Audit Committee

The Audit Committee currently comprises three non-executive directors, and oversees the Group’s financial reporting and internal controls and provides a formal reporting link with the external auditors. Its terms of reference, which are reviewed annually by the Board, are available on the Company’s website, www.tateandlyle.com.

The Committee met six times during the year. Membership of the Committee and attendance during the year were as follows:

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Number of
meetings

Number of
meetings
attended

1

Retired 22 July 2010.

2

Until 30 June 2010.

Directors as at 31 March 2011

 

 

Liz Airey (Chairman of the Committee)

6

6

Evert Henkes

6

5

Douglas Hurt

6

5

Former members

 

 

Richard Delbridge1

3

3

Robert Walker2

2

2

Dr Barry Zoumas2

2

2

All the Committee members have extensive management experience in large international organisations. It is a requirement of the Code that at least one Committee member has recent and relevant financial experience; Liz Airey, an investment banker and former finance director of Monument Oil and Gas plc, and Douglas Hurt, Finance Director at IMI plc, both meet this requirement.

The Chief Financial Officer, VP – Group Audit and Assurance, VP – Group Financial Controller and representatives of the external auditors are normally invited to attend each meeting of the Committee. The Chairman of the Board and Chief Executive also attend meetings of the Committee by invitation.

The minutes of each meeting are circulated to the Board. The VP – Group Audit and Assurance and the external auditors have direct access to, and meet regularly with, the Chairman of the Committee outside formal Committee meetings.

The Committee maintains a formal calendar of items for consideration at each meeting and within the annual audit cycle to ensure that its work is in line with the requirements of the Code.

Main responsibilities of the Audit Committee

The main responsibilities of the Committee include:

  • overseeing the Group’s financial reporting process and monitoring the integrity of the financial statements and formal announcements relating to the Group’s financial performance;
  • reviewing significant financial reporting issues and accounting policies and disclosures in financial reports;
  • reviewing the effectiveness of the Group’s internal control procedures and risk management systems;
  • reviewing the effectiveness of the internal audit function;
  • overseeing the Board’s relationship with the external auditors;
  • reviewing and monitoring the external auditors’ independence and objectivity and the effectiveness of the audit process; and
  • making recommendations to the Board on the appointment or re-appointment of the Group’s external auditors.

Independence of the external auditors

The Group’s external auditors are PricewaterhouseCoopers LLP (PwC) and the Committee operates a policy to safeguard the objectivity and independence of the external auditors. This policy sets out certain disclosure requirements by the external auditors to the Committee; restrictions on the employment of the external auditors’ former employees; partner rotation; and procedures for the approval of non-audit related services provided by the external auditors. During the year, the Committee reviewed the processes that the external auditors have in place to safeguard their independence and received a letter from them confirming that, in their opinion, they remained independent.

The Committee closely monitors the level of audit and non-audit related services they provide to the Group. Non-audit related services are normally limited to assignments that are closely related to the annual audit or where the work is of such a nature that a detailed understanding of the Group is necessary. A policy for the engagement of the external auditors to supply non-audit related services has been implemented to formalise these arrangements which requires Audit Committee approval for certain categories of work and fee levels. A breakdown of the fees paid to the external auditors in respect of audit and non-audit related work is included in Note 8 of the financial statements. Having undertaken a review of the non-audit related services provided during the year, the Committee is satisfied that these services did not prejudice the external auditors’ independence.

Work undertaken during the year

During the year and up to the date of this annual report, the work undertaken by the Audit Committee included:

Consideration and review of full-year and half-year results and interim management statements

  • meeting prior to the Board meetings at which the annual report and financial statements, the half-year report and interim management statements were approved to review significant accounting policies, financial reporting issues and judgements and reports from the external auditors.

External audit

  • reviewing the effectiveness of the external audit process, the external auditors’ strategy and plan for the half-year review and full-year audit, and the qualifications, expertise, resources and independence of the external auditors;
  • agreeing the terms of engagement and fees of the external auditors for the audit;
  • reviewing the policy on auditor independence and the basis of the provision of
    non-audit related services by the external auditors;
  • meeting with representatives of the external auditors in the USA (while on a scheduled site visit); and
  • undertaking a review of the effectiveness of the external auditors.

Risk management framework and internal audit

  • receiving and considering regular reports from the VP – Group Audit and Assurance on the Group’s risk management system, findings from reviews of internal financial controls, and the remit, organisation, annual plan and resources of the internal audit function;
  • reviewing the strength of the internal controls framework and considering the annual review of internal controls on behalf of the Board; and
  • undertaking a detailed review of the governance and controls in place within the business processes transformation programme.

Terms of reference and Audit Committee effectiveness

  • updating its terms of reference to reflect evolving best practice and the implications of the new Committee structure, whereby responsibility for certain items, including the whistleblowing process, are passed to the CR Committee. The Board approved the updated terms of reference; and
  • undertaking an effectiveness review which concluded that the Committee was considered to be operating effectively.

Review of the effectiveness of the external auditors

  • conducting an internal review of the external auditors in the year which concluded that the external audit process was operating effectively and PwC continued to provide a good service to Tate & Lyle. The Committee agreed that there was no need to undertake a tender for the audit;
  • reviewing the fees paid to other audit firms for services during the year ended 31 March 2011 and noting that there were no contractual obligations that would restrict the Committee’s choice of external auditors should it decide that any change was appropriate; and
  • recommending to the Board that PwC continue to act as auditors to the Group. PwC have indicated their willingness to continue in office, and a resolution that they be re-appointed will be proposed at the AGM.

Review of the effectiveness of the internal audit function

  • undertaking a review of the effectiveness of the internal audit function. The review concluded that the internal audit function continued to strengthen and was making a significant contribution to the internal governance of the Group. Further development will be necessary to ensure that the internal audit function continues to meet the Group’s needs which will evolve with the implementation of the Group’s strategy. In addition, some opportunities to improve processes and practices were identified and are being implemented.