Annual Report 2010 in PDF - BBA Aviation

Directors’
Corporate
Governance
Statement
continued
72 — Directors’ Report
c. Audit Committee
The Audit Committee, as can be seen from the description of its
role, discharges a number of key responsibilities on behalf of the
Board and the Company, including monitoring BBA Aviation’s
fnancial reporting processes, overseeing the work of the internal
audit team and reporting on the independence and objectivity
of the appointed external auditors.
Nick Land
Chairman of the Audit Committee
Composition
The composition of the Audit Committee during 2010 is set out in the
table below. All members of the Audit Committee are independent
non-executive directors. Nick Land, the Committee’s Chairman, has
relevant and recent fnancial experience and a professional accountancy
qualifcation as considered desirable by the Financial Reporting
Council’s Guidance on Audit Committees issued in October 2008
(Guidance on Audit Committees). In addition the other Committee
members all have experience of corporate fnancial matters and Peter
Ratclife has a professional accountancy qualif cation.
During Year
01/01/10 Resigned Appointed 31/12/10 01/03/11
Nick Land (Chairman) – –
Mark Harper – –
Peter Ratcliffe – –
John Roques 29/04/10 – – –
During 2010 the Audit Committee had four scheduled meetings,
generally coinciding with key dates in the fnancial reporting and audit
cycle and met at shorter notice on one occasion. The external auditors
and Head of Group Internal Audit regularly attend these meetings
which are minuted by the Group Secretary. The Chairman, Group Chief
Executive, Group Finance Director and Group Financial Controller also
generally join at least part of the Audit Committee meetings by
invitation. The Committee Chairman may call a meeting at the request
of any director or the Company’s external auditors.
Role
The Audit Committee may consider any matter that might have a
fnancial impact on the Group. However, its primary roles are to:
– monitor and review the efectiveness of the Company’s internal
control and risk assessment;
– monitor the efectiveness of the Company’s internal audit function;
– review the Company’s external audit function including the annual
audit plan and results of the external audit and the independence
of the external auditors;
– monitor the integrity and audit of the Company’s f nancial
statements and any formal announcements relating to the
Company’s fnancial performance, including a review of the
signif cant fnancial reporting judgements contained within them;
– establish and oversee the Company’s arrangements for employee
disclosure and fraud prevention arrangements within the Company.
The Committee reviews twice yearly reports on the Group’s key
business risks and the Audit Committee (whose members are also
members of the Remuneration Committee) is aware of the
importance of keeping the appropriateness of incentive structures
under review. The Committee assesses compliance with the directors’
responsibility statement.
There is a twice yearly formal report to the Audit Committee on
business ethics and compliance, which includes such matters as the
review of the Group’s Disclosure of Unethical Conduct Policy under
which staf may, in confdence, raise concerns about possible
improprieties in matters of fnancial reporting or other matters.
The Committee is responsible for making recommendations to
the Board regarding the remuneration and appointment of its
external auditors. While the appointment of external auditors is
considered each year, it is the policy of the Audit Committee to review
the appointment in greater detail at least every fve years, taking into
account a number of factors, including audit efectiveness at both
operating company and Group-level; quality, continuity and depth of
resources and expertise and competitiveness of fees. Such a more
detailed review was completed in 2008. The appointment of Senior
Statutory Auditor is also rotated every fve years and the Committee
discussed in 2010 the timing of the next rotation, as Nigel Mercer was
appointed to this role for the 2008 audit.
The Audit Committee discharges its responsibilities through the
review of written reports circulated in advance of meetings and by
discussing these reports and any other matters with the relevant
auditors and management. Topics covered by the Audit Committee
during 2010 and to date in 2011 included: review of any signifcant
issues from reports from both the internal and external audits;
consideration of the audit fee and the balance between audit and
non-audit fees; assessment of the risk of the possible withdrawal of
Deloitte LLP from the external auditor market; annual review of the
terms of reference of the Committee, of the schedule of the
Committee’s agenda items for the forthcoming year and of BBA
Aviation’s matrix of authority levels; review of the lessons learned from
the post-investment appraisals undertaken by management;
consideration of the future of UK GAAP in view of the Accounting
Standards Board Exposure Draft concerning this topic; and other
topics that are described in more detail in section 10.
In 2010 the Audit Committee held two confdential sessions
without management present with the Head of Group Internal Audit
and with the external auditors.
10. Audit and Accountability
a. Auditor Independence and Audit Ef ectiveness
Central to the Audit Committee’s work is the review and monitoring of
the external auditors’ independence and objectivity and the
efectiveness of the audit process. The Audit Committee carried out a
formal audit service assessment in respect of work carried out during
the year including a review of audit plans and the qualifcations,
expertise, resources, ef ectiveness and independence of the external
auditors. The Audit Committee has also carried out a self assessment
and believes that it has satisfed the requirements of the Code and the