Barclays 2009 Annual Report Download - page 189

www.barclays.com/annualreport09 Barclays PLC Annual Report 2009 187
Corporate governance
Accountability and audit
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 2009, 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 finance, 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.
Regular risk reports are made to the Board covering risks of Group
significance including credit risk, market risk, operational risk and legal risk.
Reports covering credit, market and operational risk, key risks, risk
measurement methodologies 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 87 to 93.
Management’s report on internal control over financial reporting
The management of Barclays PLC and Barclays Bank PLC (collectively
‘Management’) is responsible for establishing and maintaining adequate
internal control over financial reporting. Internal control over financial
reporting is a process designed under the supervision of the principal
executive and principal financial officers of Barclays PLC and Barclays Bank
PLC 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
(IFRS) as adopted by the European Union and the International Accounting
Standards Board (IASB).
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 IFRS and
that receipts and expenditures are being made only in accordance with
authorisations of management and the respective Directors of Barclays PLC
and Barclays Bank PLC; and provide reasonable assurance regarding
prevention or timely detection of unauthorised acquisition, use or disposition
of assets that could have a material affect on the 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
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 PLC
and Barclays Bank PLC’s internal control over financial reporting as of
31st December 2009. 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, the internal control
over financial reporting of Barclays PLC and Barclays Bank PLC was effective
as of 31st December 2009.
Our independent registered public accounting firm has issued a report
on Barclays PLC’s internal control over financial reporting which is set out on
page 192.
This annual report does not include a report of our registered public
accounting firm on Barclays Bank PLC’s internal control over financial
reporting. Barclays Bank PLC’s internal control over financial reporting
is not subject to assessment by our registered public accounting firm
pursuant to temporary rules of the Securities and Exchange Commission
that permit Barclays Bank PLC to provide only the management’s report
in this annual report.
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
pages 145 to 146.
Changes in internal control over financial reporting
There have been no changes in Barclays PLC and Barclays Bank PLC’s
internal control over financial reporting that occurred during the period
covered by this report which have materially affected or are reasonably likely
to materially affect Barclays PLC and Barclays Bank PLC’s internal control over
financial reporting.