Marks and Spencer 2006 Annual Report Download - page 40

38 Marks and Spencer Group plc
Corporate governance continued
Internal control
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:
Plans and policies
•communication of the Group’s strategy, objectives and
targets;
•annual operating and capital plans and future projections;
•operating policies and procedures;
•clearly defined capital investment control guidelines;
•review of treasury policies by the treasury committee; and
•review of social, environmental and ethical matters by the
Corporate Social Responsibility Committee.
Competent people
•appointment of employees of the necessary calibre to fulfil
their allotted responsibilities; and
•clear roles and accountabilities with regular performance
reviews.
Monitor and control
•review by operating divisions of their plans with the relevant
executive directors prior to submission to the Board for
approval, including identification and assessment of risks;
•monthly comparison of operating divisions’ actual financial
performance against budget; and
•regular consideration by the Board of year-end forecasts.
Regulatory update
•reporting of accounting and legal developments; and
•regular briefings on latest best practice corporate
governance to the Board.
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 process
undertaken;
•systems of internal control, primarily through approving the
internal audit plan and reviewing its findings, reviews of the
annual and interim financial statements and a review of the
nature, scope and reports of the external audit;
•action plans taken, or to be taken, to remedy any significant
failings or weaknesses identified; and
•action plans in place to manage significant risks.
The Audit Committee has completed its review of the
effectiveness of the Group’s systems of internal control during
the year and confirms the necessary action plans to remedy
identified weaknesses in internal control are in place.
Internal audit’s work is focused on areas of priority as identified
by the Group Risk Profile 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 position of the Group and
present their findings to the Audit Committee.
Relations with shareholders
We are committed to on-going engagement with shareholders
and have a well established cycle of communication based on
the Group’s financial reporting calendar. We promote the use of
electronic communication – all Company announcements and
presentations are made available simultaneously on our website,
together with webcasts of our financial results presentations.
The website also contains corporate and customer information
which is updated on a regular basis. There is a corporate
governance section which includes our full response to the
Code and terms of reference for the principal Board
Committees. Our registrars have also developed
www.shareview.co.uk – an electronic service where
shareholders can check their shareholding, update their
personal details and elect to receive communications
electronically, rather than through the post.
We aim to make our Annual report documents as accessible as
we can. Audio and large print versions of our Annual review are
available on our website, which now has improved navigation
and accessibility. This year we will advertise our half-year results
rather than publishing a booklet to mail to shareholders. The full
statement will be available on our website for those wanting
more detail.
Our Investor Relations department is the focal point for contact
with institutional investors and maintains regular dialogue
throughout the year. The Chairman ensures that the Board is
regularly updated on the views of our major shareholders,
following meetings they have with him, the Chief Executive, the
Finance Director or Investor Relations. In June, the Board
receives a presentation from external advisers summarising the
opinions of our principal shareholders following an extensive
survey on their views after the release of our fourth-quarter
trading statement in April.