Annual report 2010 - Imperial Tobacco Group

– receiving reports from, and questioning, members ofGroup Compliance, Group Finance and other functions.This provides the Committee with the information requiredto oversee our systems of internal control for financialreporting, internal control policies, corporate governanceprocedures, the system of risk management and to assessthe review and mitigation of associated risks;– reviewing the Auditors’ presentation of their proposed auditplan, fee proposal and confirmation of their independence.This, together with management’s assessment of theAuditors’ effectiveness and independence, allows theCommittee to establish the scope, effectiveness,independence and objectivity of our Auditors and, ifappropriate, recommend their re-appointment to the Board;– receiving and, after due consideration, approving GroupCompliance’s proposed work plan and complianceprogramme for the year. Reports from Group Complianceare then used to monitor the performance and effectivenessof controls operating throughout the business;– overseeing our public interest disclosure (whistleblowing)policy by receiving reports of its distribution through ournon-financial reporting system and receiving reports inrespect of all disclosures made via the policy;– consideration of management’s report that there were nomaterial related party matters; and– consideration of the accounting treatment relating toongoing enquiries detailed on pages 76 and 77.Going ConcernIn order to satisfy themselves that we have adequateresources for the future, the Committee and subsequentlythe Board reviewed the Group’s committed funding andliquidity positions, its ability to generate cash from tradingactivities and its ability to raise external funding in the future.Our performance, as described in the Financial Review onpages 28 to 31, and our future plans and the risks we face,as described on pages 25 to 27, were also reviewed.These reviews provided the Committee with the confidenceto recommend to the Board that the Group and Companyhave adequate resources to meet their operational needsfor the foreseeable future. For this reason the Boardcontinues to adopt the going concern basis in preparingthe financial statements.Auditor Independence PolicyIn order to ensure the independence and objectivity ofour Auditors we maintain and regularly review our AuditorIndependence Policy. This policy provides clear definitionsof services that our Auditors can and cannot provide. OurAuditors may only provide non-audit services where thoseservices do not conflict with their independence, for exampletax compliance work. The policy also establishes a formalauthorisation process, including the tendering for non-auditservices expected to generate fees in excess of £100,000,and pre-approval by the Audit Committee for allowablenon-audit work that they may perform. Our policy alsoestablishes guidelines for the recruitment of employees orformer employees of our Auditors and for the recruitmentof our employees by the Auditors. Details of the audit andnon-audit fees paid to the Auditors are shown on page 114.To ensure compliance with this policy our Audit Committeecarried out two reviews during the year of the remunerationreceived by our Auditors for audit services, audit-relatedservices and non-audit work. These reviews ensure a balanceof objectivity, value for money and compliance with thispolicy. The outcome of these reviews was that performanceof the relevant non-audit work by our Auditors was the mostcost-effective way of conducting our business and that noconflicts of interest existed between such audit and non-auditwork. The fees for such non-audit work within the financialyear were principally related to tax advisory work.These reviews enabled the Audit Committee to confirm thatwe continue to receive an efficient, effective and independentaudit service.Proactively Engaging with ShareholdersIn September 2010 we held an investor day attended byover 60 investors, potential investors and analysts at whichthey had the opportunity to meet members of the Board andsenior management. The central theme of the day was ourstrategy to deliver sustainable shareholder returns throughour sales led agenda. Case studies were provided illustratingthe success of our strategy in various markets. Topicsdiscussed included the opportunities provided by ourgeographic footprint, brands and our total tobaccoapproach, together with innovation and trade marketing. Our Auditor Independence Policy is publishedon our website, www.imperial-tobacco.com71