Carphone Warehouse 2001 Annual Report Download - page 20

Accountability and Audit
Internal control
The Board of Directors has overall responsibility for systems of internal control throughout the Group and for reviewing their effectiveness.
These include controls over financial, operating, management and risk management systems, and are designed to provide reasonable and
not absolute assurance against misstatement or loss. They are also designed to manage rather than eliminate the risk of failure to achieve
business objectives.
Among the principal features of the Group’s systems of internal control is a planning process within which the Board approves strategy
and a Group business plan. Managers prepare business plans at individual business levels, showing specific plans and budgets for the
following 12 months with longer term aspirations over a two year period. Plans are challenged and approved at Executive management level.
The Board receives comprehensive monthly information including financial and business performance showing variances against
budgets and consideration of key performance indicators. There is also a regular reforecasting process in place.
Capital expenditure is subject to the disciplines of appraisal and approval and an annual budget is set subject to this process and
incorporates the appropriate levels of authority at individual business levels.
The Audit Committee acts under delegated authority from the Board and meets three times a year. It is responsible for reviewing the
adequacy and effectiveness of the systems of internal control throughout the Group. During the period it was assisted in this work by the
risk management team covering systems of internal control in the Group’s substantive business units and issues relating to the central
support functions.
There is a continuous process for identifying, evaluating and managing the significant risks faced by the Group which has been in place
for the period under review and up to the date of approval of the Annual Report and Accounts. This process is reviewed annually by the
Board.
The process used by the Board through the Audit Committee and risk management team includes the following:
• Review of the external and internal audit workplans;
• Review at each Board meeting of a management risk report;
• Consideration of reports from management and internal audit on the systems of internal control and any material control weaknesses;
• Discussions with management on the actions taken on areas identified either by Board members or in internal/external audit
or risk reports;
• Consideration of the performance of internal audit or the risk management team together with an annual review of its resourcing, skills
and terms of reference; and
• Consideration of the appropriate Audit Committee minutes and reporting of significant issues through the Audit Committee Chairman
to the Board.
18 The Carphone Warehouse Group PLC Annual Report 2001
Corporate governance continued