Audit Committee

Assisting the Board in discharging its responsibilities for monitoring the integrity of the Group’s financial statements

The principal purpose of the committee is to assist the Board in discharging its responsibilities for monitoring the integrity of the Group’s financial statements. In addition, we review the adequacy and effectiveness of the Group’s systems of internal control and monitor the effectiveness, performance and objectivity of the internal and external auditors.

The committee comprises independent Non-Executive Directors only and meets at least five times each year.

Membership

Keith Williams (chairman) (appointed 01 August 2016)1
Glyn Barker (appointed 08 August 2012)
Patricia Cross (appointed 01 December 2013)
Michael Hawker, AM (appointed 01 September 2011)

1 Chairman from 3 August 2017

Membership and Attendance in 2016

Member Number of meetings attended Percentage attendance *
Glyn Barker (Chairman) 10 100%
Patricia Cross # 8 80%
Michael Hawker 10 100%
Bob Stein 10 100%
Sir Malcolm Williamson + 9 90%
Keith Williams 3 100%
* This shows the percentage of meetings which the Committee member attended during the year whilst a member of the Committee.
# Patricia Cross was unable to attend two meetings due to personal commitments.
+ Sir Malcolm Williamson missed one meeting due to a personal commitment.

The following officers normally attend, by invitation, all meetings of the committee:

  • Group chairman
  • Group chief executive officer
  • Chief financial officer
  • Chief audit officer
  • Chief accounting officer
  • Representatives of external auditor

Other members of senior management are also invited to attend as appropriate, to present reports.

The Board is satisfied that Glyn Barker, Michael Hawker, Bob Stein, Sir Malcolm Williamson and Patricia Cross each meet the US requirements to be an audit committee financial expert. In addition the Board is satisfied that Glyn Barker has recent and relevant financial experience in accordance with the Code and satisfies the requirements for competence in accounting and/or auditing under the Disclosure and Transparency Rules.

Committee role and responsibilities

The committee acts independently of management, to ensure that the interests of shareholders are properly protected in relation to the financial reporting and the effectiveness of the Group’s systems of internal control. The main responsibilities of the committee are to:

  • Review the significant issues and judgments of management, and the methodology and assumptions used in relation to the Group's financial statements and formal announcements on the Group's financial performance including the reserving position relating to the Group's life assurance and general insurance operations
  • Review the Group's going concern assumptions
  • Assess the effectiveness of the Group's system of internal controls, including financial reporting, financial controls and the Internal Audit function
  • Consider and review the performance of the Chief Audit Officer, and agree his remuneration
  • Consider and make recommendations to the Board on the appointment, reappointment, dismissal or resignation, effectiveness and remuneration of the external auditor
  • Assess the independence and objectivity of the external auditor 
  • Approve and monitor the application of the external auditor business standard
  • Approve and monitor the application of the internal audit charter and business standard.

In performing its duties, the committee has access to the services of the Chief Audit Officer, the Group Company Secretary, senior financial management and external professional advisers.

Read the full  terms of reference (PDF 135.0KB) for the committee.

Activities during 2016

A summary of the Committee’s activities during 2016 is shown below, full details can be found in the Committee’s report.

  • Considered and continued to monitor the impact of the acquisition of the General Insurance (GI) business of the Royal Bank of Canada, which completed on 1 July 2016, on the 2016 half year and full year results
  • Following assessment, recommended to the Board for approval the SII First Opening Information Results
  • Approved the IFRS and SII technical provisions within the 2016 half and full year results
  • Challenged and reviewed the reserve positions relating to the UK Life and GI operations
  • Reviewed and challenged the treatment and recoverability of goodwill and other intangible assets
  • Reviewed the Chief Financial Officer’s reports which included the IFRS and SII key issues and judgements; changes to financial reporting disclosure requirements; and policies for materiality and unadjusted differences
  • Reviewed and challenged the going concern assumptions for 2016 and the principles underpinning the Longer Term Viability Statement
  • Reviewed the Group Risk Actuary’s report on significant issues related to technical provisions of SII and IFRS External Audit, auditor engagement and policy
  • Reviewed the effectiveness of the External Auditor and was satisfied that the services it provided remained effective, objective and fit for purpose
  • Reviewed the External Auditor’s compliance with the independence criteria set out in the Code
  • Monitored compliance with the External Auditor Business Standard on a quarterly basis
  • Refreshed the External Auditor Business Standard to reflect new regulatory requirements
  • Held private meetings with the External Auditor without management present to provide an appropriate forum for issues to be raised
  • Reviewed reports from the External Auditor with regard to: the 2016 Audit Plan and progress against plan and reports on the audit of the 2016 half and full year results including key assumptions used and outcomes of the audit
  • Reviewed and approved the Internal Audit Charter and Business Standard
  • Assessed the performance of the Internal Audit function and concluded it was performing well, was sufficiently resourced and had demonstrated continued improvement
  • Reviewed and approved the Internal Audit Plan in July and November 2016
  • Assessed the independence of the Chief Audit Officer (CAO) and concluded that this had been maintained and was satisfied that his annual performance related bonus was unconnected to the Group’s financial performance
  • Held private meetings with the CAO without management present to provide an appropriate forum for issues to be raised
  • Reviewed reports from the CAO Internal controls, including financial reporting control framework and financial reporting developments
  • Reviewed quarterly updates on the effectiveness of the FRCF framework and rectification of controls
  • Oversaw the MCIT programme and monitored and challenged progress by management to address the Fraud Management
  • Reviewed the Internal Audit function report to ensure adequacy of the systems of internal control and risk management
  • Ensured an appropriate whistleblowing framework to comply with the policy set out by the Financial Conduct Authority and Prudential Regulation Authority