AUDIT & RISK COMMITTEE REPORT
Shonaid Jemmett-Page Chairman of the Audit & Risk Committee
I am pleased to present the Audit & Risk Committee report for 2015. The Committee plays a crucial role in ensuring the integrity of the Group’s financial statements and monitoring aspects of management and auditor conduct which could financially impact shareholders. Our report sets out what we did during the year to safeguard shareholders’ interests. It was a busy year for the Committee, reflecting the increasing focus both internally and externally on areas within the Committee’s remit such as risk management assurance and auditor rotation. Recognising the importance of a strong assurance framework for managing risk, and noting changes to the FRC’s UK Corporate Governance Code and risk management guidance, during the year the Board expanded the Committee’s remit to include greater responsibility in this area. While the Board retains ultimate responsibility for setting the Group’s risk appetite and maintaining sound systems of risk management and internal control, the Committee’s role was expanded to include the review of the systems and controls in place to manage the Group’s principal risks and to report to the Board on those reviews. In 2015, we focused on the systems in place and development activities in respect of quality, programme management and contract management (identified as increasing risks in 2015) and reported to the Board on the output. The Board’s report in relation to principal risks can be found on pages 38 to 47. During 2015 we completed a formal tender exercise for the external audit contract. We concluded the process towards the end of 2015, recommending to the Board the appointment of Deloitte LLP. The Board approved this recommendation and Deloitte’s appointment as external auditors will be proposed to shareholders at the 2016 annual general meeting (AGM). More information on the tender process can be found on pages 74 and 75. During the year, we received updates on developments in corporate governance, including the implications of new regulations requiring a viability statement and the Group’s activities on cyber security, as well as amending our terms of reference to reflect our expanded remit. We also received updates from divisional finance directors in respect of their businesses and the risks associated with their operations. Looking ahead to 2016, we plan to expand our focus on risk management to receive reports on the systems in place for managing risks in respect of the supply chain and export control, which is particularly relevant in GKN Aerospace. We will also oversee the handover from the current auditors to Deloitte LLP to ensure a smooth transition.
GKN plc Annual Report and Accounts 2015