Holiday Inn 2010 Annual Report Download - page 49

OVERVIEW BUSINESS REVIEW
THE BOARD,
SENIOR MANAGEMENT AND
THEIR RESPONSIBILITIES
GROUP FINANCIAL
STATEMENTS
PARENT COMPANY
FINANCIAL STATEMENTS USEFUL INFORMATION
Corporate governance and Audit Committee report 47
The Audit Committee supports the Board in meeting its
responsibilities in relation to the integrity of the Group’s financial
statements and associated announcements, the adequacy of
internal control and risk management systems and the
appointment and work of the internal and external auditors. The
role of the Audit Committee is summarised below and in full in its
terms of reference, a copy of which is available on the Company’s
website www.ihgplc.com/investors under corporate governance/
committees or on request.
The Committee’s composition, and the attendance of its members
in 2010, are set out on page 45.
The Committee’s Chairman and financial expert, David Kappler,
is a Chartered Management Accountant and until April 2004 was
Chief Financial Officer of Cadbury Schweppes plc. He also chairs
the Audit, Compliance and Risk Committee of Shire plc.
The Committee’s principal responsibilities are to:
• review the Group’s public statements on internal control, risk
management and corporate governance compliance prior to
their consideration by the Board;
• review the Group’s processes for detecting and addressing
fraud, misconduct and control weaknesses and to consider
the response to any such occurrence, including overseeing
the process enabling the anonymous submission of concerns;
• review reports from management, internal audit and external
audit concerning the effectiveness of internal control, financial
reporting and risk management processes;
• review with management and the external auditor any financial
statements required under UK or US legislation before
submission to the Board;
• establish, review and maintain the role and effectiveness of the
internal audit function, including overseeing the appointment of
the Head of Global Internal Audit;
• assume responsibility for the appointment, compensation,
resignation, dismissal and the overseeing of the external
auditor, including review of the external audit, its cost and
effectiveness;
• pre-approve non-audit work to be carried out by the external
auditor, and the fees to be paid for that work, along with the
monitoring of the external auditor’s independence; and
• oversee the Group’s Code of Ethics and Business Conduct
and associated procedures for monitoring adherence.
The Committee discharges its responsibilities through a series
of Audit Committee meetings during the year, at which detailed
reports are presented for review. The Committee commissions
reports, either from external advisers, the Head of Global Internal
Audit, or Group management, after consideration of the major
risks to the Group or in response to developing issues. The Chief
Financial Officer attends its meetings, as do the external auditor
and the Head of Global Internal Audit, both of whom have the
opportunity to meet privately with the Committee, in the absence
of Group management, at the conclusion of each meeting.
All proposals for the provision of non-audit services by the external
auditor are pre-approved by the Audit Committee or its delegated
member, the overriding consideration being to ensure that the
provision of non-audit services does not impact the external
auditor’s independence and objectivity.
During the year, the Committee’s deliberations included the
following matters:
• quarterly, interim and full-year financial results. These public
financial statements are reviewed by the Committee in advance
of their consideration by the Board. There is adequate time
between this review and the Board’s approval to complete any
actions or further work requested by the Committee;
• the scope and cost of the external audit;
• any non-audit work carried out by the Group’s external auditor
(and trends in the non-audit fees) in accordance with the
Committee’s policy to ensure the safeguarding of audit
independence and objectivity;
• the external auditor’s quarterly, interim and full-year reports;
• the effectiveness of the external auditors and consideration of
their objectivity, independence and reappointment;
• the scope of the annual Global Internal Audit plan, Global
Internal Audit’s approach to delivering assurance, its resourcing
and the results of its reviews;
• oversight of the financial control self-assessment process;
• the effectiveness of the Global Internal Audit function and its
compliance with professional standards;
• any major changes in the Group’s internal controls and control
environment;
• the co-ordination of the internal and external audit functions;
• the Group’s framework for the identification and control of
major risks, and the results of the Group’s risk review process;
• developments in corporate governance and accounting
standards in the UK and the US;
• reports from the Head of Risk Management on the activities
of that function;
• consideration of the results of the Group’s tangible asset
impairment review and going concern review;
• overseeing the Group’s Sarbanes-Oxley Act compliance work;
• the disclosure controls and procedures operated by the Group,
with reference to periodic reports from the Chairman of the
Disclosure Committee;
• reviewing the Group’s approach to managing tax risk, including
related policies and initiatives;
• consideration of the Group’s technology strategy and related
risks;
• consideration of the Group’s treasury objectives and policies;
• a review of changes to the Group’s policy on delegation of
authority;
• a review of the funding position and governance of the Group’s
main pension plan;
• periodic reports on any significant incidents of fraud or any
allegations made via the Group’s whistleblowing procedures
and the effectiveness of these procedures;
• any material litigation involving the Group; and
• consideration of the effectiveness of the Audit Committee and
the continuing appropriateness of its terms of reference.
David Kappler
Chairman of the Audit Committee
14 February 2011
Audit Committee report