RBS 2010 Annual Report Download - page 242

Audit Committee Report by Brendan Nelson, Chairman
Membership
Iassumed the role of Chairman of the Audit Committee on 28 April 2010,
following the retirement of Archie Hunter. The current members of the
Committee are Colin Buchan, Philip Scott and myself. Joe MacHale stood
down from the Audit Committee with effect from 30 April 2010 and is now
amember of the Board Risk Committee and Asset Protection Scheme
(APS) Senior Oversight Committee.
All members of the Audit Committee are independent non-executive
directors. Colin Buchan and Philip Scott served throughout 2010, and I
became a member of the Committee with effect from 1 April 2010.
Attendance of each member at meetings of the Audit Committee in 2010
is shown on page 238.
The members of the Audit Committee are also members of the Board
Risk Committee. This common membership ensures effective
governance across all Finance and Risk issues, and that agendas are
aligned and overlap is avoided. The Audit and Board Risk Committees
also have strong links with the Remuneration Committee, with particular
regard to ensuring that relevant Finance and Risk matters are factored
into the determination of appropriate levels of compensation.
The Board is satisfied that all Audit Committee members have recent and
relevant financial experience, and 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 Exchange Act and related
guidance. I am a Chartered Accountant, a member of the Institute of
Chartered Accountants of Scotland and a former Vice Chairman of
KPMG in the UK; Philip Scott is a fellow of the Institute of Actuaries and a
former Group Finance Director of Aviva plc; and Colin Buchan is a Fellow
of the Chartered Institute of Bankers of Scotland and was a member of
the group management board at UBS AG. 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.
Responsibilities
The Audit Committee’s primary responsibilities are to:
xassist the Group, The Royal Bank of Scotland plc and National
Westminster Bank Plc Boards in discharging their responsibilities
and in making all relevant disclosures in relation to the financial
affairs of the Group;
xreview accounting and financial reporting and regulatory compliance;
xreview the Group's systems of internal control; and
xmonitor the Group's processes for internal audit and external audit.
The terms of reference of the Audit Committee are available at
www.rbs.com and these are considered annually by the Audit Committee
and approved by the Board.
The Audit Committee is satisfied that it has complied with the relevant
provisions of the Code and the new Code.
Audit Committee Chairman
As Chairman of the Audit Committee, I play a leading role in the setting of
the annual agenda planner for the Committee and with the agenda for
each Committee meeting. Prior to every Committee meeting, I hold
meetings with each of the Head of Group Internal Audit, the external
auditors, the Group Finance Director and the Group Chief Accountant.
These meetings are instrumental in ensuring that I am briefed on all
relevant issues and that these are brought to the attention of the Audit
Committee.
Meetings and visits
Atotal of seven meetings of the Audit Committee were held in 2010,
including meetings held immediately prior to the submission of the interim
and annual financial statements to the Boards and the quarterly Interim
Management Statements. Audit Committee meetings are attended by
relevant executive directors, the internal and external auditors and
Finance and Risk management executives. Other executives, subject
matter experts and external advisers are also invited to attend the Audit
Committee, as required, to present and advise on reports commissioned
by the Committee. At least twice per annum the Audit Committee meets
privately with the external auditors.
The Audit Committee’s annual programme of visits to the Group's
business divisions and control functions continued in 2010, and these are
now also attended by the Board Risk Committee. The object of the
programme is to allow the Audit Committee and the Board Risk
Committee to gain a better understanding of the Group and an invitation
to attend is extended to all non-executive directors. The programme of
future visits is considered annually. The Audit Committee and the Board
Risk Committee undertook six visits in 2010. These were to the Global
Banking & Markets business; the Non-Core Division, Global
Restructuring Group and the Asset Protection Scheme; Major Change
Projects ongoing in the Group; the US Asset-backed Securities business;
Risk Management and the Global Banking & Markets, Global Transaction
Services and Private Banking businesses in Asia.
RBS Group 2010240
Corporate governance continued