Marks and Spencer 2012 Annual Report Download - page 54

Audit Committee
Chairman’s overview
Jeremy Darroch
Governance Marks and Spencer Group plc Annual report and financial statements 2012 52
Last year I advised that we would work with the Board to
review any changes to the risk profile and support the Board
debate on risk tolerance and appetite. The Committee
remains satisfied that the Board maintains sound risk
management and internal controls.
As a committee we are also keen to ensure key
representatives of the business have fully considered the risks
their business areas face, that these risks are being managed
and do not exceed the Board’s appetite or tolerance levels.
We focus on the risk profiles for each business unit and
review what actions they are taking or processes they have in
place to manage or mitigate their risk. Assurance is provided
through executive update presentations at each Audit
Committee meeting. During 2011/12 the Committee received
presentations from the directors of Business Continuity,
Plan A, General Merchandise Ethical Sourcing, International
Business Development and Data Security. Further information
on the presentations is provided on the next page.
The presentations facilitate real engagement between
Committee members and the business unit directors.
Feedback from the business continues to be positive with
recognition of the value this channel provides and the
experience the Committee shares.
External auditor
Key to giving us confidence in the Group’s approach to
controls and risk is the effectiveness of our external auditors,
PricewaterhouseCoopers LLP. Their effectiveness enables
us to recommend their reappointment for 2012/13. We judge
them on the quality of their audit findings, management’s
response and stakeholder feedback. Their independence
is displayed through their challenge to management. Their
audit and non-audit fees are set and reviewed each year
Effectiveness of the Audit Committee
The Board is satisfied that Jeremy Darroch and Jan du Plessis
have recent and relevant financial experience.
Who is on our Committee?
From
Audit
Committee
Name of Director A B
Jeremy Darroch
(Committee Chairman) 1 Sept 2006 6 6
Sir David Michels1(retired 29 Feb 2012) 4 3
Martha Lane Fox 1 June 2007 6 6
Steven Holliday 15 July 2004 6 6
Louise Patten2(retired 13 July 2011) 1 0
Jan du Plessis31 Nov 2008 6 5
A = Maximum number of meetings the director could have attended
B = Number of meetings the director actually attended
1) Sir David Michels was unable to attend the Committee meeting on 7 September
2011 due to personal commitments.
2) Louise Patten was unable to attend the Committee meeting on 16 May 2011
due to personal commitments.
3) Jan du Plessis was unable to attend the Committee meeting on 2 November 2011
due to overseas business commitments with Rio Tinto.
What has the Committee done during the year?
The Committee made progress on their action points during
the 2011/12 financial year, with the exception of a review of
internal audit effectiveness, which was impacted by several
changes within the internal audit team:
–The Committee composition was reviewed along with
Board and other Committee composition. Following the
retirement of Sir David Michels, the Committee comprises
four members. The Audit Committee is fully independent
and contains what we believe to be the right balance of
knowledge, skill and experience to support the business in
achieving its plan;
–The Company has made good progress on risk during the
year, resulting in better process, understanding and
awareness combined with a greater engagement right
across the business. The debate on risk, risk tolerance and
risk appetite will continue to be a focus for the Board and
for the Committee during the next year;
–An anti-bribery policy has been developed and
implemented following the Bribery Act coming into force.
Its introduction was supported by a training programme
containing a short video and online training module. Gift
registers have been introduced to ensure transparency.
These will be managed by each department and reviewed
annually by Internal Audit, with any notable items
highlighted to the Committee;
–The Committee reviewed Data Security and Data
Management. The Code of Ethics is being updated to
reflect any changes to the policy or law, including the
Bribery Act;
–The Committee reviewed the Company’s ongoing
discussions with the FRPP.
–Personnel changes within the Audit team has led to the
deferral of our review of Internal Audit effectiveness in line
with the Chartered Institute of Internal Audit requirements.
However, we intend to complete this during 2012/13.
–As a Committee we have continued to enhance our
understanding of key business areas receiving
presentations on key risks from a broad spectrum of the
business activities; and
–The Committees were independently reviewed by Ffion
Hague of Independent Board Evaluation.
What is the action plan for 2012/13?
Looking ahead the Committee believes it is important to
remain focused on the audit, assurance and risk process
within the business. The actions for 2012/13 are:
–strategic review of our internal audit and assurance plan to
ensure alignment and support of the Company’s plan;
–review internal audit effectiveness in line with the Chartered
Institute of Internal Audit requirements;
–continue to improve understanding of key business areas;
–continue to broaden the debate around risk tolerance and
appetite; and
–review ongoing learning requirements and potential
up-skilling.