IMI plc annual report 2012

2013 Board objectivesAs highlighted in the Chairman’s governance letter, the Board established for itself three specific objectives for 2013, as wellas supporting the management in delivering the plans and forecasts set by the Board. These objectives are as follows:(i) Continuing the process for Board review of strategy and embedding the outcomes in longer term business plans for theGroup;(ii) Strengthening management talent and establishing the resources and organisational structure required to accelerate ourgrowth plans; and(iii) Continuing to set the right tone and culture through investment in the IMI Way.Standing committees of the BoardThe standing committees of the Board are shown below and include the Audit Committee, the Nominations Committee,the Remuneration Committee and the Executive Committee. Each of these committees operates under written terms ofreference which clearly set out their respective delegated responsibilities and authorities. The full terms of reference of thesecommittees were updated in December 2010 and are part of the Corporate Governance Framework which appears onthe Company website. The committees report to the Board on their work, normally through their respective Chairmen,at quarterly or more frequent intervals as appropriate.Audit CommitteeNominationsCommitteeBoardRemunerationCommitteeExecutive CommitteeAudit CommitteeThe Audit Committee is chaired by Terry Gateley. Anita Frew and Bob Stack were members of the Audit Committeethroughout the year. Kevin Beeston was a member until he left the Board in October. Phil Bentley joined the committee on1 October 2012. Terry Gateley is a qualified Chartered Accountant and has significant recent and relevant financialexperience. Phil Bentley will become Chairman of the committee when Terry Gateley retires in May. Phil Bentley is aqualified accountant and his previous career includes twelve years on the board of Centrica plc, the first seven as FinanceDirector, and time as chair of the audit committee of Kingfisher plc. The committee acts in an oversight role in respect of thefinancial statements and reports that are prepared by executive management. The committee received reports from theexternal auditor who attended its meetings when required to do so. The committee’s work included reviewing the financialstatements, accounting policies, significant issues of judgement and, as described below under the section headed ‘InternalControl’ starting on page 46, looking at the effectiveness of internal financial controls. Key issues reviewed by the committeeincluded; financial control issues in parts of Fluid Controls, assurance reviews in respect of major change projects, theaccounting treatment of certain non-recurring items as exceptional, accounting in respect of pensions, plans for buildingfunctional excellence in finance roles across the Group and accounting for acquisitions.The committee considered the independence and objectivity of the external auditor. In assessing auditor independence thecommittee had regard to the Smith Guidance for audit committees and required the auditor to confirm that its ethics andindependence policies complied with the requirements of the Institute of Chartered Accountants in England and Wales.The Group policy on the use of the auditor for non-audit work is monitored by the committee and requires approval by theChairman of the committee for any non-audit engagement where fees exceed £150,000 and does not allow work to beplaced with the auditor if it could compromise auditor independence, such as functioning in the role of management orauditing its own work. The committee also receives reports from and monitors the work of the internal audit function, knownas the IMI Group Assurance Department, and reviews the operation of the Group whistle-blowing policy and the independenthotline (www.imihotline.com). During 2011 the committee received an independent report on the effectiveness of the internalaudit function and has since been monitoring progress of the implementation of agreed recommendations.BUSINESS OVERVIEW GROUP OPERATING REVIEW RESPONSIBLE BUSINESS BOARD REPORTSFINANCIAL STATEMENTSIMI plc Annual Report 201243