RBS 2011 Annual Report Download - page 265

RBS Group 2011 263
Letter from Brendan Nelson,
Chairman of the Group Audit Committee
Dear Shareholder,
Iam pleased to bring you this report following my first full year as
Chairman of the Group Audit Committee.
Iwould like to begin by welcoming Baroness Noakes and Tony Di Iorio
who joined the Committee in August and September 2011, respectively;
coinciding with Colin Buchan’s retirement from the Group Board. They
bring with them a wealth of experience and knowledge. I am grateful to
Colin for his commitment to the Committee.
2011 has been a difficult year for the industry and for the Group and the
Committee has concentrated its efforts on key emerging issues. In
particular, it has considered and, where appropriate, made
recommendations to the Group Board in respect of:
xthe continued market turmoil and its effect on the Group’s
businesses, in particular the GBM division;
xthe ongoing Eurozone crisis and impairment of the Group’s
sovereign debt exposure;
ximpairment charges in the UK Corporate and Ulster Bank divisions;
xPayment Protection Insurance (PPI) provision;
xthe implications, including the capital, risk and control assumptions
and dependencies of the proposed structured transfer of the assets
and liabilities of RBS N.V. to RBS plc;
xthe adequacy of internal change processes and controls;
xthe activity, performance and findings of Internal and External Audit;
and
xthe quality and transparency of disclosures contained in external
financial statements.
The oversight role of the Committee in these areas is explained in more
detail in the Committee’s full report given below.
It is clear that 2012 will be as challenging as 2011. External conditions,
internal change and the remediation of known and future issues, while
managing the regulatory agenda, will make ‘business as usual’ extremely
challenging. The Committee will continue to monitor compliance with the
Group’s current regulatory requirements and monitor the implications of
proposed future regulatory change, including the Independent
Commission on Banking’s recommendations as they develop through
2012. Internal organisational change will also present challenges and the
Committee will provide oversight of the revised control framework within
the new Markets and International Banking division as it fully embeds.
Iam pleased to report the recent appointment of Nicholas Crapp as our
new Head of Group Internal Audit. Nicholas joined the Group at the
beginning of 2012 and I look forward to his contribution to this challenging
agenda. Overall, I am confident that with the continued commitment of
my fellow colleagues and the support of the Group executive, the
Committee is well placed to meet the challenges of 2012.
Brendan Nelson
Chairman of the Group Audit Committee
22 February 2012
Report of the Group Audit Committee