RBS 2009 Annual Report Download - page 223

221RBS Group Annual Report and Accounts 2009
Governance
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 LLP as external auditors at the Annual General Meeting in
April 2010.
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. Ernst and
Young will conduct an external review of the 2009 performance of
Group Internal Audit in 2010. Internal reviews were undertaken of 2008
and 2009 performance, both of which concluded that the function
operated effectively and the Board agreed with the Audit Committee
findings.
It is also 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. In 2009, the Group Audit
Committee performance evaluation was conducted externally by
Spencer Stuart as part of the Board and Senior Committee evaluation
process. The evaluation used detailed questionnaires and individual
meetings were held with each member. Amongst the areas reviewed
were the role of the Board and Committees, composition, meetings and
processes, performance and reporting, and external relationships. The
Board has considered and discussed reports on the outcomes of the
evaluations and is satisfied with the way in which the evaluations have
been conducted, the conclusions and the actions being progressed.
Since 2005, divisional audit committees have been responsible for
reviewing each division’s business. During 2009, the divisional audit
committee structure was revised to reflect organisational changes
including the creation of the Non-Core Division. The divisional audit
committees report to the Audit Committee and the Audit Committee is
satisfied that these committees continue to discharge their terms of
reference.
Archie Hunter
Chairman of the Audit Committee
24 February 2010