Barclays 2014 Annual Report Download - page 69

barclays.com/annualreport Barclays PLC Annual Report 2014 I 67
During 2014, non-executive Directors attended briefings on the
following subjects:
Q The US Dodd Frank Wall Street Reform and Consumer Protection
Act;
Q Structural reform, in particular the requirements for an US
intermediate holding company with independent non-executive
Directors;
Q Barclays’ values and culture; and
Q Barclays’ African businesses.
In addition, non-executive Directors visited businesses around the
Group, met with investors and external parties to enrich their
understanding of Barclays’ businesses and the challenges it faces as
well as a focus on areas within their remit. For example, Tim Breedon,
as Chairman of the Board Financial Risk Committee, met with external
evaluators of Barclays Internal Audit function to discuss the results;
met with regulators in the UK and the US to discuss matters including
stress testing, product control and valuations; and travelled to South
Africa and New York.
Information provided to the Board
Both the Executive Directors and senior executives keep the non-
executive Directors informed of the key developments in the business
through regular reports and presentations, including weekly updates
that include information on investors’ and other stakeholders’ reactions
to the news of the week and the market’s response.
Throughout the year, Directors are regularly briefed regarding their
roles on the Board and its Committees, including updates on the
regulatory and financial services environment. Barclays ensures that
the information is provided in a timely manner and is presented clearly
and concisely.
It is the role of the Company Secretary to support the Chairman in
ensuring good information flows between the Board, its Committees
and the senior executives. He acts as adviser to the Board regarding
governance matters and provides support to the Chairman to ensure
the effectiveness of the Board. In addition, Directors have access to the
advice and services of the Company Secretary, who ensures Board
procedures are complied with and that the Directors have access to
independent and professional advice at the Company’s expense.
Accountability
The Strategic Report on pages 02 to 32 describes the business model
and strategy whereby the Company generates and preserves value over
the long term and delivers the objectives of the Company.
Risk Management and Internal Control
The Directors have responsibility for ensuring that management
maintain an effective system of risk management and internal control
and for assessing 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.
Barclays is committed to operating within a strong system of internal
control that enables business to be transacted and risk taken without
exposing itself to unacceptable potential losses or reputational
damage. Barclays has an overarching framework that sets out Barclays
approach to internal governance (the Barclays Guide). The Barclays
Guide establishes the mechanisms and processes by which the Board
directs the organisation, through setting the tone and expectations
from the top, delegating its authority and assessing compliance.
A key component of the Barclays Guide is the Enterprise Risk
Management Framework (ERMF). The purpose of the ERMF is to
identify and set minimum requirements in respect of the main risks to
achieving the Group’s strategic objectives and to provide reasonable
assurance that internal controls are effective. The key elements of the
Group’s system of internal control, which is aligned to the
recommendations of The Committee of Sponsoring Organizations of
the Treadway Commission, Internal Control – Integrated Framework
(2013 COSO), are set out in the risk control frameworks relating to
each of the Group’s Principal and Key Risks. As well as incorporating
our internal requirements, these reflect material Group-wide legal and
regulatory requirements relating to internal control and assurance.
Effectiveness of internal controls
Key controls are assessed on a regular basis for both design and
operating effectiveness. Issues arising out of business risk and control
assessments and other internal and external sources are examined to
identify pervasive themes. Where appropriate, control issues are
reported to the Board Audit Committee via the Operational Risk and
Control Committee. In addition, regular reports are made to the Board
Audit Committee by management, Barclays Internal Audit and the
Finance, Compliance and Legal functions covering, in particular,
financial controls, compliance and other operational controls.
Risk management and internal control framework
The Directors formally review the effectiveness of the system of internal
control and risk management annually. Throughout the year ended
31 December 2014 and to date, the Group has operated a system of
internal control that 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 UK Corporate
Governance Code’ published by the Financial Reporting Council (the
Turnbull Guidance).
These processes include an attestation procedure which requires all
significant processes and identified material risks to be assessed and
recorded, together with the related key controls by the heads of
businesses and functions. As part of this, specific consideration is given
to relevant information, including as a minimum: any open control
issues; any outstanding internal and external audit findings; regulatory
reviews and any outstanding regulatory compliance matters;
compliance with Group level policies; records of operational loss/risk
events; experience of all types of fraud; and any other material
control-related matters that have been raised either by management or
via independent/external review. The status of any remediation in
connection with these matters is also examined. The results of this
attestation procedure were reported to the Board Audit Committee in
February 2015, when it was noted that, although several of the
attestations referred to outstanding control design or operating
effectiveness issues, none of these were considered to be material and
none had prevented the heads of businesses or functions from
providing a Turnbull statement. All issues had identified remediation
tasks and attributed timescales for resolution (or timescales being
determined).
Regular reports are made to the Board covering risks of Group level
significance. The Board Financial Risk Committee and the Board
Conduct, Operational and Reputational Risk Committee examine
reports covering the Principal Risks (Credit risk, Market risk, Funding
risk, Operational risk and Conduct risk) as well as reports on risk
measurement methodologies and risk appetite. Further details of
material existing and emerging risks and risk management procedures
are given in the Risk review section on pages 113 to 220.
The Strategic Report Governance Risk review Financial review Financial statements Shareholder information