RBS 2013 Annual Report Download - page 57
Download and view the complete annual report
Please find page 57 of the 2013 RBS annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.-
1
-
2
-
3
-
4
-
5
-
6
-
7
-
8
-
9
-
10
-
11
-
12
-
13
-
14
-
15
-
16
-
17
-
18
-
19
-
20
-
21
-
22
-
23
-
24
-
25
-
26
-
27
-
28
-
29
-
30
-
31
-
32
-
33
-
34
-
35
-
36
-
37
-
38
-
39
-
40
-
41
-
42
-
43
-
44
-
45
-
46
-
47
-
48
-
49
-
50
-
51
-
52
-
53
-
54
-
55
-
56
-
57
-
58
-
59
-
60
-
61
-
62
-
63
-
64
-
65
-
66
-
67
-
68
-
69
-
70
-
71
-
72
-
73
-
74
-
75
-
76
-
77
-
78
-
79
-
80
-
81
-
82
-
83
-
84
-
85
-
86
-
87
-
88
-
89
-
90
-
91
-
92
-
93
-
94
-
95
-
96
-
97
-
98
-
99
-
100
-
101
-
102
-
103
-
104
-
105
-
106
-
107
-
108
-
109
-
110
-
111
-
112
-
113
-
114
-
115
-
116
-
117
-
118
-
119
-
120
-
121
-
122
-
123
-
124
-
125
-
126
-
127
-
128
-
129
-
130
-
131
-
132
-
133
-
134
-
135
-
136
-
137
-
138
-
139
-
140
-
141
-
142
-
143
-
144
-
145
-
146
-
147
-
148
-
149
-
150
-
151
-
152
-
153
-
154
-
155
-
156
-
157
-
158
-
159
-
160
-
161
-
162
-
163
-
164
-
165
-
166
-
167
-
168
-
169
-
170
-
171
-
172
-
173
-
174
-
175
-
176
-
177
-
178
-
179
-
180
-
181
-
182
-
183
-
184
-
185
-
186
-
187
-
188
-
189
-
190
-
191
-
192
-
193
-
194
-
195
-
196
-
197
-
198
-
199
-
200
-
201
-
202
-
203
-
204
-
205
-
206
-
207
-
208
-
209
-
210
-
211
-
212
-
213
-
214
-
215
-
216
-
217
-
218
-
219
-
220
-
221
-
222
-
223
-
224
-
225
-
226
-
227
-
228
-
229
-
230
-
231
-
232
-
233
-
234
-
235
-
236
-
237
-
238
-
239
-
240
-
241
-
242
-
243
-
244
-
245
-
246
-
247
-
248
-
249
-
250
-
251
-
252
-
253
-
254
-
255
-
256
-
257
-
258
-
259
-
260
-
261
-
262
-
263
-
264
-
265
-
266
-
267
-
268
-
269
-
270
-
271
-
272
-
273
-
274
-
275
-
276
-
277
-
278
-
279
-
280
-
281
-
282
-
283
-
284
-
285
-
286
-
287
-
288
-
289
-
290
-
291
-
292
-
293
-
294
-
295
-
296
-
297
-
298
-
299
-
300
-
301
-
302
-
303
-
304
-
305
-
306
-
307
-
308
-
309
-
310
-
311
-
312
-
313
-
314
-
315
-
316
-
317
-
318
-
319
-
320
-
321
-
322
-
323
-
324
-
325
-
326
-
327
-
328
-
329
-
330
-
331
-
332
-
333
-
334
-
335
-
336
-
337
-
338
-
339
-
340
-
341
-
342
-
343
-
344
-
345
-
346
-
347
-
348
-
349
-
350
-
351
-
352
-
353
-
354
-
355
-
356
-
357
-
358
-
359
-
360
-
361
-
362
-
363
-
364
-
365
-
366
-
367
-
368
-
369
-
370
-
371
-
372
-
373
-
374
-
375
-
376
-
377
-
378
-
379
-
380
-
381
-
382
-
383
-
384
-
385
-
386
-
387
-
388
-
389
-
390
-
391
-
392
-
393
-
394
-
395
-
396
-
397
-
398
-
399
-
400
-
401
-
402
-
403
-
404
-
405
-
406
-
407
-
408
-
409
-
410
-
411
-
412
-
413
-
414
-
415
-
416
-
417
-
418
-
419
-
420
-
421
-
422
-
423
-
424
-
425
-
426
-
427
-
428
-
429
-
430
-
431
-
432
-
433
-
434
-
435
-
436
-
437
-
438
-
439
-
440
-
441
-
442
-
443
-
444
-
445
-
446
-
447
-
448
-
449
-
450
-
451
-
452
-
453
-
454
-
455
-
456
-
457
-
458
-
459
-
460
-
461
-
462
-
463
-
464
-
465
-
466
-
467
-
468
-
469
-
470
-
471
-
472
-
473
-
474
-
475
-
476
-
477
-
478
-
479
-
480
-
481
-
482
-
483
-
484
-
485
-
486
-
487
-
488
-
489
-
490
-
491
-
492
-
493
-
494
-
495
-
496
-
497
-
498
-
499
-
500
-
501
-
502
-
503
-
504
-
505
-
506
-
507
-
508
-
509
-
510
-
511
-
512
-
513
-
514
-
515
-
516
-
517
-
518
-
519
-
520
-
521
-
522
-
523
-
524
-
525
-
526
-
527
-
528
-
529
-
530
-
531
-
532
-
533
-
534
-
535
-
536
-
537
-
538
-
539
-
540
-
541
-
542
-
543
-
544
-
545
-
546
-
547
-
548
-
549
-
550
-
551
-
552
-
553
-
554
-
555
-
556
-
557
-
558
-
559
-
560
-
561
-
562
-
563
-
564
Report of the Group Audit Committee
55
Systems of internal control
In addition to the Markets Control and Culture Remediation Programmes,
oversight of the three lines of defence model and consideration of
accountability in relation to inappropriate rate setting activity (all as more
fully described in the letter from the Committee Chairman), the
Committee reviewed the progress of the Finance and Risk
Transformation Programme. The Committee challenged management on
the pace of delivery, cost, prioritisation and benefits. Management is
considering the delivery and direction of the programme in light of the
organisational changes announced following the strategic review and the
Committee will exercise close oversight of the revised programme in
2014.
The Committee has also tracked progress in relation to other mandatory
and remedial projects and has challenged individual business areas on
the ability to meet regulatory expectations, responsibilities and required
resource. The Committee has considered ongoing regulatory reviews
and investigations and has monitored the Group’s relationship with its
principal regulators. It has received reports from the Sensitive
Investigations Unit and has considered the appropriateness of action
being taken by management in relation to identified issues. The
Committee has considered the Group’s compliance with the
requirements of the Sarbanes-Oxley Act of 2002 and was advised of
whistle-blowing events which occurred within the Group. The Committee
has requested that Internal Audit consider how whistle-blowing
processes can be audited and will seek to identify enhancements to the
process.
The Committee also reviewed the effectiveness of the internal Notifiable
Event Process during the year; alerts on each event are received by the
Chairman of the Committee, and the Chairman of the Board Risk
Committee.
Regular reports were received by the Committee on wholesale credit
quality assurance testing and consumer credit quality assurance testing.
The Committee reviewed the Group’s various pension obligations and
discussed the status of funding and triennial valuation discussions
underway with the RBS Group Pension Fund. The Committee will
monitor the investment strategy, capital impact and funding of the
scheme during 2014, as negotiations progress.
A
s discussed in the report of the Board Risk Committee, changes to the
Divisional Risk and Audit Committee structure, designed to enhance the
effectiveness and transparency of the consideration of risk and audit
issues at a divisional level are currently under consideration. Detailed
proposals will be presented to the Committee in the first quarter of 2014.
Internal audit
The Group Audit Committee oversaw the work of Internal Audit
throughout 2013. Through regular reports and opinions, the Committee
obtained insights into Internal Audit’s assessment of the control
environment across all divisions and of management’s level of
awareness. The reports from Internal Audit enabled the Committee to
monitor internal control within the Group by reporting on areas where
improvements to the control environment were needed.
In response to Internal Audit findings during the latter half of 2013, the
Committee received at its request a presentation from executives of the
Markets division on controls relating to trade and transaction reporting
and actions underway to address identified weaknesses. The Committee
has asked for regular updates on remediation progress to be provided
during 2014.
Internal Audit also highlighted that the volume of change underway
across the organisation and some specific regulatory remediation efforts,
are key risk areas for the Group. The Committee will focus on these
areas in 2014, particularly as the recently announced strategic changes
are executed.
During bi-annual visits with Internal Audit, the Committee considered the
bench-strength and capability of the function and areas where
enhancement was required, including Technology and Markets. Plans in
place to make improvements, including strategies to externally co-source
certain activities and to accelerate recruitment were discussed to ensure
that risks were appropriately covered. The Committee also reviewed
Internal Audit’s budget and succession-planning.
The Head of Internal Audit continues to report to the Chairman of the
Group Audit Committee. In 2013, his secondary reporting line was
changed and he now also reports directly to the Group Chief Executive
(previously the Group Finance Director). Consideration was given to the
presence of the Head of Internal Audit and divisional Heads of Audit at
Executive Committee and other senior meetings. The Committee will
continue to monitor the participation and influence of Internal Audit at
senior level meetings during 2014.
The Committee considered and approved enhancements to the reporting
methodology in Internal Audit reports and agreed that the changes to the
criteria underlying ratings would improve transparency and provide
additional evidence about culture and attitude. These improvements to
reporting will be introduced in 2014. Proposed improvements to the
evaluation of risk and enhancement to the audit universe, that will enable
scoping and prioritisation of the work of Internal Audit that better reflects
the scale and complexity of the business, were also considered by the
Committee. The impact of assurance work initiated by the Group’s
regulators on risk coverage was discussed and the annual plan of audit
activity was approved.
A
n external review of the effectiveness of Internal Audit takes place every
three to five years, with internal reviews continuing in intervening years.
In December 2013, the Group Audit Committee undertook an internal
evaluation of Group Internal Audit. The evaluation concluded that Group
Internal Audit had operated effectively throughout 2013. Minor
observations and recommendations will be progressed. Benchmarking of
Internal Audit against the Chartered Institute of Internal Auditors
“Effective Internal Audit in the Financial Services Sector” guidance
recommendations was explicitly included in the evaluation of
effectiveness. Internal Audit currently meets these recommendations in
the majority of areas and has incorporated actions within its strategic
plan to address identified shortcomings.