Annual Report and Accounts 2009 - BG Group

48
Directors’ Report: Corporate Governance
Governance continued
Governance Framework: Internal Control Framework
BG Group’s Internal Control Framework (ICF)
defines the way in which the Group operates.
It comprises the Group’s Business Principles
and mandatory policies, processes and
standards. Within these, a series of core
controls has been identified which contribute
to the identification or mitigation of one or
more Group risks.
The Board is ultimately responsible for the
Group’s system of internal controls and it
oversees the review, compliance and assurance
processes that have been designed to ensure
there is an effective control environment.
In addition, the Group has in place a series
of policies, practices and controls in relation
to the financial reporting and consolidation
processes which are designed to ensure the
identification and communication of changes
in accounting standards, and reconciliation
of core financial systems and internal
A key element of BG Group’s Governance
framework is independent assurance, which
is provided primarily by Group Audit,
independent external auditors and other
external advisers.
Group Audit provides assurance to the Board,
Audit Committee, GEC and management
that effective and efficient internal control
processes are in place to identify and manage
business risk across the Group.
performance. These processes are supported by
assurance reviews including self-certification
by management and ongoing independent
evaluation by Group Audit.
The Board’s role is undertaken in accordance
with the guidance set out in the Combined
Code and as set out in the Committee of
Sponsoring Organizations of the Treadway
Commission (COSO) framework, adopted by
the Audit Committee as best practice. The
COSO framework provides reasonable, rather
than absolute, assurance against material loss
or misstatement and is designed to manage,
rather than eliminate, the risk of failure to
achieve business objectives.
The Board has established processes designed
to allow it to assess the effectiveness of the
internal control environment within the
Group. Each year, every member of the GEC
and the Company Secretary provide Letters
Governance Framework: Independent Assurance
www.bg-group.com
In particular, Group Audit:
• provides an independent assessment of
the Group’s system of risk management
and internal control;
• assists management by carrying out
independent appraisals of the effectiveness
of the internal control environment
and making recommendations for
improvement; and
• supports development of the
Group’s governance and business
risk management policies.
of Assurance (LoA) to the Chief Executive
in relation to the control environment in
their areas of responsibility. These LoAs
are supported by the results of the
Governance Self Assessment (GSA) process
which requires management level reporting
to the GEC and the Company Secretary to
assess the effectiveness of the core controls
within their areas of responsibilities and
to report any significant deficiencies or
material weaknesses.
The Governance Committee reviews the
LoAs and the results of the GSA process and
assesses the effectiveness of the disclosure
controls and procedures which have been
established to ensure the timely and accurate
release of information required to be disclosed
to the market. The Committee reports on
these matters to the Audit Committee.
The independent external auditors’ report to
shareholders and their audit opinion on the
applicable section of the Financial Statements
are set out on page 65.
The external reserves consultant, DeGolyer
& MacNaughton, provides independent
assurance on reserves, using its own
estimation methodology, through a rolling
programme of reviews which covers a
proportion of the reserves portfolio each year.