Marks and Spencer 2008 Annual Report Download - page 48

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 internal audit
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
Communication
We are committed to ongoing 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 Interim management statements in January and July.
Our website provides up-to-date information including
simultaneous webcasts of our financial results and
AGM presentations; regulatory announcements; Annual
reports; corporate governance and share price information
and answers to frequently asked questions. Following
shareholder approval in July 2007, the website is now
our principal means of communicating with investors.
Institutional investors
Our investor relations department is the focal point for
contact with our institutional investors and is in regular
contact with them as well as with analysts and brokers
during the year. Our Chairman, Chief Executive and Group
Finance and Operations Director play key roles in our
relationship with major shareholders and the presentations
of full and half year results are attended by all the executive
directors. The Senior Independent Director is also available
for shareholders as required. An investor relations summary
is produced for each Board meeting and each year the Board
receives feedback from independent advisers on institutional
investor views of management and Company performance,
based on the results of their extensive survey. From 1 June
2008 the Deputy Chairman will maintain contact with principal
investors and representative bodies on a regular basis, keeping
the Board informed.
46 MARKS AND SPENCER GROUP PLC
Corporate governance statement
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