2016_Halma_ARA_160610_2

Corporate Governance Report continued
Audit Manager investigates cases relating
to financial matters (including fraud), the
Company Secretary investigates other
matters and monitors all open cases
through to their conclusion.
During the year, the Committee carried
out a review of the effectiveness of the
Group’s whistleblowing arrangements.
A refresh of the whistleblowing service was
carried out across the Group in May 2015.
Audit Committee activities
Financial statements and reports
• reviewed the 2016 Annual Report and Accounts, the 2015 Half Year Report and
the trading updates issued in July 2015 and February 2016. As part of these reviews
the Committee received a report from the external auditor on the audit of the Annual
Report and Accounts;
• reviewed the effectiveness of the Group’s risk management and internal controls
and disclosures made in the Annual Report and Accounts;
• reviewed the process and stress testing undertaken to support the Group’s Viability
Statement and Going Concern statements;
• considered acquisition valuation and accounting methodology;
• reviewed pension fund accounts;
• reviewed treasury policy;
• reviewed currency exposure and hedging policies; and
• reviewed taxation provisions.
Risk management
• considered the output from the Group-wide risk review process to identify, evaluate
and mitigate risks, the Group’s changing risk profile and future risk reports;
• devoted additional time to adequately address risk management and internal
control in the Group; and
• considered export controls and other compliance-related matters.
Internal audit
• evaluated the effectiveness and the scope of work to be undertaken by the Internal
Audit function;
• reviewed management responses to audit reports issued during the year;
• reviewed the Group’s whistleblowing policy and procedures; and
• reviewed the resourcing of Internal Audit.
External auditor and non-audit work
• considered the timing and process for external auditor tender;
• reviewed, considered and agreed the scope and methodology of the audit
and non-audit work to be undertaken by the external auditor;
• evaluated the independence and objectivity of the external auditor;
• agreed changes to the policy on non-audit services; and
• agreed the terms of engagement and fees to be paid to the external auditor
for the audit of the 2 April 2016 financial statements.
The Committee receives regular updates on
changes to financial accounting standards
and reporting requirements, regulatory and
governance changes, the evolving landscape
around risk, fraud and cyber security.
In its advisory capacity, the Committee
confirmed to the Board, that based on its
review of the Annual Report and Accounts and
internal controls that support the disclosures,
that the Annual Report and Accounts,
taken as a whole, are fair, balanced and
understandable, and provide the necessary
information for shareholders to assess the
Company’s position and performance, its
business model and strategy.
WHISTLEBLOWING
The Committee has responsibility for
ensuring that arrangements are in place for
employees to raise concerns or suspicions
they may have about possible wrongdoing
in financial reporting or other matters.
An external organisation, Expolink, operates
a 24 hour confidential reporting service
for the Group, which provides employees
with the choice of making a report via a
multilingual telephone line or by web
reporting. The service allows employees
to remain anonymous (subject to local
legislation) and also provides a case reporting
number which ensures that there is a
mechanism for two-way communication
between the reporter and the Company, even
if they have chosen to remain anonymous.
Confidential reports from this service are
provided to the Company Secretary for
investigation and to report any significant
cases to the Committee. The Internal
ENGAGEMENT OF THE
EXTERNAL AUDITOR
The external Auditor is engaged to
express an opinion on the Group and
Company financial statements. The audit
includes the review and testing of the data
contained in the financial statements to the
extent necessary for expressing an audit
opinion on the truth and fairness of the
financial statements.
Deloitte LLP has been the external Auditor
of the Group since 2003 and a review of the
independence of Deloitte LLP is undertaken
each year. At the year end, the Auditor
formally confirmed its independence and
that objectivity has been maintained. The
Committee concluded that the relevant
independence continues to be met. In
addition, the Senior Statutory Auditor
responsible for the Group audit is rotated
at least every five years. A new Senior
Statutory Auditor has been appointed
for the financial year ended 2 April 2016.
Deloitte LLP provides the Committee
with relevant reports, reviews and advice
throughout the year, as set out in their
terms of engagement.
EXTERNAL AUDITOR TENDERING
In accordance with UK Corporate
Governance Code, the Committee
has primary responsibility for making
a recommendation to the Board on the
reappointment of the external Auditor and
will lead the process for putting the audit
contract out to tender at least every 10 years.
In accordance with The Statutory Audit
Services for Large Companies Market
Investigation (Mandatory Use of Competitive
Tender Processes and Audit Committee
Responsibilities) Order 2014 (the 2014 Order),
Halma is required to re-tender the external
audit contract by June 2023. As reported
last year, it is anticipated that the external
tender process will be completed before
the end of December 2018. Accordingly, the
Committee’s current intention is to conduct
a competitive tender process in the financial
year 2018/19. The Committee believes that
it is in the best interests of the Company’s
members to conduct a competitive tender
ahead of the 2023 deadline and, due to the
transitional arrangements, the change in
Senior Statutory Auditor and Carole Cran
being appointed as Committee Chairman
from July 2016, that concluding a tender by
December 2018 is also in the best interests
of the Company. The Committee confirms
that the Company was in compliance with
the provisions of the 2014 Order during the
financial year ended 2 April 2016.
70 Halma plc Annual Report and Accounts 2016