Marks and Spencer 2007 Annual Report Download - page 44

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 Board; and
• review of social, environmental and ethical matters by the
How we do business 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, which are in compliance with the Turnbull
Guidance 2005. It confirms the necessary action plans to
remedy identified weaknesses in internal control are in place
and have been throughout the year.
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 Audit Committee monitors and assesses the role and
effectiveness of the internal audit function on behalf of
the Board.
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 continue to be committed to on-going engagement with
shareholders and have a well established cycle of
communication based on the Group’s financial reporting
calendar. This includes our preliminary results in May, Annual
report in June, half year results in November and trading
updates, now called interim management statements, in July
and January. 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 and AGM presentations. Our website also
contains up to date corporate and customer information including
the full response to the Code, matters reserved to the Board
and terms of reference for the principal Board Committees.
For improved accessibility we make Audio and large print
versions of the text from our Annual review available on our
website. In 2006 we advertised our half year results in two
national newspapers and made the full statement available on
our website. All of these can also be provided in hard copy by
writing to the Group Secretary.
Our registrars continue to enhance their electronic
communication service for our shareholders through
www.shareview.co.uk. This offers a number of capabilities
ranging from electing to receive communications electronically to
checking shareholdings and dividend information online.
Private investors continue to own a particularly high percentage
of M&S shares in comparison to other large UK companies. We
make a special effort to ensure communications and policies are
appropriate to the needs of the private investor. Communication
channels are available for all stakeholders to make their views
known, by e-mail at [e-mail], or
telephone on 0845 609 0810 for shareholder queries or
0845 302 1234 for customer queries.
Corporate governance statement continued
42 MARKS AND SPENCER GROUP PLC www.marksandspencer.com/annualreport2007