RBS 2012 Annual Report Download - page 313

RBS GROUP 2012
311
Report of the Group Audit Committee
Meetings and visits
A total of seven scheduled meetings of the Group Audit Committee were
held in 2012, including meetings held immediately before consideration of
the annual and interim financial statements and the quarterly interim
management statements by the Board. The Group Audit Committee also
held five ad hoc meetings. Group 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 Group
Audit Committee, as required, to present and advise on reports
commissioned by the Committee. At least twice a year the Group Audit
Committee meets privately with the External Auditors. The Committee
also meets privately with the Group Internal Audit management.
The annual programme of joint visits by the Group Audit and Board Risk
Committees to the Group's business divisions and control functions
continued in 2012. The object of the programme is for members of the
Committee to gain a deeper understanding of the Group; invitations to
attend are extended to all non-executive directors. During 2012, the
Group Audit Committee and the Board Risk Committee undertook a total
of six visits - to Risk Management (2), Internal Audit (2), Group Finance
and Business Services to review the Group Change portfolio.
Membership of the Group Audit Committee
The Group Audit Committee is made up of at least three independent
non-executive directors. The Chairman and members of the Committee,
together with their attendance at meetings, are shown below.
Attended/
scheduled
Brendan Nelson (chairman) 7/7
Tony Di Iorio 7/7
Baroness Noakes 7/7
Philip Scott 7/7
All members of the Group Audit Committee are also members of the
Board Risk Committee facilitating effective governance of finance and
risk issues. The Group Audit and Board Risk Committees also have
strong links with the Group Performance and Remuneration Committee
ensuring that levels of compensation reflect relevant finance and risk
considerations.
The members of the Group Audit Committee are selected with a view to
the expertise and experience of the Group Audit Committee as a whole.
The Board is satisfied that all Group Audit Committee members have
recent and relevant financial experience, and that each member of the
Group 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 (“Exchange Act”) and related guidance. Full
biographical details of the Committee members are set out on pages 298
to 301.
Performance evaluation
An external review evaluating the effectiveness of the Group Audit
Committee takes place every three to five years with internal reviews by
the Board in the intervening years. An external review of the Board and
its senior committees took place during 2012. Overall, the review
concluded that the Group Audit Committee continued to operate
effectively.
The role and responsibilities of the Group Audit Committee
The Group Audit Committee’s primary responsibilities are shown below
and are set out in its terms of reference which are reviewed annually by
the Group Audit Committee and approved by the Board. These are
available on the Group’s website www.rbs.com
Financial reporting and policy
Monitor the integrity of the
financial statements of the
Group, and any formal
announcements relating to the
Group’s actual and forecast
financial performance; and
Review significant financial and
accounting judgements.
Systems of internal control
Review the arrangements of
the Group’s systems of internal
controls in relation to financial
management, compliance with
laws and regulations,
safeguarding of assets, and
the procedures for monitoring
the effectiveness of such
controls.
Process for Internal Audit
Monitor and review the scope,
nature of the work and
effectiveness of Internal Audit;
and
Receive and review its reports,
findings and recommendations
covering the management of
key operating risks, the
adequacy of any necessary
follow up action and any
relevant investigation work.
Process for External Audit
Monitor and review reports
prepared by the External
Auditors, including their annual
management letter;
Approve the terms of
engagement of the External
Auditors;
Resolve any disagreements
between management and the
External Auditors regarding
financial reporting; and
Asses the performance of the
External Auditors annually.
Oversight of the Group’s
relationship with its regulators
Monitor the relationship with
the Financial Services
Authority and other relevant
regulatory bodies, including
review of the scope and results
of work conducted by the
Skilled Persons approved by
the Financial Services
Authority.
Group
Audit
Committee
Financial reporting and policy
•Monitor the integrity of the
financial statements of the
Group, and any formal
announcements relating to the
Group’s actual and forecast
financial performance; and
•Review significant financial and
accounting judgements.
Systems of internal control
•Review the arrangements of the
Group’s systems of internal
controls in relation to financial
management, compliance with
laws and regulations,
safeguarding of assets, and the
procedures for monitoring the
effectiveness of such controls.
Process for Internal Audit
•Monitor and review the scope,
nature of the work and
effectiveness of Internal Audit;
and
•Receive and review its reports,
findings and recommendations
covering the management of
key operating risks, the
adequacy of any necessary
follow up action and any
relevant investigation work.
Oversight of the Group’s
relationship with its regulators
•Monitor the relationship with the
Financial Services Authority and
other relevant regulatory bodies,
including review of the scope
and results of work conducted
by the Skilled Persons approved
by the Financial Services
Authority.
Process for External Audit
•Monitor and review reports
prepared by the External
Auditors, including their annual
management letter;
•Approve the terms of
engagement of the External
Auditors;
•Resolve any disagreements
between management and the
External Auditors regarding
financial reporting; and
•Assess the performance of the
External Auditors annually.
Group Audit
Committee