Barclays 2008 Annual Report Download - page 189

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Governance
Barclays PLC Annual Report 2008 187
Corporate governance
Accountability and audit
that internal controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
Management has assessed the effectiveness of Barclays internal
control over financial reporting as of 31st December 2008. In making its
assessment, management has utilised the criteria set forth by the
Committee of Sponsoring Organisations of the Treadway Commission in
Internal Control – Integrated Framework. Management concluded that,
based on its assessment, Barclays internal control over financial reporting
was effective as of 31st December 2008.
Management’s assessment of and conclusion on the
effectiveness of internal control over financial reporting did not include
internal controls relating to certain of the Lehman Brothers North American
investment banking and capital markets businesses acquired from
Lehman Brothers Holdings Inc. in September 2008. These businesses
have been included in Barclays consolidated financial statements for the
year ended 31st December 2008. The businesses the controls relating to
which have not been included in management’s assessment represented
approximately 1.1%of the group income and 0.2%of the total assets of
Barclays for the year ended 31st December 2008.
Our independent registered public accounting firm has issued a
report on Barclays internal control over financial reporting which is set out
on page 192.
The system of internal financial and operational controls is also subject
to regulatory oversight in the United Kingdom and overseas. Further
information on supervision by the financial services regulators is provided
under Supervision and Regulation in the Risk Management section on
page 148. The Group Chief Executive and Group Finance Director also
concluded that no significant changes were made in our internal controls
or in other factors that could significantly affect these controls subsequent
to their evaluation.
Statement of Directors’ responsibilities for accounts
The following statement, which should be read in conjunction with the
Auditors’ report set out on page 191, is made with a view to distinguishing
for shareholders the respective responsibilities of the Directors and of the
auditors in relation to the accounts.
The Directors are required by the Companies Act 1985 to prepare
accounts for each financial year and, with regards to Group accounts,
in accordance with Article 4 of the IAS Regulation. The Directors have
prepared individual accounts in accordance with IFRSs as adopted
by the European Union. The accounts are required by law and IFRSs to
present fairly the financial position of the Company and the Group and
the performance for that period. The Companies Act 1985 provides, in
relation to such accounts, that references to accounts giving a true and
fair view are references to fair presentation.
The Directors consider that, in preparing the accounts on pages
193 to 298, and the additional information contained on pages 315 to
323, the Group has used appropriate accounting policies, supported by
reasonable judgements and estimates, and that all accounting standards
which they consider to be applicable have been followed.
The Directors have responsibility for ensuring that the Company and
the Group keep accounting records which disclose with reasonable
accuracy the financial position of the Company and the Group and
which enable them to ensure that the accounts comply with the
Companies Act 1985.
The Directors have general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the Group and to
prevent and detect fraud and other irregularities.
Going concern
The Group’s business activities and financial position; the factors likely
to affect its future development and performance; and its objectives
and policies in managing the financial risks to which it is exposed and
its capital are discussed in the Business Review.
The Directors have assessed, in the light of current and anticipated
economic conditions, the Group’s ability to continue as a going concern.
The Directors confirm they are satisfied that the Company and the
Group have adequate resources to continue in business for the
foreseeable future. For this reason, they continue to adopt the ‘going
concern’ basis for preparing accounts.
Internal control
The Directors have responsibility for ensuring that management maintain
an effective system of internal control and for reviewing its effectiveness.
Such a system is designed to manage rather than eliminate the risk of
failure to achieve business objectives and can only provide reasonable
and not absolute assurance against material misstatement or loss.
Throughout the year ended 31st December 2008, and to date, the Group
has operated a system of internal control which provides reasonable
assurance of effective and efficient operations covering all controls,
including financial and operational controls and compliance with laws
and regulations. Processes are in place for identifying, evaluating and
managing the significant risks facing the Group in accordance with the
guidance ‘Internal Control: Revised Guidance for Directors on the
Combined Code’ published by the Financial Reporting Council. The Board
regularly reviews these processes through its principal Board Committees.
The Directors review the effectiveness of the system of internal control
semi-annually. An internal control compliance certification process
is conducted throughout the Group in support of this review. The
effectiveness of controls is periodically reviewed within the business areas.
Regular reports are made to the Board Audit Committee by management,
Internal Audit and the compliance and legal functions covering particularly
financial controls, compliance and operational controls. The Board Audit
Committee monitors resolution of any identified control issues of Group
level significance through to a satisfactory conclusion.
The Group Internal Control and Assurance Framework (GICAF)
describes the Group’s approach to internal control and details Group policies
and processes. The GICAF is reviewed and approved on behalf of the Group
Chief Executive by the Group Governance and Control Committee.
Quarterly risk reports are made to the Board covering risks of Group
significance including credit risk, market risk and operational risk. Reports
covering risk measurement standards and risk appetite are made to the
Board Risk Committee. Further details of risk management procedures are
given in the Risk management section on pages 69 to 149.
Management’s report on internal control over financial reporting
The management of Barclays is responsible for establishing and
maintaining adequate internal control over financial reporting. Barclays
internal control over financial reporting is a process designed under the
supervision of Barclays principal executive and principal financial officers to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external reporting
purposes in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union and the International
Accounting Standards Board (IASB).
Barclays internal control over financial reporting includes policies
and procedures that pertain to the maintenance of records that,
in reasonable detail, accurately and fairly reflect transactions and
dispositions of assets; provide reasonable assurances that transactions
are recorded as necessary to permit preparation of financial statements in
accordance with IFRSs and that receipts and expenditures are being made
only in accordance with authorisations of management and the Directors
of Barclays; and provide reasonable assurance regarding prevention or
timely detection of unauthorised acquisition, use or disposition of Barclays
assets that could have a material affect on Barclays financial statements.
Internal control systems, no matter how well designed, have inherent
limitations and may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk