Gordon McQueen (Chairman)
Jill Little
Oliver Marriott
Hilary Riva
The Committee comprises only independent non-executive Directors. The Committee’s composition did not change during the year. The Chairman, Gordon McQueen, is a Member of the Institute of Chartered Accountants of Scotland, a Fellow of the Chartered Institute of Bankers in Scotland and is the member of the Committee with recent and relevant financial experience.
The Finance Director, members of the finance team and the auditors have attended each meeting. The auditors have the opportunity for discussion with the Committee without management present.
Terms of reference
The Committee’s terms of reference which are available on the Group’s website encompass:
- Financial reporting;
- Internal control and risk management;
- Compliance, whistleblowing and fraud; and
- External audit.
Activities during the year
The Committee met three times during the year to undertake its annual work cycle as follows:
Tenure of auditors and tender for audit services
PricewaterhouseCoopers LLP (or its predecessor firms) has been the Company’s auditor since it listed on the London Stock Exchange in October 1987. Senior Statutory Auditors are only permitted to serve for five years. In view of the impending rotation of the Senior Statutory Auditor following the 2010 audit, the Committee considered it an appropriate time to tender the provision of the Group’s audit services for the forthcoming financial year.
The audit tender process involved the comparison of PricewaterhouseCoopers LLP against the audit approach and service proposed by three other leading audit firms. This process included a detailed explanation of the Group’s business to each of the three firms. The Committee interrogated the proposals they each put forward for the conduct and resourcing of the Group’s audit should they be appointed or reappointed as the Group’s auditors, and the fees they envisaged charging. Having completed a critical evaluation of each firm’s proposal, the Committee resolved to recommend to the Board that PricewaterhouseCoopers LLP be proposed to shareholders for re-appointment as the Group’s auditors at the 2011 Annual General Meeting.
Audit partner
At the conclusion of the 2010 audit, Bowker Andrews the Senior Statutory Auditor was replaced on completion of his five year term by Andrew Paynter in line with the Auditing Practices Board’s Ethical Standards for Auditors.
Award of non-audit assignments to the external audit firm
The policy of the Committee is that non-audit assignments will not be awarded to the external audit firm where there is a risk that their audit independence and objectivity could be conflicted. The award of all non-audit assignments to the Group’s auditors in excess of £25,000 is subject to the prior approval of the Committee.
One assignment was approved during the year under this policy for the Group’s corporate tax compliance work.
Audit fees
Fees payable to the Group’s auditors for audit and non-audit services are set out below:
The audit fees for the Company and the Group are relatively low due primarily to the simple corporate structure of the Group. The balance of audit to non-audit fees is considered by the Committee.
Auditor confirmation
PricewaterhouseCoopers LLP have confirmed to the Committee:
- That they have internal procedures in place to identify any aspects of non-audit work which could compromise their role as auditors and to ensure the objectivity of their audit report;
- That the total fees paid by the Group during the year do not represent a material part of their firm’s fee income; and
- That they consider that they have maintained their audit independence throughout the year. The Committee is satisfied with the independence of the auditors based on the information provided.
On behalf of the Board
Gordon McQueen Audit Committee Chairman
30 November 2011
