Marks and Spencer 2003 Annual Report Download - page 14

Internal control
Whilst the Board maintains full control and direction over appropriate strategic, financial, organisational and compliance
issues, it has delegated to executive management the implementation of the systems of internal control within an
established framework.
The Board has put in place an organisational structure with formally defined lines of responsibility and delegation of
authority. There are also established procedures for planning, capital expenditure, information and reporting systems, and
for monitoring the Group’s businesses and their performance. These include:
•communication of the Group’s strategy, objectives and targets;
•appointment of employees of the necessary calibre to fulfil their allotted responsibilities;
•review by operating divisions of their annual and three-year operating and capital plans with the relevant executive
directors prior to submission to the Board for approval. This includes the identification and assessment of risks;
•regular consideration by the Board of year-end forecasts;
•monthly comparison of operating divisions’ actual financial performance with budget;
•clearly defined capital investment control guidelines;
•operating policies and procedures;
•reporting of accounting and legal developments to the Board;
•review of treasury policies by the Treasury Committee with changes approved by the Board; and
•review of social, environmental and ethical matters by the Corporate Social Responsibility Committee.
Assurance
On behalf of the Board, the Audit Committee examines the effectiveness of the Group’s:
•assessment of risk by reviewing evidence of risk assessment activity and a report from internal audit on the risk
assessment process; and
•systems of internal control primarily through agreeing the scope of the internal audit programme and reviewing
its findings, reviews of the annual and interim financial statements and a review of the nature and scope of the
external audit.
Any significant findings or identified risks are closely examined so that appropriate action can be taken.
The work of the internal audit department is focused on areas of priority as identified by risk analysis and in accordance
with an annual audit plan approved each year by the Audit Committee and by the Board. The Board receives a full report
from the Chief Internal Auditor each year on the department’s work and findings and regular interim updates on
specific issues.
The external auditors are engaged to express an opinion on the financial statements. They review and test the systems of
internal financial control and the data contained in the financial statements to the extent necessary to express their audit
opinion. They discuss with management the reporting of operational results and the financial condition of the Group and
present their findings to the Audit Committee.
The directors, through the Audit Committee, have reviewed the effectiveness of the Group’s systems of internal control.
Compliance with the Combined Code
The directors confirm that for the year ended 29 March 2003 the Company complied with all the Code provisions.
Corporate governance
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