Annual Report and Accounts - Hemscott IR

TRAVIS PERKINS ANNUAL REPORT AND ACCOUNTS 2012
Audit Committee Report
FOR THE YEAR ENDED 31 December 2012
As Chairman of the Audit Committee, I am pleased to report below on
the Committee’s activities in 2012.
Role of the audit committee
The Committee is primarily responsible for:
• The integrity of the financial statements of the Company and
any formal announcements relating to the Company’s financial
performance, and reviewing significant financial reporting
judgments contained therein;
• Reviewing the Company’s internal financial controls and its
internal control and risk management systems;
• Monitoring and reviewing the effectiveness of the Company’s
internal audit function;
• Reviewing the audit plans of the external auditors and for
monitoring the conduct of the audit;
• Reviewing the external auditor’s independence and objectivity and
the effectiveness of the audit process, taking into consideration
relevant UK professional and regulatory requirements;
• Reviewing and implementing the Company’s policy on the
engagement of the external auditors to supply non-audit services,
taking into account relevant guidance regarding the provision of
non-audit services by an external audit firm;
• Conducting any tender process for the provision of the external
audit, and making recommendations to the Board, for a resolution
to be put to the shareholders in relation to the appointment and
remuneration of the external auditors.
Shortly after each meeting, I report to the Board on the work of the
Committee, identifying any matters where it considers that action or
improvement is needed, and make recommendations as to the steps
to be taken.
The Committee’s full terms of reference are available on the
Company’s website, or on request to the Company Secretary.
Composition of the audit committee
I was Chairman, and Ruth Anderson and John Coleman were
members, of the Committee throughout 2012. All members of the
Committee are considered to be independent and have considerable
financial and commercial experience from a variety of corporate and
professional backgrounds. In particular, the Board considers that
both I and Ruth Anderson have the recent and relevant financial
experience required by the UK Corporate Governance Code (see also
the board profiles on pages 54 and 55). The Company Secretary is
secretary to the Committee.
Meetings and attendance
The Committee held four meetings during 2012, and attendance at
the meetings is shown on page 57. I also invited the Group Chairman,
the Chief Executive, the Finance Director, the Deputy Chief Executive,
the Group Financial Controller, the Director of Business Risk and
Assurance and the external auditor to attend the meetings. At each
meeting I gave the external auditor and the Director of Business
Risk and Assurance the opportunity to discuss with the Committee,
any matters which they wished to raise without the presence
of management. In addition, during the year, I held a number of
meetings with the Director of Business Risk and Assurance and
with the external auditors, without management being present.
Committee members meet regularly with operational and functional
staff throughout the year and participate in relevant technical update
programmes. I am satisfied that the Committee received sufficient,
reliable and timely information from management to enable it to
fulfil its responsibilities during the year.
Main activities of the committee during the year
At our meeting in February, the Committee reviewed the annual
financial statements of the Company. It took into account regular
management accounting information, a report from the internal
auditors on internal control matters and the external auditors’ report
on the conduct of their audit, their review of accounting policies and
areas of judgment in the financial statements and their comments on
statements concerning risk and internal control. A similar review was
undertaken at the July meeting when the interim statements were
considered. During the year the Committee also reviewed:
• Lessons learned from the process to integrate the BSS Group’s
financial systems, the costs of that integration, and the associated
exceptional items;
• The impairment testing of goodwill and other non-monetary assets
and the accounting processes and disclosures related thereto;
• The accounting treatment of the acquisition of the remaining share
capital in Toolstation in January 2012;
• The progress of training on the Bribery Act;
• The Company’s tax management and its compliance with
tax legislation, the tax impact of significant projects, and the
relationship with HMRC;
• An evaluation of the Committee’s work carried out as part of the
Board evaluation process referred to on pages 58 and 59.
I subsequently reported to the Board on this evaluation;
• The Committee’s terms of reference; changes were recommended
to the Board in the light of changes to the UK Corporate Governance
Code;
• Comments received on its 2011 report from institutional investor
bodies;
• The effectiveness of the system of internal financial control and
the system for monitoring and reporting on risks faced by the
Group; the Committee considered these systems to have been
effective during the year;
• The terms of reference, strategy, staffing, processes and
effectiveness of the internal audit department, taking into account
the results of an exercise to benchmark its performance against
other companies;
• The status of actions taken in response to recommendations
arising from internal and external audit work;
• The effectiveness of the Group’s ‘whistleblowing’ policy;
• The policy on engagement of the external auditor for non-audit
work, as referred to below, and the policy on the employment of
anyone previously employed by the external auditor;
• The plans presented by the external auditor for conduct of the
year-end audit and half-year review including the related risk
analyses, terms of engagement, fees and letters of representation;
GOVERNANCE
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