Carphone Warehouse 2005 Annual Report Download - page 28

24
Corporate Governance continued
The Carphone Warehouse Group PLC Annual Report 2005
The Senior Independent Director also met with the Non-Executive
Directors, in the absence of the Chairman, to assess the Chairman’s
effectiveness (having taken soundings beforehand from the Executive
Directors). The Chairman had no other significant commitments during
the period that would have affected his performance in his role.
External appointments
The Board supports Executive Directors taking up Non-Executive
Directorships as part of their continued development, and the Board
believes that this will ultimately benefit the Company. Further details
are provided in the Remuneration Report on pages 26 to 31.
Board Committees
There are three principal Board Committees: Audit, Remuneration and
Nomination. The Committees are provided with sufficient resources via
the Company Secretary and, where necessary, have direct access to
independent professional advisers to undertake their duties.
Audit Committee
During the period the Committee comprised three independent Non-Executive
Directors, Adrian Martin (Chairman), John Gildersleeve and Sir Brian Pitman.
Adrian Martin is deemed by the Board to be the Committee member with
recent and relevant financial experience. All of the Committee members have
extensive commercial experience. The Committee met formally four times during
the period. All members of the Committee were present at each meeting, except
Sir Brian Pitman who was absent from the meetings on 13 May 2004 and
28 October 2004 because he had to attend other meetings that had been
fixed before the Company had arranged the meetings. The Company
Secretary ensured that he received all relevant papers in advance and that any
comments he had were communicated to the meeting. The Chairman of the
Committee updates the Board on any significant issues that may have arisen
at the Board meeting following each Committee meeting. Martin Dawes was
appointed to the Committee on 27 January 2005, from which point the
Committee comprised four independent Non-Executive Directors.
During the period, all the requirements of the Code in respect of the
Committee were met. The work undertaken by the Committee is described
within the following sections of this Report.
The Group’s Chief Financial Officer and other senior management attend
Committee meetings by invitation of the Committee. Representatives of the
Group’s external auditors and the Group Director of Risk also attend these
meetings by invitation of the Committee. The external and internal auditors
have direct access to the Committee during formal meetings and time is
set aside for them to have private discussions with the Committee, in the
absence of management.
The Committee’s terms of reference, which are available on request from
the Company Secretary and are published on the Company’s website,
comply with the Code. During the period, the formal calendar of items
considered at each Audit Committee meeting within each annual cycle
embraced the Code requirements to:
• monitor the integrity of the financial statements of the Company, and any
formal announcements relating to the Group’s financial performance, including
reviewing significant financial reporting judgements contained in them;
• review the Company’s internal financial controls and its internal control and
risk management systems and to make recommendations to the Board;
• monitor and review the effectiveness of the Group’s internal audit function;
• make recommendations to the Board in relation to the appointment, re-
appointment and removal of external auditors and to approve their
remuneration and terms of engagement;
• review and monitor the external auditors’ independence and objectivity
and the effectiveness of the audit process, taking into consideration
relevant UK professional and regulatory requirements; and
• review the Group’s policy on the engagement of the external auditors
to supply non-audit services. In this context the Committee’s remit
requires it to report to the Board identifying any matters in respect of
which it considers that action or improvement is needed and to make
recommendations as to the steps to be taken.
In the light of the assessments and review undertaken, the Committee
recommended to the Board that Deloitte & Touche LLP be retained as
auditors of the Group. This recommendation was endorsed by the Board.
The policy relating to the provision of non-audit services by the external
auditors specifies the types of work from which the external auditors are
excluded; for which the external auditors can be engaged without referral
to the Committee; and for which a case-by-case decision is required. The
ratio of non-audit fees to audit fees is monitored by the Committee within
an overall limit set by the Board on the recommendation of the Committee.
A statement of fees paid or accrued for services from the external auditors
during the period is set out below:
2005 2004
£000 £000
Audit services:
– statutory audit 836 568
– non-statutory audit 98 –
Further assurance services 15 225
Tax services:
– compliance services 10 –
– advisory services 150 313
Other services 54 12
Total 1,163 1,118
Certain non-audit services are pre-approved by the Committee depending
upon the nature and size of the service. Non-statutory audit services during
the period primarily related to work undertaken in respect of International
Accounting Standards. Tax services comprise compliance services and
technical advice associated with relevant UK and international fiscal laws
and regulations and, in particular, assessment of the potential implications
of proposed corporate transactions or restructuring.
Having undertaken a review of the non-audit related work the Committee
has satisfied itself that the services undertaken during the period did not
prejudice the external auditors’ independence.
At each of its meetings the Committee reviewed and considered reports
from the Group Director of Risk on the status of the Group’s risk management
systems, findings from the internal audit function concerning internal
controls, and reports on the status of any weaknesses in internal controls
identified by the internal or external auditors.
Remuneration Committee
During the period the Committee comprised four independent Non-Executive
Directors, John Gildersleeve (Chairman), Sir Brian Pitman, Martin Dawes and
Adrian Martin. The Committee met formally three times during the period and
each member attended every meeting, except Adrian Martin who was absent
from the meeting on 27 May 2004 because he was not appointed to the
Committee until 27 January 2005. Other Directors, the Company Secretary,
the Group Director of Human Resources and advisers attended by invitation
only. A detailed description of the Committee’s remit and work during the
period is contained in the Remuneration Report on pages 26 to 31. Its terms of
reference comply with the Code, are available on request from the Company