Carphone Warehouse 2013 Annual Report Download - page 43

The Board’s focus is primarily on reviewing the effectiveness of these
processes, more than involving itself in the processes themselves.
Specific controls and processes are detailed further below.
The systems of internal control described above were in place
throughout the year and up to the date of approval of the annual
report and financial statements. The effectiveness of these systems
is periodically reviewed by the Audit Committee in accordance with
the revised guidance in the Turnbull Report. These systems are also
refined as necessary to meet changes in the Group’s business and
associated risks. The systems of internal control are designed to
manage rather than eliminate the risk of failure to achieve business
objectives. They can only provide reasonable and not absolute
assurance against material errors, losses, fraud or breaches
oflaws and regulations.
The Board has conducted an annual review of the effectiveness of
thesystems of risk management and internal control in operation
during the year and up to the date of the approval of the annual
report and financial statements and this was approved by the
AuditCommittee and the Board.
JOINT VENTURE CONTROL PROCESSES
A dedicated team of risk specialists, including internal auditors,
form the Best Buy Europe Risk and Business Assurance function.
Members of this team conduct risk workshops and reviews within
each of the main Best Buy Europe operating divisions and assist
Virgin Mobile France with similar risk reviews as required.
The risk management processes of Best Buy Europe and Virgin
Mobile France have involved assessments of significant business
risks which are wide-ranging, covering risks arising from the
regulatory environment, strategy, counter-parties and organisational
change associated with acquisitions and major projects. The output
from each assessment is a list of strategic, financial, operational
and compliance risks. Associated action plans and controls to mitigate
them are also put in place where this is possible and to the extent
considered appropriate, taking account of costs and benefits.
Reports, action plans and any changes to the status of significant risks
and risk matrices are reported at each Audit Committee meeting and
at Board meetings where applicable. During the year the Board has
not identified or been advised of any significant control failings.
Other controls in place for Best Buy Europe and Virgin Mobile
France are as follows:
— Best Buy Europe has its own audit committee. Nigel Langstaff
isa member of the committee and other members of senior
management attend the meetings by invitation. Internal audit
andrisk reports are provided at these meetings.
— A number of key matters are reserved for the approval of both of
Best Buy Europe’s shareholders before they can be undertaken
by the Best Buy Europe management team.
— Roger Taylor and Nigel Langstaff are directors of Virgin Mobile
France. Its board ordinarily meets monthly and hasultimate
responsibility for strategic, operational, risk and compliance
matters for the business.
— There is frequent informal interaction between shareholders and
management on strategic and operational matters, with respect
to Best Buy Europe and Virgin Mobile France.
REPORT OF THE AUDIT COMMITTEE
In light of the assessments and review undertaken, the Audit
Committee recommended to the Board that Deloitte LLP be retained
as auditors of the Company. 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 Audit Committee; and for which a
case-by-case decision is required. In order to safeguard the external
auditors’ objectivity and independence, the ratio of non-audit fees to
audit fees is monitored by the Audit Committee within an overall limit
set by the Board on the recommendation ofthe Audit Committee.
A statement of fees paid or accrued for services from the external
auditors during the year is set out below:
2013 2012
£m £m
Audit services – statutory audit 0.1 0.1
Tax advisory services —0.6
Other assurance services —0.2
Total 0.1 0.9
The Group’s share of the external auditors’ statutory audit fees for
joint ventures was £0.5m (2012:£0.6m) and the Group’s share
oftheir fees for tax and other services was £0.2m (2012: £0.2m).
Certain non-audit services are pre-approved by the Audit Committee
depending upon the nature and cost of the service. Taxservices
principally comprise 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 Audit Committee hassatisfied itself
thatthe services undertaken during the year didnot prejudice
theexternal auditors’ independence.
At each of its meetings the Audit Committee reviewed and
considered reports on the status of the Group’s risk management
systems, findings from reviews of internal controls in joint venture
operations, and reports on the status of any weaknesses in internal
controls identified by the internal or external auditors.
RISK MANAGEMENT AND INTERNAL CONTROL
The Company has established a risk management programme
thatassists management throughout the Group to identify,
assessand mitigate business, financial, operational and compliance
risks. The Board views management of risk asintegralto good
businesspractice.
The directors have overall responsibility for the Group’s systems
ofinternal control and for reviewing their effectiveness. The Board
delegates to executive management the responsibility for designing,
operating and monitoring these systems. The systems are based
onaprocess of identifying, evaluating and managing significant risks
and include the risk management processes set out above.
Executive management of Best Buy Europe and Virgin Mobile France
have direct responsibility for the risk management programmes of
their businesses. Consequently, the Board places reliance as far as
possible on the risk management processes of the joint venture boards.
ANNUAL REPORT 2013 CARPHONE WAREHOUSE GROUP PLC 41
BUSINESS REVIEW GOVERNANCE FINANCIAL STATEMENTS