Annual Report Accounts 2012 - Tribal

44Tribal Group plc Annual Report and Accounts 2012 | Audit committeeAudit CommitteeThe pace of change within Tribal hascontinued into 2012. As the Group growsand internationalises, the Audit Committeehas focused on the business’s approach tonew and evolving control requirements.Simon Ball, Chairman of the Audit CommitteeAudit CommitteeThe Audit Committee is appointed by the Board from the nonexecutivedirectors of the company. Its terms of reference areset out on our website. The Committee is chaired by SimonBall. Katherine Innes Ker and John Ormerod are also members.The Group Finance Director attends all meetings at the invitationof the Committee. The Chief Executive also attends byinvitation. The Committee met four times during 2012.Overview of the actions taken by the AuditCommittee to discharge its dutiesDuring the year, the Audit Committee has:• reviewed the December 2011 annual report and financialstatements, the June 2012 half year results and theinterim management statements issued in May andNovember; as part of this review, the Committee reviewedsignificant accounting policies, financial reporting issuesand judgements and reports from the external auditor ontheir audit of the annual report and financial statementsand review of the half year results;• reviewed the effectiveness of the external audit process,the external auditor’s strategy and plan for the audit andthe qualifications, expertise, resources and independenceof the external auditor;• approved the internal audit plan for 2012;• reviewed the effectiveness of the group’s internal controlsand approach to risk management, including a review ofthe Group’s whistle-blowing policy, anti-bribery controls,and controls and risk management in the Group’sinternational businesses;• agreed a work plan for the Committee;• reviewed and agreed the scope of the audit work to beundertaken by the external auditor;• agreed the fees to be paid to the external auditor for theiraudit of the December 2012 financial statements andreview of the June half year results; and• reviewed its own effectiveness.Amongst the key areas that the Audit Committee reviewedduring the year were:• the Group’s revenue recognition policies in view of theincreasing complexity of the Group’s contracts, and inparticular the accounting methodology to be applied tothe SALM contract;• the accounting methodology being applied in relation tosoftware development costs;• the appropriate accounting treatment for discontinuedand closed business streams;• the classification of certain costs as exceptional items;• the Group’s tax strategy and its policies in relation to itstax affairs; and• the Group’s management of its exposure to foreignexchange risks and the appropriate level of hedging tomitigate those risks, particularly in light of the Group’sinternational growth strategy.External auditorThe external auditor meets privately with the Audit Committeebefore key meetings of the Committee without executivemanagement being present. To fulfil its responsibility regardingthe independence of the external auditor, the Audit Committeereviewed:• the external auditor’s plan for the current year, noting therole of the senior statutory audit partner, who signs theaudit report and who, in accordance with professionalrules, has not held office for more than five years, and anychanges to the key audit staff;