Marks and Spencer 2009 Annual Report Download - page 63

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– a review of guidelines from advisory bodies and institutional
investors on executive remuneration.
Further information on the Committee’s activities is given in the
Remuneration report on pages 62 to 71.
Committee performance review In February 2009 Committee
members completed a questionnaire electronically to rate their
performance. An unattributed executive summary was then
distributed to all members for discussion.
The 2008/09 review has confirmed that:
– the Committee has confidence in the alignment of senior
remuneration with the Company’s strategic aims;
– all targets set (both financial and non-financial) are sufficiently
challenging; and
– the Committee understands and monitors investor concerns and
receives sufficient information, advice and support to assist its
decision-making.
The Committee has set itself some key actions for 2009/10 to:
– set a senior remuneration framework that continues to ensure
‘pay for performance’; and
– make sure that the reward framework remains aligned to the
business strategy.
The Audit Committee
“We need robust reporting and controls. Our oversight
of management and financial reporting enables us to
give shareholders the necessary assurances.”
Jeremy Darroch, Committee Chairman
Committee membership On 28 March 2009 the Audit Committee
comprised five independent non-executive directors: Jeremy
Darroch (Committee Chairman), Martha Lane Fox, Steven Holliday,
Sir David Michels and Jan du Plessis, who joined the Committee on
1 November 2008 when he was appointed to the Board.
The Board has satisfied itself that at least one member of the
Committee has recent and relevant financial experience and is
confident that the collective experience of Committee members
enables it to be effective. The Committee also has access to the
financial expertise of the Group, its external and internal auditors
and can seek further professional advice at the Company’s expense,
if required.
The Group Secretary acts as secretary to the Committee and
ensures that it receives information and papers in a timely manner
to enable full and proper consideration of agenda items agreed
in advance in its annual meetings planner.
Our activities during the year During 2008/09 the Audit
Committee met five times (see attendance table on page 60) to
coincide with key dates in the Company’s financial reporting and
audit cycle. In September 2008 the Committee decided to increase
the number of times it met during the year from four to five times
to give more time to review with management the findings of
internal audits relating to key business processes and the principal
risks facing the Group.
In October 2008 the Committee reviewed and updated its terms
of reference in line with new Financial Reporting Council Guidance
on Audit Committees.
Its activities during the year included a review of:
– finance reports and accounting policies relating to full year and half
year results;
– engagement letter and Audit Engagement Policy for the external
auditors;
– reports from the external auditors on the major findings from their
audit work;
– internal audit reports on reviews of key business areas and
processes, undertaken as agreed in advance by the Committee;
– internal controls and risk management;
– tax risk management;
– going concern and counterparty risks;
– property values;
– code of ethics and whistleblowing;
– directors’ travel and expenses;
– reports from management on e-commerce, finance processes and
business continuity;
– progress against Plan A targets for carbon emissions, energy
efficiency and waste to landfill; and
– assurance programme for our How We Do Business Report
(Plan A and CSR).
At the end of each meeting the Committee held separate meetings
with the external and internal auditors, without management present,
to discuss matters relating to their respective areas and any issues
arising from their audits. These discussions, together with respective
audit findings and stakeholder feedback, assisted the Committee
in determining the effectiveness and objectivity of external and
internal audit.
External auditors The external auditors, PricewaterhouseCoopers
LLP (‘PwC’), 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.
The Committee keeps under review the independence and
objectivity of the external auditors and the effectiveness of the audit
process. It has reviewed and updated the Auditor Engagement
Policy which requires prior Committee approval for certain
engagements. On occasions, the nature of non-audit advice may
make it more timely and cost-effective to select PwC, who already
have a good understanding of the Group.
PwC may also be appointed for consultancy work, but only after
rigorous checks, including competitive tender, to confirm they are
the best provider. PwC is also subject to professional standards
which safeguard the integrity of the auditing role performed on
behalf of shareholders.