Marks and Spencer 2016 Annual Report Download - page 48

46
MARKS AND SPENCER GROUP PLC
DIRECTORS’ REPORT: GOVERNANCE
The Board assumes ultimate responsibility
for the e ective management of risk across
the Group, determining its risk appetite as
well as ensuring that each business area
implements appropriate internal controls.
The Group’s risk management systems are
designed to manage rather than eliminate
the risk of failure to achieve business
objectives, and can only provide reasonable
and not absolute assurance against
material misstatement or loss.
See p27-29 of the Strategic Report for more
information on our material risks.
See p47-48 for further information on our
risk management processes.
The key features of the Group’s internal
control and risk management systems
that ensure the accuracy and reliability of
fi nancial reporting include clearly defi ned
lines of accountability and delegation of
authority, policies and procedures that
cover fi nancial planning and reporting,
preparing consolidated accounts, capital
expenditure, project governance and
information security, and the Group’s Code
of Ethics and Behaviours.
The Board has delegated responsibility for
reviewing the e ectiveness of the Group’s
systems of internal control to the Audit
Committee. This covers all material controls
including fi nancial, operational and
compliance controls and risk management
systems. The Committee is supported by
a number of sources of internal assurance
from within the Group in order to complete
these reviews, in particular:
1. Internal Audit The Group’s primary
source of internal assurance remains
delivery of the Internal Audit Plan, which is
structured to align with the Group’s
strategic priorities and key risks and is
developed by Internal Audit with input from
management. Recommendations from
Internal Audit are communicated to the
relevant business area for implementation
of appropriate corrective measures, with
results reported to the Committee.
2. Business Presentations Focusing
primarily on the key risks identifi ed in the
Group Risk Profi le, management continues
to provide updates to the Committee on
how these are managed in individual
business areas. These are complemented
by independent reviews conducted by
Internal Audit.
3. Other control agencies Responsible
for maintaining control over critical areas
of risk, the processes and controls of these
agencies are tested by Internal Audit & Risk
during relevant audits. An overview of these
agencies and the manner in which they
provide assurance to the Committee is
indicated in the table below.
The Group was compliant throughout
the year with the provisions of the UK
Corporate Governance Code relating to
internal controls and the FRC’s revised
Turnbull Guidance on Internal Control.
No signifi cant failings or weaknesses were
identifi ed during the Committee’s review in
respect of the year ended 2 April 2016 and
up to the date of this Annual Report.
Where the Committee identifi ed areas
requiring improvement, processes are in
place to ensure that the necessary action
is taken and that progress is monitored.
Further details of these processes can
be found within our detailed Corporate
Governance Statement which is available to
view in the Corporate Governance section
of marksandspencer.com/thecompany.
Andy Halford
Audit Committee Chairman
ASSURANCE AND INTERNAL CONTROL ENVIRONMENT
COMMITTEES Existing direct
line of reporting
AUDIT
COMMITTEE
Fire, Health
& Safety Plan A* Business
Continuity
ANNUAL UPDATE BY RELEVANT EXECUTIVE
REPORTS Formal updates
Information
Security Whistle blowing & Fraud GSCOP (Grocery Supplier
Code of Practice)
Bribery Code of Ethics
and Behaviours
ANNUAL PAPER
OTHER CONTROL AGENCIES Updates as
requested/
appropriate
Food Safety & Integrity Ethical Audits
Trading Safely & Legally
AUDIT TESTING BY INTERNAL AUDIT (AS APPROPRIATE)
* Reports directly to the Group Board.
INTERNAL ASSURANCE FRAMEWORK
ACCOUNTABILITY
AUDIT COMMITTEE REPORT CONTINUED