HSBC 2006 Annual Report Download - page 263

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by HSBC and the number of former employees of
the external auditor currently employed in senior
positions in HSBC. The reports enable the
Committee to consider whether there has been any
impairment, or appearance of impairment, of the
auditor’s judgement or independence in respect of
the audit.
The Group Audit Committee has established
policies for the pre-approval of specific services that
may be provided by the principal auditor, KPMG
Audit Plc and its affiliates (‘KPMG’). These policies
are kept under review and amended as necessary to
meet the dual objectives of ensuring that HSBC
benefits in a cost effective manner from the
cumulative knowledge and experience of its auditor,
whilst also ensuring that the auditor maintains the
necessary degree of independence and objectivity.
These pre-approval policies apply to all services
where HSBC Holdings or any of its subsidiaries pays
for the service, or is a beneficiary or addressee of the
service and has selected or influenced the choice of
KPMG. All services entered into with KPMG during
2006 were pre-approved by the Committee or were
entered into under pre-approval policies established
by the Committee. A quarterly update on non-audit
services provided by KPMG is presented to the
Committee.
The pre-approved services relate to regulatory
reviews, agreed-upon procedures reports, other types
of attestation reports, the provision of advice and
other non-audit services allowed under SEC
independence rules. They fall into the categories of
audit services, audit-related services, tax services
and other services.
All services provided by KPMG relating to the
implementation of section 404 of the Sarbanes-
Oxley Act were specifically pre-approved by the
Group Audit Committee.
An analysis of the remuneration paid in respect
of audit and non-audit services provided by KPMG
for each of the last three years is disclosed in Note 8
on the Financial Statements on page 331.
The Committee has recommended to the Board
that KPMG Audit Plc be reappointed auditor at the
forthcoming Annual General Meeting.
Remuneration Committee
The role of the Remuneration Committee and its
membership are set out in the Directors’
Remuneration Report on page 280.
Nomination Committee
The Nomination Committee is responsible for
leading the process for Board appointments and for
identifying and nominating, for approval by the
Board, candidates for appointment to the Board.
Before recommending an appointment to the Board,
the Committee evaluates the balance of skills,
knowledge and experience on the Board and, in the
light of this, identifies the role and capabilities
required for a particular appointment. Candidates are
considered on merit against these criteria. Care is
taken to ensure that appointees have enough time to
devote to HSBC. Prospective Directors are asked to
identify any significant other commitments and
confirm they have sufficient time to discharge what
is expected of them. All Directors are subject to
election by shareholders at the Annual General
Meeting following their appointment and to re-
election at least every three years. The members of
the Nomination Committee throughout 2006 were
Sir Brian Moffat (Chairman), Lord Butler, Baroness
Dunn and Sir Brian Williamson.
From the conclusion of the Annual General
Meeting in 2007, Sir Brian Williamson will become
Chairman of the Committee in succession to Sir
Brian Moffat, Lord Butler will cease to be a member
of the Committee and J W J Hughes-Hallett and
S M Robertson will become members of the
Committee.
There were four Nomination Committee
meetings during 2006, each of which was attended
by all members.
Following each meeting the Committee reports
to the Board on its activities.
The terms of reference of the Committee are
available at www.hsbc.com/boardcommittees.
The appointments of J F Gil Díaz, G Morgan
and S M Robertson as non-executive Directors were
made on the advice and recommendation of the
Nomination Committee. J F Gil Díaz, former
Secretary of Finance and Public Credit in Mexico,
and G Morgan, a director of HSBC Bank Canada for
nine years, were identified by the Nomination
Committee and so neither an external consultancy
nor open advertising was used in connection with
their appointments.
The terms and conditions of appointments of
non-executive Directors are available for inspection
at 8 Canada Square, London E14 5HQ and will be
made available for 15 minutes before the Annual
General Meeting and during the Meeting itself.