Committee and the
Turnbull attestations made by senior management, has concluded and
reported to the Board for their approval that the Group has maintained
effective disclosure controls and procedures and that management has
continued to operate an effective system of internal control.
Work of the Committee during 2004
In addition to the regular items discussed by the Committee, described
above, the Committee received reports from Business Heads on the
control environment affecting their businesses and more detailed
reports on specific control issues.
The Committee also received regular reports on the progress of two
major regulatory projects, namely the implementation of International
Financial Reporting Standards and the implementation of s.404 of the
US Sarbanes-Oxley Act of 2002, whereby management and the
external auditors will have to attest to the effectiveness of the Group’s
systems of internal control over financial reporting. The Committee
has concluded that the Group is on track to deliver these projects, but
will keep them under ongoing review.
The Committee is confident that it has the required skills and experience
to fully discharge its responsibilities.
Board Risk Committee Chairman’s Statement
The Committee met three times during the year, but will normally
meet four times a year. The purpose of the Committee is to approve
the Group’s overall risk appetite, including limits for individual types of
risk, including credit, market and operational risk. The Committee also
approves material changes to the overall risk appetite and monitors
the Group’s risk profile, including risk trends and concentrations,
provisions experience against budget and key performance indicators
for risk. A key role of the Committee is also to obtain assurance that
the principal risks facing the Group have been properly identified and
are being appropriately managed.
In order to assess the effectiveness of the Group’s risk control
framework, the Committee regularly reviews the Group’s risk
measurement systems and receives reports from management
confirming that they have reviewed the Group’s risk control standards.
An overview of the Group’s risk management and control framework
can be found on page 44. The Board approved the Committee’s revised
approach in November 2004.
Signed on behalf of the Board Audit and Board Risk Committees
Stephen Russell
Board Audit and Board Risk Committee Chairman
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