Following my first year as Chairman of the Audit Committee, I am pleased to present this year's Audit Committee Report which fully reflects the changes required under the UK Corporate Governance Code (the Code) and the Guidance on Audit Committees issued by the Financial Reporting Council (FRC) in September 2012. The report is split into four sections which provide an overview on:
- the Committee's purpose and function;
- its major activities during the year (including primary areas of judgement on the financial results);
- our review of internal financial controls and the requirement for an internal audit function; and
- our interaction with the Company's external auditor and the results of our assessment of the quality of their work and their integrity and independence.
During the period under review we have focused particular attention on significant matters such as the profit on the divestment of our Services Segment and the valuation of intangibles. This is particularly important where judgement is involved and is supported by the independent review and challenge of our external auditor, KPMG LLP, and our discussions with them. The following report makes clear the specific judgements and factors the Committee considered in reviewing these matters in the Audit Committee Report.
We appointed Deloitte LLP during the year to review the Group's internal financial controls and risk framework and management are now working closely with Deloitte to implement recommendations arising from their report. The Committee will continue to monitor progress on a regular basis.
We have also continued to work closely with KPMG throughout the 2014 financial year. In advance of the Committee's review of both the half-yearly and year end results, I have held a meeting with the Lead Audit Partner, his team and Anne-Francoise Nesmes, the Chief Financial Officer, to review and discuss the key matters impacting the results and any major audit points raised. I also met privately with the Lead Audit Partner prior to the Committee's review of the year end results. As set out in last year's report the Committee will undertake an external audit tender process during the next financial year to coincide with the rotation of the current Lead Audit Partner. The successful audit firm will be responsible for all external audit work from the commencement of the 2016 financial year.
Finally, we specifically reviewed, at the request of the Board, whether the 2014 Annual Report was fair, balanced and understandable and concluded that it was. The basis supporting our conclusion is set out in the Audit Committee Report.
Audit Committee Chairman