BP 2013 Annual Report Download - page 81

Corporate governance
BP Annual Report and Form 20-F 2013 77
auditor is only considered for permitted non-audit services when its
expertise and experience of the company is important. A two-tier system
for approval of audit-related and non-audit work operates. For services
relating to accounting, auditing and financial reporting matters, internal
accounting and risk management control reviews or non-statutory audit,
the committee has agreed to pre-approve these services up to an annual,
aggregate level. For all other services which fall under the ‘permitted
services’ categories, approval above a certain financial amount must be
sought on an individual engagement basis. Any proposed service not
included in the permitted services categories must be approved in advance
either by the audit committee chairman or the audit committee before
engagement commences. The audit committee, chief financial officer and
group controller monitor overall compliance with BP’s policy on audit-
related and non-audit services, including whether the necessary pre-
approvals have been obtained.
Committee review
The audit committee undertakes an annual evaluation of its performance
and effectiveness. In 2013 the committee used an online survey which
examined governance processes such as the mix of experience and skills
amongst members, meeting content, information, training and resources.
Areas of focus for 2014 arising from the evaluation included monitoring the
length of committee papers, the inclusion of broader business topics on
the agenda and suggestions for further committee training.
Safety, ethics and environment assurance
committee (SEEAC)
Chairman’s introduction
The SEEAC has continued to monitor closely and provide constructive
challenge to management in the drive for safe and reliable operations at all
times. This has included the committee receiving specific reports on the
company’s management of high priority risks in shipping, wells, pipelines,
facilities and non-operated joint arrangements. The committee has also
undertaken a number of field visits as described in more detail below as
well as maintained its schedule of regular meetings with executive
management.
The SEEAC has continued to receive regular reports from the independent
experts that it has engaged in both the Upstream (Carl Sandlin) and in the
Downstream (Duane Wilson). They have provided valuable insights and
advice on many aspects of process safety and we are grateful to them for
their work.
Paul Anderson
Committee chair
Role of the committee
The role of the SEEAC is to look at the processes adopted by BP’s
executive management to identify and mitigate significant non-financial
risk. This includes the committee monitoring the management of personal
and process safety and receiving assurance that processes to identify and
mitigate such non-financial risk are appropriate in design and effective in
implementation.
Key responsibilities
The committee receives specific reports from the business segments but
also receives cross-business information from the functions. These include,
but are not limited to, the safety and operational risk function, group audit,
group ethics and compliance and group security. The SEEAC can access any
other independent advice and counsel if it requires, on an unrestricted basis.
The committee met seven times in 2013, including joint meetings with the
audit committee. At one of the joint meetings the committee reviewed the
general auditor’s report on the system of internal control and risk
management for the year in preparation for the board’s report to shareholders
in the annual report (see ‘Internal Control Revised Guidance for Directors’
(Turnbull) on page 110). In that joint meeting the committees also reviewed
the general auditor’s audit programme for the year ahead to ensure both
committees endorsed the coverage. The SEEAC and audit committee
worked together, through their chairs and secretaries, to ensure that the
agendas did not overlap or omit coverage of any key risks during the year.
In addition to the committee membership, all of the SEEAC meetings were
attended by the group chief executive, the executive vice president for
safety and operational risk (S&OR) and the general auditor or his delegate.
The external auditor also attended some of the meetings (and was briefed
on the other meetings by the chair and secretary to the committee). The
group general counsel and the group ethics and compliance officer also
attended certain meetings. The committee scheduled private sessions for
the committee members only (without the presence of executive
management) at the conclusion of each meeting to discuss any issues
arising and the quality of the meeting.
Members
Name Membership status
Paul Anderson
(chairman) Member since February 2010; chairman since December 2012
Frank Bowman Member since November 2010
Antony
Burgmans Member since February 2004
Cynthia Carroll Member since June 2007
Ann Dowling Member since February 2012
Activities during the year
Safety, operations and environment
The committee received regular reports from the S&OR function, including
quarterly reports prepared for executive management on the group’s
health, safety and environmental performance and operational integrity.
These included quarter-by-quarter measures of personal and process
safety, environmental and regulatory compliance and audit findings.
Operational risk and performance forms a large part of the committee’s
agenda.
During the year the committee received specific reports on the company’s
management of risks in shipping, wells, pipelines, facilities and non-
operated joint arrangements. The committee reviewed these risks, and risk
management and mitigation, in depth with the relevant executive
management.
Independent expert – Upstream
Mr Carl Sandlin continued in his role as an independent expert to provide
further oversight and assurance regarding the implementation of the Bly
Report recommendations. He has twice reported directly to the SEEAC in
2013, and presented detailed reports on his work, including reporting on a
number of visits he has made to company operations around the world.
He will again report to SEEAC in early 2014.