Corporate governance report

Audit committee

The audit committee is chaired by John Coombe and its other members are Andy Hornby and Penny Hughes. John Coombe was formerly chief financial officer of GlaxoSmithkline plc. The Board considers that he has the recent and relevant financial experience required to chair the audit committee. Andy Hornby and Penny Hughes offer a wide range of experience from positions at the highest level of business. Further details of all the members of the audit committee are set out in the Board of Directors and Operating Board section.

The audit committee normally meets no fewer than four times a year and its principal responsibilities cover internal control and risk management, internal audit, external audit (including auditor independence) and financial reporting. The chairman, chief executive and finance director are normally expected to attend meetings of the committee.

The committee has a structured programme linked to the Group’s financial calendar. During the period under review, the committee undertook the following activities:

• reviewed the preliminary announcement, annual report and financial statements and the half-yearly announcement and considered reports from the external auditors identifying any accounting or judgemental issues requiring its attention;
• reviewed the statement in the annual report on the system of internal control;
• reviewed and approved audit plans for the external and internal auditors;
• considered quarterly reports from the head of internal audit on the results of internal audit reviews, significant findings, management action plans and timeliness of resolution;
• reviewed reports on the Group’s risk management process and risk profile;
• reviewed presentations on risk and its identification, management and control with senior management;
• reviewed, at each scheduled meeting, a report on any material litigation involving Group companies;
• reviewed management of fraud risk and incidences of fraud; and
• reviewed arrangements by which Group employees may, in confidence, raise concerns about possible improprieties in financial reporting, dishonesty, corruption, breaches of business principles and other matters.

One of the primary responsibilities of the audit committee is to make recommendations to the Board in relation to the appointment, re-appointment and removal of the external auditors. A number of factors were taken into account by the committee in assessing whether to recommend the external auditors for re-appointment. These include:

• the quality of reports provided to the audit committee and the Board and the quality of advice given;
• the level of understanding demonstrated of the Group’s businesses and the retail sector; and
• the objectivity of the external auditors’ views on the controls around the Group.