Carphone Warehouse 2014 Annual Report Download - page 44

Audit Committee report continued
3. EXTERNAL AUDIT CONTINUED
A. OVERSIGHT OF EXTERNAL AUDIT PROCESS continued
The Audit Committee continues to be satisfied with the quality of
theaudit. The Committee holds private meetings with Deloitte LLP
to allow opportunity for open dialogue and feedback without the
presence of management. This allows the Committee toensure
thatmanagement are acting appropriately in response tosignificant
risks, that no audit procedures were hindered by management, and
that there were no compromises to auditor independence during
theaudit process.
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.
B. CONSIDERATION OF AUDITOR APPOINTMENT
ANDINDEPENDENCE
On an ongoing basis the Committee considers the appropriateness
of the re-appointment of the external auditors, including rotation
ofthe audit partner. Matters considered during these deliberations
include the deemed effectiveness of audit procedures performed,
and the independence of the external auditors. The Group has a number
of policies in place to help safeguard the independence of external
auditors. For example, the external auditors are not permitted
toperform any work which they may subsequently need to audit
orwhich might create a conflict of interest. The Committee’s
consideration of non-audit services provided by Deloitte LLP
hasbeen set out separately below.
Recent changes to the UK Corporate Governance Code include
anew provision that FTSE 350 companies put the external audit
contract out to tender at least every ten years. Guidance issued bythe
Financial Reporting Council suggests that for ease of transition it
isacceptable for aformal audit tender to be delayed ifnecessary
tothe end of the current lead audit partner’s tenure. Deloitte LLP
has been the external auditor since the Group’s formation in 2010
(following the demerger of Old Carphone Warehouse into the Group
and TalkTalk Group), and was also the external auditor prior to this
of Old Carphone Warehouse. The current lead audit partner has been
in place for three years (partner rotation is required on a five-yearly
basis). The Committee has recommended to the Board that Deloitte LLP
be retained for the 2014–15 financial year and a resolution proposing
the re-appointment will be put to shareholders at the Company’s
forthcoming annual general meeting. The Committee will continue
to consider the requirements of the UK Corporate Governance Code
and also recent proposals by the Competition Commission and the
European Union on audit tendering and rotation, and will make
adecision at the appropriate time to tender the audit once these
proposals are finalised, in order to ensure compliance with the
relevantregulations.
C. CONSIDERATION OF NON‑AUDIT SERVICES
To safeguard the objectivity and independence of the external auditors,
the Committee has established a formal policy regarding the provision
of non-audit services by the external auditors. The policy specifies
the types of work from which the external auditors are excluded, those
which do not require referral to the Audit Committee, and instances
where a case-by-case decision is required. 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. The non-audit services performed
by the external auditors during the year involved assignments which
were closely related to the annual audit or work of such a nature
that a detailed understanding of the Group was necessary. As such
it was considered appropriate that these services be performed
byDeloitte LLP.
D. FEES PAID
A statement of fees paid or accrued for services from the external
auditors during the year is set out below. 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.
2014 2013
£m £m
Audit services – statutory audit 1.4 0.1
Tax advisory services 0.5 —
Tax compliance services 0.2 —
Other assurance services 0.6 —
Total 2.7 0.1
The Group’s share of the external auditors’ statutory audit fees for
joint ventures was £0.1m (2013: £0.5m) and the Group’s share of
their fees for tax and other services was £0.1m (2013: £0.2m).
Fees paid in relation to non-audit services primarily related to the
CPW Europe Acquisition, in respect of which the external auditors
acted as reporting accountant.
The Committee approved the fees proposed for audit services for
2013–14 following a review of the level of work to be performed by
Deloitte LLP, including the impact of significant one-off transactions
which took place during the year.
John Allwood Chairman, Audit Committee
Carphone Warehouse Group plc
Annual Report 2014
42
CORPORATE GOVERNANCE