BP 2009 Annual Report Download - page 77

BP Annual Report and Accounts 2009
Board performance and biographies
Board performance and biographies
The full list of the tasks and requirements of the audit committee
is set out in BP’s board governance principles and can be found at
www.bp.com/governance. The committee keeps these tasks under
review to determine whether they remain fit for purpose. In 2009, the
evaluation of the committee’s work was conducted as an integral part of
the external evaluation undertaken by the board. Following this
evaluation, the board concluded that the committee had fulfilled its
responsibilities as defined under the principles and that its tasks and
requirements remained appropriate.
Committee structure
The audit committee comprises four independent non-executive directors
selected to provide a wide range of financial, international and
commercial expertise appropriate to fulfil the committee’s duties. During
2009 the members, in addition to myself as chairman included George
David, Erroll Davis, Jr and Douglas Flint. The secretary of the committee
is David Pearl, deputy company secretary of BP.
The committee met 12 times in 2009, with an additional joint
meeting between the audit committee and the safety, ethics and
environment assurance committee (SEEAC) to review the general
auditor’s report on internal controls and risk management for the
previous year. Each meeting was attended by the group chief financial
officer, the deputy group chief financial officer, the group controller, the
general auditor (head of internal audit) and the chief accounting officer.
The lead partner of the external auditors (Ernst & Young) was also
present. Other senior management are invited to attend when the
business of the committee requires. During the year the committee held
private sessions, usually at the end of each full meeting, without the
presence of executive management. It also held separate sessions with
only the external auditors present and only the general auditor present.
Carl-Henric Svanberg attended two meetings of the audit
committee during the year as part of his board induction programme.
The board determined that Douglas Flint is the audit committee
member with recent and relevant financial experience as defined by the
Combined Code guidance.
The board also determined that Douglas Flint meets the
independence criteria provisions of Rule 10A-3 of the US Securities
Exchange Act of 1934 and that Mr Flint may be regarded as an audit
committee financial expert as defined in Item 16A of the Annual Report
on Form 20-F. Mr Flint is group finance director of HSBC Holdings plc and
a former member of the Accounting Standards Board and the Standards
Advisory Council of the International Accounting Standards Board.
After l retire from the BP board at the AGM in April 2010, it has
been agreed that Douglas Flint will become chairman of the audit
committee.
Attendance
Audit Audit
committee committee
meetings eligible meetings
to attend attended
Sir Ian Prosser (chair) 13 13
E B Davis, Jr 13 11
D J Flint 13 12
G David 13 13
Information and external advice
The committee receives information and reports directly from
accountable functional and business managers and from relevant external
sources. BP’s board governance principles are explicit that the board and
its committees can access independent advice and counsel when
needed on an unrestricted basis. Further support is provided by the
company secretary’s office and during 2009 external specialist legal and
regulatory advice was provided to the audit committee in the normal
course of carrying out its responsibilities by Sullivan & Cromwell LLP. In
addition to the lead partner for Ernst & Young, other external audit staff
also attended meetings where appropriate to a particular review of a
business or function.
As part of its annual evaluation process, the audit committee
looked at whether it has received sufficient and timely information to
enable it to undertake its tasks effectively. It was concluded that the
processes surrounding the reliability and timeliness of information
was robust.
The board was kept updated and informed of the audit
committee’s activities and any issues that had arisen both through the
committee minutes and also more immediately through verbal updates
given by myself as committee chair as part of the board’s regular agenda.
Training and visits
The composition of the committee was unchanged from the previous
year, so training was focused on deepening knowledge rather than
induction.
During the year the committee received briefings on financial
reporting developments, governance changes affecting audit
committees, new SEC regulations for oil and gas reserves accounting
and tax reform.
In addition to the site visits made by the board as a whole, the
audit committee visited BP’s UK trading operations for an in-depth
briefing on the fundamentals of oil and gas trading. This was
supplemented by visits by myself and the secretary of the committee to
BP’s oil and gas trading operations in Houston and Chicago. These visits
also provided an opportunity to meet staff of the independent monitor
appointed for BP’s US trading business. Two members of the committee
also joined the SEEAC visit to BP’s Projects and Operations Academies
at MIT in March. I found that visit, and the one I made to the company’s
accounting, reporting and control course, provided valuable insight into
training deep within the organization.
Committee activities in 2009
Audit committee activities
Approximate allocation of agenda time in 2009*
5% 31%
28%
36%
Financial reporting
Monitoring business risks
Internal controls and audit
Other agenda items *Excludes time spent on site visits.
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