Barclays 2013 Annual Report Download - page 69

Following all the above, and in particular the process of re-evaluation,
the Committee recommended to the Board and to shareholders that
PwC should be re-appointed as the Group’s auditors at the AGM on
24 April 2014.
To help assure the objectivity and independence of the external auditor,
the Committee has in place a policy that sets out the circumstances in
which the external auditor may be permitted to undertake non audit
services. Allowable services are pre-approved up to £100,000, or
£25,000 in the case of certain taxation services. Any proposed
non-audit service that exceeds these thresholds requires specific
approval from the Chairman of the Committee before the auditor can
be engaged. Such proposals must be robustly justified and, if
appropriate, tendered, before they are approved. During 2013, the
Chairman of the Committee scrutinised all such requests for approval,
particularly those that concerned taxation-related services, and two
requests for approval were declined. In particular, for tax advisory
services the Committee’s instruction to management is not to use the
external auditor unless an exceptional case can be made for not
engaging an alternative supplier.
The Committee assessed quarterly reports on non-audit services
undertaken by the auditor in order to satisfy itself as to the types of
services being provided and to which businesses and the fees incurred.
While the level of non-audit services provided by PwC has fallen in
recent years, the Committee made clear to management that it wished
to see a further reduction in the level of non-audit fees payable to PwC
and that the default position should be to use another firm.
Subsequently, a communication was issued to all business Chief
Financial Officers across the Group emphasising the Committee’s
instructions.
A breakdown of the fees paid to the auditor for non-audit work during
2013 may be found in note 44 on page 368, with non-audit fees
representing 28.5% of the audit fee (2012: 25.7%). Assurance activity
conducted by the external auditor in connection with the rights issue in
2013 resulted in a slight increase in the level of non-audit fees year on
year. Significant categories of engagement undertaken in 2013
included: attest and assurance services associated with the production
of reports and comfort letters in connection with Barclays’ rights issue;
quality assurance services relating to Barclays new performance
management system; and tax compliance services for ongoing
assignments initiated pre-January 2011 in connection with our
expatriate and international assignees. In each case, the request to use
the auditor for these services was sponsored by a senior executive, who
was required to demonstrate to the Committee a robust and thorough
value case for using the auditor, including an explanation of any tender
process conducted, any alternative providers considered and the
criteria on which the decision to award the service to the auditor was
made, including the specific skills and experience to be provided by the
auditor. In addition, in each case the relevant audit partner was required
to attest that provision of the services had been approved in
accordance with the auditors’ own internal ethical standards and that
the auditors’ objectivity and independence would not be compromised.
Further details of the non-audit services that are prohibited and
allowed under the policy can be found in the corporate governance
section of Barclays’ website, Barclays.com. 2014 is likely to see new
regulation on non-audit services from the European Union, introducing
certain restrictions around the provision of non-audit services by the
auditor and a 70% non-audit services fee cap. The Committee will
review the policy to take into account any new requirements that are
introduced and will implement a limit for non-audit services of
£250,000 over and above which the Committee will be required to
approve such requests.
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