Internal Control
Internal Control
The board is responsible for the group’s system of internal control (including financial control) and for reviewing its effectiveness. Such a system can only provide reasonable, and not an absolute, assurance against material misstatement or loss, as it is designed to manage rather than eliminate the risk of failure to achieve business objectives.
The identification of major business risks is carried out in conjunction with operational management and reviewed by the audit committee. The boards of the operating companies assess the financial implications and effectiveness of the control process in place to mitigate or eliminate these risks. The group’s policy is to maintain adequate levels of insurance cover against all material risks where cover is available and cost-effective. The effectiveness of such controls will continue to be monitored and the board will regularly review the process.
The audit committee is responsible, on behalf of the board, for monitoring the internal control framework, including the management of risk.
- Management information systems
- There are in place planning, budgeting and forecasting systems and a monthly review of actual results compared with budget and prior periods.
- Group controls
- Common accounting systems and controls are in place throughout the group and are monitored on a regular on-going basis.
- Group internal audit
- The group conducts a programme of internal audits covering all operating companies. The scope of internal audit work is agreed by the audit committee and reviewed on a regular basis. Matters arising from each internal audit are reported to the audit committee.
- Organisation
- There are well structured financial and administrative functions at both group and operating company level, staffed by appropriately qualified personnel. The key functions include: group accounting, corporate planning and group treasury, legal and company secretarial and group taxation.
- Monitoring procedures
- All functions report to the group board on a regular basis to provide assurance that their respective areas of responsibility are adequately controlled. In addition, the management within each operating company has full reporting responsibility and accountability to that operating company’s board.
- Whistle-blowing
- The company secretary is responsible for the review of ethical issues which may arise from its confidential reporting service (whistle-blowing), to which staff can report illegal, dangerous, dishonest or unethical activities. The audit committee is responsible for monitoring and reviewing the effectiveness of this service and is informed of all reported disclosures and the actions being taken.