Ryanair 2005 Annual Report Download - page 28

Accountability and Audit
The directors have set out their responsibility for the
preparation of the financial statements on page 24. They have
also considered the going concern position of the group and
their conclusion is set out on page 19. The Board has established
an Audit Committee whose principal tasks are to consider
financial reporting and internal control issues. The Audit
Committee, which consists exclusively of independent non-
executive directors, meets at least quarterly to review the
financial statements of the group, to consider internal control
procedures and to liaise with internal and external auditors. In
the year ended March 31, 2005 the Audit Committee met on 5
occasions. On a semi annual basis the Audit Committee receives
an extensive report from the internal auditor detailing the
reviews performed in the year, and a risk assessment of the
group. This report is used by the Committee and the Board, as a
basis for determining the effectiveness of internal control. The
Audit Committee regularly considers the performance of
internal audit and how best financial reporting and internal
control principles should be applied.
In addition, the audit committee has responsibility for
appointing, setting compensation and overseeing the work of
the independent auditor. The audit committee pre-approves all
audit and permissable non-audit services provided by the
independent auditor.
Internal Control
The directors acknowledge their responsibility for the system
of internal control which is designed to manage rather than
eliminate the risk of failure to achieve business objectives, and
can provide only reasonable and not absolute assurance
against material mis-statement or loss.
In accordance with the provisions of the Combined Code the
directors review the effectiveness of the group’s system of
internal control including:
•Financial
•Operational
•Compliance
•Risk
•Management
The Board is ultimately responsible for the group’s system of
internal controls and for monitoring its effectiveness. Formal
guidance for directors on the implementation of the new
requirements entitled “Internal Control: Guidance for
Directors on the Combined Code”, was published in September,
1999 (“the Turnbull guidance”). The Board established the
procedures necessary to implement the Turnbull guidance
during 1999.
The key procedures that have been established to provide
effective internal control include:
• a strong and independent Board which meets at least 4
times a year and has separate Chief Executive and
Chairman roles;
• a clearly defined organisational structure along functional
lines and a clear division of responsibility and authority in
the group;
•a comprehensive system of internal financial reporting
which includes preparation of detailed monthly
management accounts, providing key performance
indicators and financial results for each major function
within the group;
•quarterly reporting of the financial performance with a
management discussion and analysis of results;
•weekly management committee meetings, comprising of
heads of departments, to review the performance and
activities of each department in the group;
•detailed budgetary process which includes identifying
risks and opportunities and which is ultimately approved
at Board level;
•Board approved capital expenditure and treasury policies
which clearly define authorisation limits and procedures;
•an internal audit function which reviews key financial /
business processes and controls, and which has full and
unrestricted access to the Audit Committee;
•an Audit Committee which approves audit plans and
considers significant control matters raised by
management and the internal and external auditors;
•established systems and procedures to identify, control
and report on key risks. Exposure to these risks is
monitored by the Audit Committee and the Management
Committee; and
•a risk management programme in place throughout the
group whereby executive management reviews and
monitors the controls in place, both financial and non
financial, to manage the risks facing the business.
On behalf of the Board, the Audit Committee has reviewed the
effectiveness of the group’s system of internal control for the
year ended March 31, 2005 and has reported thereon to the
Board.
The Board has delegated to executive management the
planning and implementation of the systems of internal control
within an established framework which applies throughout the
group.
(Continued)
Directors’ Report
18
ANNUAL REPORT & FINANCIAL STATEMENTS 2005