united-utilities-annual-report-2015

UNITED UTILITIES GROUP PLC ANNUAL REPORT AND FINANCIAL STATEMENTS 2015Stock Code: UU.unitedutilities.comMain responsibilitiesof the committeeThe main responsibilities of thecommittee are:• to make a recommendation tothe board for the appointmentor reappointment of the auditor,and to be responsible for thetender of the audit from time totime and to agree the fees paidto the auditor;• to establish policies for theprovision of any non-auditservices by the auditor;• to review the scope and theresults of the annual auditand report to the board onthe effectiveness of theaudit process and how theindependence and objectivityof the auditor has beensafeguarded;• to review the half-year andannual financial statements andany announcements relating tofinancial performance, includingreporting to the board on thesignificant issues considered bythe committee in relation to thefinancial statements and howthese were addressed;• to review the scope, remit andeffectiveness of the internalaudit function and the group’sinternal control and riskmanagement systems;• to review the group’sprocedures for whistleblowing,reporting fraud and otherinappropriate behaviour and toreceive reports relating thereto;and• to report to the board onhow it has discharged itsresponsibilities.What has been on the committee’sagenda during the yearIn addition to fulfilling its ongoingduties, the committee has an extensiveagenda of items addressing issuesrelating to the day-to-day activitiesof the business which it deals with inconjunction with senior management,the auditor, the internal audit functionand the financial reporting team. Therewere four scheduled meetings of thecommittee during the year. Items onthe agenda included:• considering the issues and findingsbrought to the committee’sattention by the internal auditteam and satisfying itself thatmanagement has resolved or isin the process of resolving anyoutstanding issues or concerns;• reviewing the assurance workundertaken by internal audit relatingto: the content of the regulatorybusiness plan and the processessupporting the preparation of theplan; and the annual regulatoryreports;• reviewing the reports from thefinancial reporting team on thefinancial statements, including theUUW financial statements and otherregulatory reports, and consideringmatters such as the accountingjudgements and policies beingapplied;• reviewing the audit reports fromKPMG on the financial statementsand tasking management to resolveany issues relating to internal controlsand risk management systems;• reviewing the going concernand longer term viabilityassessments prior to making itsrecommendations to the board;• annual review and approval ofthe policy on non-audit servicesprovided by the auditor includingthe continued use during 2014/15of Makinson Cowell (now owned byKPMG);• monitoring incidents ofwhistleblowing and fraud reporting;• biannual oversight and monitoringof the group’s compliance with theBribery Act which the board reviewsannually;• overseeing and approving thestrategic internal audit planningapproach;• an externally facilitated review ofthe quality and effectiveness ofinternal audit; and• reviewing the committee’s termsof reference and the conclusions ofthe committee’s annual evaluation.The externally facilitated evaluationwas undertaken as part of theoverall board evaluation (see page66). The review explored: timemanagement and the compositionof the committee; the committee’sprocesses and support; and theagenda and work of the committee.It was concluded that the committeewas effective.How we assessed whether ‘theannual report and accounts, takenas a whole, is fair, balanced andunderstandable and providesthe information necessaryfor shareholders to assessthe company’s position andperformance, business model andstrategy’The committee, further to the board’srequest, has reviewed the annualreport and financial statements withthe intention of providing advice tothe board on whether, as requiredby the Code, ‘the annual report andaccounts, taken as a whole, is fair,balanced and understandable andprovides the information necessary forshareholders to assess the company’sposition and performance, businessmodel and strategy’.To make this assessment, all membersof the committee received copiesof the annual report and financialstatements to review early in thedrafting process to ensure that thekey messages being followed in theannual report were aligned with thecompany’s position, performanceand strategy being pursued; and thatthe narrative sections of the annualreport were consistent with thefinancial statements. The significantissues considered by the committeein relation to the financial statementswere consistent with those identifiedby the external auditor in their reporton pages 114 to 117.SHAREHOLDER INFORMATION FINANCIAL STATEMENTS GOVERNANCESTRATEGIC REPORT77