RBS 2007 Annual Report Download - page 105

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RBS Group • Annual Report and Accounts 2007
Governance
Audit Committee Report
The members of the Audit Committee are Archie Hunter
(Chairman), Colin Buchan, Bill Friedrich, Joe MacHale and Sir
Steve Robson. All members of the Audit Committee are
independent non-executive directors. The Audit Committee
holds at least five meetings each year, two of which are held
immediately prior to submission of the interim and annual
financial statements to the Group Board. This core programme
is supplemented by additional meetings as required, four
being added in 2007. Audit Committee meetings are attended
by relevant executive directors, the internal and external
auditors and finance and risk management executives. At least
twice per annum the Audit Committee meets privately with the
external auditors. Since 2000, the Audit Committee has
undertaken an annual programme of visits to the Group's
business divisions and control functions. The object of the
programme is to allow the Audit Committee to gain a better
understanding of the risk and control issues facing the Group
and an invitation to attend is extended to all non-executive
directors. The programme of future visits is considered
annually and the norm is for three or four visits to be
undertaken each year.
The Board is satisfied that all the Audit Committee members
have recent and relevant financial experience. Although the
Board has determined that each member of the Audit
Committee is an ‘Audit Committee Financial Expert’ and is
independent, each as defined in the SEC rules under the US
Securities Exchange Act of 1934 and related guidance, the
members of the Audit Committee are selected with a view to
the expertise and experience of the Audit Committee as a
whole, and the Audit Committee reports to the Board as a
single entity. The designation of a director or directors as an
‘Audit Committee Financial Expert’ does not impose on any
such director, any duties, obligations or liability that are greater
than the duties, obligations and liability imposed on such
director as a member of the Audit Committee and Board in
the absence of such a designation. Nor does the designation
of a director as an ‘Audit Committee Financial Expert’
affect the duties, obligations or liability of any other member
of the Board.
The Audit Committee is responsible for:
•assisting the Board in discharging its responsibilities and
in making all relevant disclosures in relation to the financial
affairs of the Group;
•reviewing accounting and financial reporting and
regulatory compliance;
•reviewing the Group’s systems of internal control; and
•monitoring the Group’s processes for internal audit, risk
management and external audit.
Full details of the responsibilities of the Audit Committee are
available at www.rbs.com
The Audit Committee has adopted a policy on the engagement
of the external auditors to supply audit and non-audit services,
which takes into account relevant legislation regarding the
provision of such services by an external audit firm. The Audit
Committee reviews the policy annually and prospectively
approves the provision of audit services and certain non-audit
services by the external auditors.
Annual audit services include all services detailed in the
annual engagement letter including the annual audit and
interim reviews (including US reporting requirements), periodic
profit verifications and reports to regulators including skilled
persons reports commissioned by the Financial Services
Authority (e.g. Reporting Accountants Reports).
Annual audit services also include statutory or non-statutory
audits required by any Group companies that are not
incorporated in the UK. Terms of engagement for these audits
are agreed separately with management, and are consistent
with those set out in the audit engagement letter, as local
regulations permit.
The prospectively approved non-audit services include the
following classes of service:
•capital raising, including consents, comfort letters and
relevant reviews of registration statements;
•provision of accounting opinions relating to the financial
statements of the Group;
•provision of reports that, according to law or regulation,
must be rendered by the external auditors;
•tax compliance services;
•corporate finance services relative to companies that will
remain outside the Group; and
•insolvency work relating to the Group’s customers.
The Audit Committee approves all other permitted non-audit
services on a case by case basis before their commencement.
In addition, the Audit Committee reviews and monitors the
independence and objectivity of the external auditors when it
approves non-audit work to be carried out by them, taking into
consideration relevant legislation and ethical guidance.
Information on the audit and non-audit services carried out by
the external auditors is detailed in Note 4 to the Group’s
accounts.