Carphone Warehouse 2014 Annual Report Download - page 42

Audit Committee report continued
2. RISK AND INTERNAL CONTROLS
A. RISK MANAGEMENT
The Group has established a risk management programme that
assists management to identify, assess and mitigate business, financial,
operational and compliance risks. The Board views risk management
as integral to good business practice and protecting the best interests
of shareholders. Executive management of the Group has direct
responsibility for the risk management programmes of their businesses.
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 Group’s risk management framework aims to:
+assist management to implement effective means of risk
identification, assessment and mitigation;
+instil a risk-based approach and awareness into the Group’s culture;
+encourage accountability for identifying and managing the risks
specific to line managers’ respective areas of the business; and
+create and implement risk management strategies which
address all types of risks.
The Group maintains a risk register, and all senior managers within
the business are responsible for managing and monitoring the risks
identified within their areas, and identifying new risks as they arise.
The risk register is reviewed and updated at each of the tri-annual
meetings of the Committee, with informal tracking taking place every
two months. Each risk identified is ranked according to a weighted
score based on the risk category, the likelihood of an event occurring
and its impact on the business should it occur due to either failure
or absence of mitigating controls. Mitigating controls in place are
alsodocumented.
B. INTERNAL CONTROL
As in any business, the Group faces a number of risks and uncertainties
on a daily basis, and a detailed internal control framework exists so
as to mitigate these risks and protect the interests of shareholders.
The directors have overall responsibility for the Group’s systems of
internal control and for reviewing effectiveness, and they discharge
this responsibility by performing the following:
+determining the Group’s risk appetite and tolerance;
+overseeing the risk management strategy; and
+ensuring that management implements effective systems of risk
identification, assessment and mitigation.
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.
1. CONSIDERATION OF ACCOUNTING AND FINANCIAL REPORTING MATTERS CONTINUED
SIGNIFICANT ISSUES
AND AREAS OF JUDGEMENT HOW THE ISSUE WAS ADDRESSED BY THE COMMITTEE
Closure of French operations The closure of the Group’s French operations has required management judgement
inanumber of areas, particularly in relation to the recognition of provisions for committed
closure costs. The Committee reviewed management’s assumptions when performing
these calculations and is comfortable that the amounts recognised up to 29 March 2014
appropriately reflect the costs incurred up to, and liabilities assumed as at, this date.
Taxation The Group operates across multiple tax jurisdictions, and the complex nature of tax
legislation in these jurisdictions necessitates the use of judgement; additionally,
management uses assumptions and judgements to assess the likelihood of utilisation
of available tax losses. The Committee considered the material judgements made by
management, with reference to the assumptions made, progress made on matters
being discussed with tax authorities and advice provided by external advisers where
applicable. The Committee was satisfied that the conclusions reached by management
were appropriate.
Going concern The Committee assessed the Group’s available facilities, facility headroom, banking
covenants and the results of a sensitivity analysis performed. The Committee also
reviewed management’s analysis which was performed with reference to budgeted
revenue and earnings levels for the coming years and were satisfied that the going
concern basis of preparation continues to be appropriate for the Group.
Carphone Warehouse Group plc
Annual Report 2014
40
CORPORATE GOVERNANCE