BP 2013 Annual Report Download - page 115

Corporate governance
BP Annual Report and Form 20-F 2013 111
Shareholder approval of equity compensation plans
The NYSE rules for US companies require that shareholders must be given
the opportunity to vote on all equity-compensation plans and material
revisions to those plans. BP complies with UK requirements that are similar
to the NYSE rules. The board, however, does not explicitly take into
consideration the NYSE’s detailed definition of what are considered
‘material revisions’.
Code of ethics
The NYSE rules require that US companies adopt and disclose a code of
business conduct and ethics for directors, officers and employees. BP has
adopted a code of conduct, which applies to all employees, and has board
governance principles that address the conduct of directors. In addition BP
has adopted a code of ethics for senior financial officers as required by the
SEC. BP considers that these codes and policies address the matters
specified in the NYSE rules for US companies.
Code of ethics
The company has adopted a code of ethics for its group chief executive,
chief financial officer, group controller, general auditor and chief accounting
officer as required by the provisions of Section 406 of the Sarbanes-Oxley
Act of 2002 and the rules issued by the SEC. There have been no waivers
from the code of ethics relating to any officers.
BP also has a code of conduct, which is applicable to all employees.
This was updated (and published) on 1 January 2012.
Controls and procedures
Evaluation of disclosure controls and procedures
The company maintains ‘disclosure controls and procedures’, as such term
is defined in Exchange Act Rule 13a-15(e), that are designed to ensure that
information required to be disclosed in reports the company files or
submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission rules and forms, and that such information is accumulated
and communicated to management, including the company’s group chief
executive and chief financial officer, as appropriate, to allow timely
decisions regarding required disclosure.
In designing and evaluating our disclosure controls and procedures, our
management, including the group chief executive and chief financial
officer, recognize that any controls and procedures, no matter how well
designed and operated, can provide only reasonable, not absolute,
assurance that the objectives of the disclosure controls and procedures are
met. Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within the company have been detected.
Further, in the design and evaluation of our disclosure controls and
procedures our management necessarily was required to apply its
judgement in evaluating the cost-benefit relationship of possible controls
and procedures. Also, we have investments in certain unconsolidated
entities. As we do not control these entities, our disclosure controls and
procedures with respect to such entities are necessarily substantially more
limited than those we maintain with respect to our consolidated
subsidiaries. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and not be
detected. The company’s disclosure controls and procedures have been
designed to meet, and management believes that they meet, reasonable
assurance standards.
The company’s management, with the participation of the company’s
group chief executive and chief financial officer, has evaluated the
effectiveness of the company’s disclosure controls and procedures
pursuant to Exchange Act Rule 13a-15(b) as of the end of the period
covered by this annual report. Based on that evaluation, the group chief
executive and chief financial officer have concluded that the company’s
disclosure controls and procedures were effective at a reasonable
assurance level.
Management’s report on internal control over financial
reporting
Management of BP is responsible for establishing and maintaining
adequate internal control over financial reporting. BP’s internal control over
financial reporting is a process designed under the supervision of the
principal executive and financial officers to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of BP’s
financial statements for external reporting purposes in accordance with
IFRS.
As of the end of the 2013 fiscal year, management conducted an
assessment of the effectiveness of internal control over financial reporting
in accordance with the Internal Control Revised Guidance for Directors
(Turnbull). Based on this assessment, management has determined that
BP’s internal control over financial reporting as of 31 December 2013 was
effective.
The company’s internal control over financial reporting includes policies
and procedures that pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect transactions and dispositions
of assets; provide reasonable assurances that transactions are recorded as
necessary to permit preparation of financial statements in accordance with
IFRS and that receipts and expenditures are being made only in accordance
with authorizations of management and the directors of BP; and provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of BP’s assets that could have
a material effect on our financial statements. BP’s internal control over
financial reporting as of 31 December 2013 has been audited by Ernst &
Young, an independent registered public accounting firm, as stated in their
report appearing on page 121 of BP Annual Report and Form 20-F 2013.
Changes in internal control over financial reporting
There were no changes in the group’s internal controls over financial
reporting that occurred during the period covered by the Form 20-F that
have materially affected or are reasonably likely to materially affect our
internal controls over financial reporting.
Principal accountants’ fees and services
The audit committee has established policies and procedures for the
engagement of the independent registered public accounting firm,
Ernst & Young LLP, to render audit and certain assurance and tax services.
The policies provide for pre-approval by the audit committee of specifically
defined audit, audit-related, tax and other services that are not prohibited
by regulatory or other professional requirements. Ernst & Young are
engaged for these services when its expertise and experience of BP are
important. Most of this work is of an audit nature. Tax services were
awarded either through a full competitive tender process or following an
assessment of the expertise of Ernst & Young relative to that of other
potential service providers. These services are for a fixed term.