QinetiQ Annual Report 2017

QinetiQ Group plc Annual Report and Accounts 2017
Corporate governance | Corporate governance statement
59
Report of the Audit Committee
The Audit Committee is chaired by Paul Murray.
The Board considers him to have recent and relevant
financial experience. He was formerly Group Finance
Director of Carlton Communications plc and LASMO plc,
and he is currently Audit & Risk Committee Chairman
at Royal Mail Group plc. The Board considers the
members of the Committee to be independent. They
bring extensive experience of corporate management
in senior executive positions to the Company. Details
of their background and experience can be found
on pages 48 and 49. The CEO, CFO, Group Financial
Controller, Group Internal Audit Manager and
representatives of the external auditor normally
attend Audit Committee meetings.
Main responsibilities
The Audit Committee monitors the Group’s integrity
in financial reporting and reviews the effectiveness
of the financial risk management framework.
Paul Murray
Audit Committee Chairman
The Audit Committee
monitors the Group’s
integrity in financial
reporting and reviews
the effectiveness
of the financial
risk management
framework.
Dear shareholder,
I am pleased to present the report of the Audit
Committee on the work carried out during the last
financial year. The Committee continues to operate
on the basis of an open but challenging dialogue with
management and with the internal and external auditors,
and the application of an appropriate level of scrutiny.
The main responsibilities of the Committee are set out in
this report. In addition to reviewing the Group’s financial
reporting processes and external audit effectiveness, two
key areas that the Committee considered during the year
were (i) a review of the process for risk management and
reporting, in conjunction with the Risk & CSR Committee,
in response to the outcome from last year’s review of
the effectiveness of the Board and its Committees.
Further details are set out in the report of the Risk & CSR
Committee on page 66 and the Committee reviewed the
new process/format at its March 2017 meeting; and (ii)
to initiate and oversee an audit tender process for the
appointment of the external auditor, of which further details
can be found in this report. After the successful conclusion
of the tender, the Board approved the appointment of
PricewaterhouseCoopers LLP as the external auditor for
the financial year ending 31 March 2018, to succeed KPMG
LLP. I would like to thank all of the audit firms for their
professionalism and work in the audit tender process,
and also the team at KPMG who have worked closely
with the Committee over many years.
As noted on page 51, an internal review of the
effectiveness of the Board and its Committees was
carried out during the year. The outcome of the review
in respect of the Audit Committee is set out on page 62.
Paul Murray
Audit Committee Chairman
The Committee’s full terms of reference can be found
in the Governance section of the QinetiQ website at
www.QinetiQ.com/about-us/ corporate-governance.
The Audit Committee meets as necessary and at
least four times a year. During the financial year ended
31 March 2017, the Committee met on six occasions.
The external auditor has the right to request that a meeting
of the Audit Committee be convened. During the past
financial year, and in accordance with its terms of
reference, the Committee met with each of QinetiQ’s
external auditor and the Group Internal Audit Manager
on two separate occasions, without Executive Directors
present, to discuss the audit process and assure itself
regarding resourcing, auditor independence and objectivity.
Activities during the year
The Committee has an annual calendar of activities, in
addition to which it identifies particular areas of focus
during the year. During the course of its meetings, the
Committee received presentations, reports and analyses
from the CFO, the Group Financial Controller, the Group
Internal Audit Manager and the external auditor.
The key activities during the year were as follows:
a) Internal controls (page 60);
b) Financial reporting: the significant issues considered
by the Committee in relation to the preparation
and reporting of the full and half-year financial
statements, and how these issues were addressed
(page assessment of the ‘fair, balanced and
understandable’ requirement (page 61);
c) Audit Committee effectiveness review (page 62);
and
d) External audit:
––
Effectiveness of external audit process
(page 62);
––
External auditor independence and the provision
of non-audit services (page 63);
––
Review of the effectiveness and the
independence of the external auditor (page 63);
and
––
External audit tender and the appointment
of auditor (page 63).