RBS 2012 Annual Report Download - page 317

RBS GROUP 2012
315
For all other permitted non-audit services, Group Audit Committee approval must be sought, on a case by case basis, in advance. The Group Audit
Committee reviews and monitors the independence and objectivity of the External Auditors when it approves non-audit work, taking into consideration
relevant legislation, ethical guidance and the level of non-audit services relative to audit services. The approval process is rigorously applied to prevent
the External Auditors from functioning as management, auditing their own work, or serving in an advocacy role.
A competitive tender process is required for all proposed non-audit services engagements where the fees are expected to exceed £100,000.
Engagements below £100,000 may be approved by the Chairman of the Group Audit Committee; as an additional governance control all engagements
have to be approved by the Group Chief Accountant and Group Procurement. Where the engagement is tax related, approval must also be obtained
from the Head of Group Taxation. Ad hoc approvals of non-audit services are ratified by the Group Audit Committee each quarter. During 2012, the
External Auditors were approved to undertake certain significant engagements which are categorised and explained more fully below:
Summary of category of engagement Reason for selection of External Auditors
Assurance testing and agreed upon
procedures to regulators
(three engagements)
The External Auditors’ knowledge of the Group and extensive experience in such work ensured time
and cost savings were achieved in both instances.
Business product development and launch
(one engagement)
The External Auditors were selected following a competitive tender. They were appointed based on
their firm-wide capability, the quality and relevant expertise of the team, and the competitive fee levels.
Provision of advice to management and
independent assurance and assessment
(one engagement)
The External Auditors were considered to be the most suitable firm to undertake this work given their
extensive knowledge of the Group’s systems, end-to-end process and financial reporting framework.
The considerable time pressures associated with this project meant that by appointing the External
Auditors a number of efficiency savings were ensured.
In addition, the External Auditors are engaged from time to time by the Group to perform restructuring services. The Group is not liable for these fees,
and often has a limited role in the selection process. As an additional governance control, these engagements are subject to the ad hoc approval
process. Information on fees paid in respect of audit and non-audit services carried out by the External Auditors can be found in Note 5 to the
consolidated accounts on page 385.
Brendan Nelson
Chairman of the Group Audit Committee
27 February 2013