BOC Report and accounts 2005 - Alle jaarverslagen

68 The BOC Group plc Annual report and accounts 2005 Corporate governance
Audit committee report
In 2005 the audit committee discharged its responsibilities as set out in the terms of reference and the specific
matters reviewed by the committee included:
i) interim and full year financial results and announcement statements;
ii) interim and full year report from the internal audit function of progress against the 2005 audit plan and
iii)
effectiveness of internal controls;
the Group’s project to comply with the requirements of Section 404 of the US Sarbanes-Oxley Act.
This review included the project plan, progress against the plan and matters arising in the implementation of
the plan;
iv) details of the Group’s project to transition to International Financial Reporting Standards from 2006;
v) the external audit plan for 2005 presented by the Group’s auditors, PricewaterhouseCoopers LLP (PwC).
This review included the audit objectives, auditor independence and objectivity policies managed by PwC,
partner rotation, audit scope, team, timetable deliverables and fee proposal;
vi)
the annual report disclosure items relevant to the audit committee. Included in this review were the Group’s
critical accounting policies, the going concern statement, the report on risk and internal controls and the risk
factors statement.The audit committee also reviewed the disclosure control review procedures employed by
the Group which enabled the chief executive and Group finance director to sign the Section 302 and 906
certificates pursuant to the US Sarbanes-Oxley Act;
vii) the external auditors’ report to the committee for 2005;
viii) the independence and objectivity of the external auditors, including a review of non-audit fees.The audit
committee has reviewed and approved a policy for the provision of non-audit services by the external
auditors.This policy has been in place since 2002 and defines services which can be provided by the auditors.
The policy also specifies which services cannot be provided.The policy requires all non-audit services to be
approved in advance by the audit committee, which has delegated this task to the chairman of the audit
committee.The approval process requires full disclosure of the objectives and scope of the services to be
performed and fee structure.The audit committee reviews all approved services at subsequent meetings.
The auditors are permitted to perform non-audit services only if the scope of work is within the terms of the
policy and there is a business benefit to the Group in these services being performed by the external auditors
rather than an alternative supplier.The level of the fee spend is closely monitored to ensure independence
and objectivity of the audit is maintained. Further details of actual fees paid to external auditors are given in
note 2c) on page 97;
ix)
the procedures by which staff can report, in confidence, any matters of a financial or non-financial nature
alleging breaches of the Group’s Code of Conduct.The audit committee also reviewed the procedures by
which allegations are reported to senior management and the audit committee.
During this period the audit committee met with the Group’s external auditors without the presence of
management.The audit committee also met with the Group’s head of internal audit without the presence of
management.The head of internal audit has access to the chairman of the audit committee, if necessary, outside
of meetings.
Regular attendees to audit committee meetings, at the invitation of the chairman of the committee, include:
the chairman, chief executive, Group finance director, director of risk management, head of business assurance
audit, director financial planning and control, and the external auditors. Other senior managers are invited to attend
as required to participate in presentations or discussions to enable the committee to discharge its duties.
The audit committee concludes that, based on the foregoing, it has discharged its responsibilities as set out in
the terms of reference and is satisfied that auditor independence and objectivity have been maintained.
Nomination committee
Members:Andrew Bonfield, Guy Dawson,Tony Isaac, Rob Margetts (chairman), Rebecca McDonald, Matthew Miau,
Sir Christopher O’Donnell and Anne Quinn.The majority of members are independent non-executive directors.
Secretary: Nick Deeming.
The nomination committee reviews its terms of reference on an annual basis.
The nomination committee meets periodically as required but at least annually. During 2005 the committee
met six times. Members’ attendance at meetings is detailed on page 66.The committee primarily monitors the
composition and balance of the board and its committees, and identifies and recommends to the board the
appointment of new directors.The committee also keeps under review the board committee structure and the
composition of each committee and makes recommendations to the board of any changes considered necessary.
Whilst the chairman of the board chairs this committee he is not permitted to chair meetings when the
appointment of his successor is being considered or during discussions regarding his performance.
The committee reviews annually the succession plans for the executive directors and the executive
management board. During 2005 the vacant roles of chief executive, Industrial and Special Products and Group
human resources director were both filled by internal candidates.The committee also considers the reappointment
of non-executive directors upon expiry of their term of office and the proposals for re-election of directors retiring
by rotation at the Annual General Meeting. Directors submit themselves for re-election at regular intervals and at
least every three years in accordance with the company’s Articles of Association and the Combined Code on
Corporate Governance. During these deliberations consideration is given to the results of the annual board
evaluation.The evaluation process is explained in more detail above.The Notice of Annual General Meeting is
contained in a separate circular and details the directors who will be standing for election and re-election at
the meeting.