PDF - Somero Enterprises

Section 3Management and GovernanceCorporate Governance continuedDuring the year, the Audit Committee of the Board, comprising two non-executive directors;a meets regularly with the external auditors and executive directors attending by invitation;b receives and considers reports relating to the monitoring of the adequacy of the Group’s internal controls, the suitability of its accountingpolicies and financial reporting and matters arising from the external auditors work;c monitors the nature and extent of non-audit work undertaken by the external auditors; andd makes recommendations to the Board on these matters.In forming their opinion of the independence and objectivity of the external auditors, the Audit Committee takes into account thesafeguards operating within the external auditors and that the level of auditor fee is sufficient to enable them to fulfil their obligationsin accordance with the audit Letter of Engagement.The Chairman of the Audit Committee makes a report to the Board following each committee meeting and the Board receives the minutesof all Audit Committee meetings.Going Concern BasisAfter making enquiries, the directors have formed a judgement, at the time of approving the financial statements, that there is a reasonableexpectation that the Company has adequate resources to continue in operational existence for the foreseeable future. For this reason thedirectors continue to adopt the going concern basis in preparing the financial statements.Compliance StatementAlthough not required to, the Board reports on compliance with the 48 code provisions throughout the accounting period. Save for theexceptions outlined below, the Company has complied throughout the accounting period ended 31 December 2006 with the provisions setout in Section 1 of the Code. The exceptions to the Code were as follows:A.4.1 The directors have not constituted a Nomination Committee because they consider that it is preferable for elections to the Board tobe dealt with by the Board as a whole.A.6 The Board has not undertaken a formal evaluation of its own performance and that of its committees and individual directors. Due to theinitial public offering during the year it was deemed more appropriate to undertake the first evaluation in 2007.D.1 While not done in 2006, the Board will conduct appropriate survey’s of shareholders to understand their issues and concerns.D.2 Due to the initial public offering in November 2006 the audit fees do not reflect ongoing operations and will not be reported until 2007where a full year audit and normal audit services will be reported.The directors are responsible for preparing the Annual Report and the financial statements. The directors have chosen to prepare theaccounts for the Company in accordance with US Generally Accepted Accounting Principles (“US GAAP”).Company law requires the directors to prepare such financial statements for each financial year which give a true and fair view in accordancewith US GAAP of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that periodand comply with US GAAP. In preparing those financial statements, the directors are required to:• select suitable accounting policies and then apply them consistently;• make judgements and estimates that are reasonable and prudent;• state whether applicable accounting standards have been followed; and• prepare the financial statements on the going concern basis, unless it is inappropriate to presume that the Company will continuein business.The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financialposition of the Company and the Group and to enable them to ensure that the financial statements comply with the Companies Act 1985.They are also responsible for the system of internal control, for safeguarding the assets of the Group and hence for taking reasonable stepsfor the prevention and detection of fraud and other irregularities.26Somero Enterprises, Inc.Annual Report and Accounts 2006