Enterprise Inns plc Annual Report and Accounts 2012

Audit Committee Report
Appointment of external auditors during 2012
The appointment of Ernst & Young LLP as the Group’s external auditors (incumbent since the Company started trading
in 1991) was fully reviewed during the year under review and a full tender process was undertaken for audit and
taxation advisory services. As a result of this tender, the Committee determined that the appointment of Ernst &
Young LLP for audit services and the appointment of KPMG LLP for the provision of taxation advisory services should
be recommended to the Board. The Board made these appointments during the first half of the financial year and this
was disclosed in the interim report.
The Committee has assessed the performance and independence of the external auditors which underpins its
recommendation to the Board to propose to shareholders the re-appointment of Ernst & Young LLP as auditors until
the conclusion of the AGM in 2014. Full details are set out in the Notice of the AGM on pages 109 to 112.
ROLE OF INTERNAL AUDIT
Internal Audit has a Group-wide remit and is independent of its business operations. It undertakes an ongoing
programme to provide assurance on the adequacy of internal control and risk management processes across the
Group’s operations. It is responsible for reviewing and reporting on the effectiveness of internal controls and risk
management systems with the Committee and, ultimately, the Board. The head of Internal Audit attends Committee
meetings to present the findings of such reviews at regular intervals throughout the year and reports on Internal Audit’s
performance against the agreed annual internal audit plan, such plan being agreed during the year by the Committee.
EFFECTIVE INTERNAL CONTROL AND RISK MANAGEMENT
The Board is responsible for the overall system of internal controls for the Group and for reviewing its effectiveness. It
carries out such a review at least annually covering all material controls including financial, operational and compliance
controls and risk management systems.
The system of internal controls is designed to manage rather than eliminate the risk of failure to achieve business
objectives and can only provide reasonable and not absolute assurance against material misstatement or loss.
Operating policies and controls are in place, and have been in place throughout the year under review, and cover a
wide range of issues including financial reporting, capital expenditure, information technology, business continuity
and management of employees. Detailed policies ensure the accuracy and reliability of financial reporting and the
preparation of financial statements. The key elements of the Group’s on-going processes for the provision of effective
internal control and risk management systems, in place throughout the year and at the date of this Report, include:
• regular Board meetings to consider matters reserved for directors’ consideration;
• regular management reporting, providing a balanced assessment of key risks and controls;
• an annual Board review of corporate strategy, including a review of material business risks and uncertainties facing
the business;
• established organisational structure with clearly defined lines of responsibility and levels of authority;
• an internal audit function which implements the annual internal audit plan and provides independent assurance to
executive management, the Committee and the Board on the effectiveness of internal controls and risk management;
• documented policies and procedures;
• regular review by the Board of financial budgets, forecasts and covenants with performance reported to the Board
monthly;
• a detailed investment process for major projects, including capital investment coupled with a post-investment
appraisal analysis;
• regular review by the Committee of financial and accounting controls; and
• senior management providing six-monthly assurance that controls and risk management processes in their business
units have operated satisfactorily.
Our Governance
Annual Report 2012
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