Marks and Spencer 2012 Annual Report Download - page 55

Overview Strategic review Financial review Governance Financial statements and other information
Governance Marks and Spencer Group plc Annual report and financial statements 2012 53
(see note 4). We ensure that our auditor engagement policy,
which is reviewed annually and disclosed on our website
marksandspencer.com/thecompany, is adhered to when
non-audit work is commissioned. Audit partner rotation is
also important to retain the objectivity of the process –
Stuart Watson was appointed lead audit engagement
partner in 2008/09.
Committee updates
In addition to the regular renew of audit compliance and
process controls, the Committee received a number of detailed
reviews from a number of business areas. Updates received by
the Committee provided detail on the progress made over the
year and the ongoing objectives. A brief overview of the detail
covered in these updates is provided below.
Business Continuity
–Reviewed the tools and processes established to ensure
we have the capability to protect our people, the brand,
property and profit at all times;
–Received plans for all locations both nationally and
internationally;
–Discussed plans for the Olympics and the Queen’s
Diamond Jubilee;
–Full medical and security package introduced for all
business travellers;
–Travel tracker system introduced both nationally and
internationally;
–Group training awareness programme launched; and
–Evacuation pack and welfare response.
Plan A
–External International Advisory Board established,
comprising academics and advisors, extending our reach to
reflect the countries we operate in and source from;
–Discussed progress in reducing carbon emissions,
improvements in fuel and energy efficiency, reduction in
waste and packaging, improvements in recycling and the
M&S/Oxfam clothes exchange;
–Update on work with suppliers to set up 12 Ethical Model
factories in Bangladesh and three in India;
–Review of commitments against plan;
–Overview of discussions with UNICEF outside the UK on
social development programmes linked to the garment
industry; and
–Overview of what we believe will be benchmarked as
industry leading positions across a number of key areas.
General Merchandise ethical sourcing
–Reviewed how we manage the ethical risks across our
supply chain outlining our ethical trading approach across
1.7 million workers, spread over 1,448 sites in over 77
countries with 55 different languages;
–Considered the key ethical issues including: excessive
working hours, poor health and safety, terms and conditions
of employment, migrant labour, and low wages;
–Discussed the team and the independent ethical trading
division based in our regional offices in China, India,
Vietnam, Sri Lanka, Bangladesh, Turkey and the UK.
M&S was the first UK retailer to establish a clear set of labour
standards in 1998 known as our Global Sourcing Principles.
Each supplier must agree to and sign our terms and
conditions, which include these Principles. M&S has been a
founding member of the Ethical Trading Initiative since 1998
and we have established ethical policies on key issues. We
have a clear factory approval process which is independent
from our buying departments.
International business development
–Focused on the risks to our international growth – each risk
was highlighted and discussed, alongside the relevant
mitigating action which was either recently taken or in
progress;
–Discussed the team and its integration – the presentation also
covered the performance of our partly-owned businesses,
franchise operations, ethical reputation and the importance
of having an aligned approach across the business.
Data security
Updates relating to our investment in IT security, building of
the new retail website platform and the move from the current
platform supported by Amazon. International activities, user
access and the controls around the protection of personal
data. Policies were reviewed as was the recruitment of
resource and the skill sets these individuals bring to M&S.
Assurance
On behalf of the Board, the Audit Committee examines the
effectiveness of the Group’s:
–systems of internal control, covering all material controls,
including financial, operational and compliance controls
and risk management systems, primarily through approving
the internal audit plan and reviewing its findings, reviews
of the annual and half year financial statements and a
review of the nature, scope and reports of external audit;
–management of risk by reviewing evidence of risk assessment
activity and an internal audit report on the process; and
–action taken or to be taken to manage critical risks or
to remedy any control failings or weaknesses identified.
The Audit Committee has completed its review of the
effectiveness of the Group’s systems of internal control
during the year and up to the date of this Annual Report,
in accordance with the requirements of the revised Turnbull
Guidance on Internal Control, published by the FRC. It
confirms that no significant failings or weaknesses were
identified in the review for 2011/12. Where areas for
improvement were identified, processes are in place to
ensure that the necessary action is taken and that progress
is monitored.
The key features of the Group’s internal control and risk
management systems that ensure the accuracy and
reliability of financial reporting include: clearly defined lines
of accountability and delegation of authority, policies and
procedures that cover financial planning and reporting,
preparing consolidated accounts, capital expenditure,
project governance and information security, and the
Company’s Code of Ethics and Behaviours.