RBS 2007 Annual Report Download - page 106

RBS Group • Annual Report and Accounts 2007
104
Corporate governance continued
Governance
The Audit Committee undertakes an annual evaluation to assess
the independence and objectivity of the external auditors and
the effectiveness of the audit process, taking into consideration
relevant professional and regulatory requirements. The results
of this evaluation are reported to the Board.
The Audit Committee is responsible for making
recommendations to the Board, for it to submit the Audit
Committee’s recommendations to shareholders for their
approval at the Annual General Meeting in relation to the
appointment, reappointment and removal of the external
auditors. The Board has endorsed the Audit Committee’s
recommendation that shareholders be requested to approve
the reappointment of Deloitte & Touche LLP as external
auditors at the Annual General Meeting in April 2008.
The Audit Committee also fixes the remuneration of the
external auditors as authorised by shareholders at the Annual
General Meeting.
The Audit Committee approves the terms of engagement of
the external auditors.
It is intended that there will be an external review of the
effectiveness of Group Internal Audit every three to five years,
in line with best practice, with internal reviews continuing in the
intervening years. In 2007, KPMG conducted a review of the
effectiveness of Group Internal Audit and concluded that the
function operated effectively. The Board considered the
external review findings and also concluded that the Group
Internal Audit function was effective.
It is intended that there will be an external review of the
effectiveness of the Audit Committee every three to five years,
with internal reviews by the Board continuing in the intervening
years. PricewaterhouseCoopers conducted an external review
of the effectiveness of the Audit Committee in 2005. An
internal review of the Audit Committee’s performance was
undertaken in 2007 and a separate report on the outcome was
considered and discussed by the Board which concluded that
it effectively discharged its responsibilities.
Since 2005, divisional audit committees have been responsible
for reviewing each division’s business. These committees
report to the Audit Committee which has concluded that they
operate effectively.
Archie Hunter
Chairman of the Audit Committee
27 February 2008