RBS 2012 Annual Report Download - page 346

Internal control over financial reporting
The Group is required to comply with Section 404 of the US Sarbanes-Oxley Act of 2002 and assess the effectiveness of internal control over
financial reporting as of 31 December 2012.
The Group assessed the effectiveness of its internal control over financial reporting as of 31 December 2012 based on the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission in ‘Internal Control - Integrated Framework'.
Based on its assessment, management has concluded that, as of 31 December 2012, the Group's internal control over financial reporting is
effective.
The Group's auditors have audited the effectiveness of the Group's internal control over financial reporting and have given an unqualified opinion.
Management's report on the Group's internal control over financial reporting will be filed with the Securities and Exchange Commission at the same
time as the Annual Report on Form 20-F.
Disclosure controls and procedures
As required by US regulations, management have conducted an evaluation of the effectiveness and design of the Group’s disclosure controls and
procedures (as defined in the Exchange Act rules) as at 31 December 2012. Based on this evaluation, management concluded that the Group’s
disclosure controls and procedures were effective as of the end of the period covered by this annual report.
Changes in internal control
There was no change in the company's internal control over financial reporting that occurred during the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting.
The New York Stock Exchange
As a foreign issuer with American Depository Shares representing ordinary shares, preference shares and debt securities listed on the New York
Stock Exchange (the “NYSE”), the company must disclose any significant ways in which its corporate governance practices differ from those
followed by US companies under the NYSE corporate governance listing standards. In addition, the company must comply fully with the provisions
of the listing standards that relate to the composition, responsibilities and operation of Audit Committees. These provisions incorporate the relevant
rules concerning audit committees of the Exchange Act.
The company has reviewed its corporate governance arrangements and is satisfied that these are consistent with the NYSE’s corporate
governance listing practices, with the exception that the Chairman of the Board is also the Chairman of the Group Nominations Committee, which is
permitted under the Code (since the Chairman was considered independent on appointment). The company’s Group Audit, Board Risk, Group
Performance and Remuneration, Group Sustainability and Group Nominations Committees are otherwise composed solely of non-executive
directors deemed by the Group Board to be independent. The NYSE corporate governance listing standards also require that a compensation
committee has direct responsibility to review and approve the Group Chief Executive’s remuneration.
As stated at the start of this Compliance report, in the case of the company, the Group Board, rather than the Group Performance and
Remuneration Committee, reserves the authority to make the final determination of the remuneration of the Group Chief Executive.
The Group Audit Committee complies with the provisions of the NYSE corporate governance listing standards that relate to the composition,
responsibilities and operation of audit committees. In March 2012, the company submitted its required annual written affirmation to the NYSE
confirming its full compliance with those and other applicable provisions. More detailed information about the Group Audit Committee and its work
during 2012 is set out in the Group Audit Committee report on pages 309 to 315.
This Compliance report forms part of the Corporate governance report and the Report of the directors.
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Compliance report continued