20645_Scapa_AR_160504

CORPORATE GOVERNANCE CONTINUED
> > review the Group’s procedures for
detecting fraud
> > review the Group’s procedures for the
prevention of bribery and corruption
> > review the Group’s procedures for ensuring
that appropriate arrangements are in place
to enable employees to raise matters
of possible impropriety in confidence
> > review the effectiveness of the Group’s
financial reporting
AUDIT AND RISK COMMITTEE ACTIVITIES
In order to discharge its responsibilities,
during the year, the Committee has
undertaken the following activities:
Financial statements and reports
> > Reviewed and discussed changes
to the UK Corporate Governance
framework and its impact on
reporting requirements
> > Reviewed and approved the external
audit fees for 2015/16
> > Reviewed the interim accounts and
related statements and discussed:
◊ key accounting judgements
◊ income statement for the half year,
specifically revenue, trading profit
and foreign exchange
◊ significant judgements on
insurance strategy
> > Reviewed and considered the significant
issues in relation to the financial
statements and how these have
been addressed, including:
◊ Viability statement – The 2014
Corporate Governance Code provision
C.2.2 has set out a requirement for
the Directors to explain in the annual
report how they have assessed the
prospects of the Company, over what
period they have done so and why
they consider that period to be
appropriate. The Committee reviews
the analysis undertaken in relation to
strategic risk management and risk
assessment, risk appetite, internal
control, risk and control reporting
structure and the principal risks
identified on an ongoing basis. This
monitoring and review informs the draft
statement which was documented for
the first time in 2015/16.
◊ Pension liabilities – The Group has
a material defined benefit pension
scheme deficit in the UK and smaller
schemes in the US and Europe.
Small changes to the assumptions
used to value the retirement benefits
obligations can have a significant
impact on the financial position of
the Group. The Committee reviews
the assumptions put forward by
the actuaries and reviews their
reasonableness. The Committee
reviews the assumptions by
comparison to external benchmark
data and also considers the
adequacy of disclosures in respect
of the sensitivity of the deficit to
changes in these key assumptions.
◊ Inventory valuation – Inventory is a
significant item on the Balance Sheet
and therefore exposes the Group to
risks around valuation and existence.
The Committee reviews the year end
reports on inventory with particular
focus on the level of provisioning and
the results from the annual stocktakes.
The Committee reviews the
analysis of stock write-offs throughout
the year.
◊ Goodwill – At 31 March 2016 the
Group had goodwill in relation to the
Acutek Medical operations in North
America, Webtec and First Water. The
Committee considers the long term
growth expected for each cash
generating unit and the expected
Weighted Average Cost of Capital
(WACC) of the Group that drives the
net present value calculations.
◊ Exceptional items – The Committee
received reports and challenged the
basis and completeness of
information. In particular, the
Committee considered the nature of
the items and determined whether
separate disclosure was appropriate
or not. The Committee discussed
with the management the key
judgements behind all the exceptional
items and agreed with their
recommendations.
> > Reviewed the year end accounts and
related statements and auditor’s report
for 2015/16 to ensure that the report is
fair, balanced and understandable
External audit
> > Monitored and ensured the independence
and objectivity of the external auditor
> > Approved all non-audit service work
over £10,000
> > Reviewed and approved the scope
and methodology of the external audit
strategy for 2015/16
> > Reviewed the performance of the
external auditor and considered the
reappointment of Deloitte LLP as auditor
for 2016/17 and recommended the
appointment to the Board
Internal audit
> > Evaluated the adequacy of the strategic
and annual internal audit plan
> > Reviewed and followed up, where
appropriate, management responses
to internal audit findings and
recommendations raised during the year
> > Reviewed and approved the Risk &
Assurance team resourcing including
the co-source provision and
associated costs
> > Reviewed the performance of internal audit
> > Performed an ongoing review of
compliance with the Group’s processes
to prevent and detect bribery and
corruption
Risk management
> > Reviewed the key risks (financial
and operational) facing the Group
and the ongoing development and
implementation of action plans to
mitigate these risks
> > Reviewed and approved the
updated Group Authority Matrix
> > Reviewed the updated Group Open
Door policy and procedure (previously
known as the Whistleblowing policy)
to enable anonymous reporting
of complaints
> > Reported to the Board on how it has
discharged its responsibilities
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SCAPA GROUP PLC ANNUAL REPORT AND ACCOUNTS 2016