AUDIT & RISK COMMITTEE REPORT continued
In 2015, we: • conducted our annual review of the independence and objectivity of PwC • approved PwC’s audit plan and terms of engagement for the audit of the 2015 financial statements • noted the non-audit fees payable to PwC, having regard to the policy on the provision of non-audit services • conducted a tender exercise in relation to the appointment of external auditors, recommending the appointment of Deloitte LLP to the Board with effect from 2016 • approved for recommendation to the Board a transitional policy on non-audit services in light of the proposed change of auditors. The Committee is responsible for making recommendations to the Board in relation to the appointment of the external auditors. We also approve the terms of engagement and fees of the external auditors, ensuring that they have appropriate audit plans in place and that an appropriate relationship is maintained between the Group and the external auditors.
In order to safeguard independence further, we monitor compliance with the policy for the provision of non-audit services. The external auditors are generally excluded from consultancy work and are not engaged by GKN for other non-audit work unless there are compelling reasons to do so, for example where PwC can draw upon significant historic knowledge gained through the audit process. Any proposal to use the external auditors for non-audit work with a value between £50,000 and £250,000 must be submitted to the Group Finance Director for approval prior to their appointment. All proposals above this amount must be submitted to me for approval. In addition, the Group Finance Director will seek my prior authorisation for certain aspects of non-audit services relating to acquisitions, disposals and investigative accounting services, regardless of the fee value. The use of contingent fees is strictly prohibited under the policy. Details of the fees paid to PwC in 2015 can be found in note 4(a) to the financial statements. Non-audit fees incurred during 2015 amounted to £1.1 million which related principally to tax compliance services (£0.5 million). Tax advisory services amounted to £0.3 million and audit-related assurance services and other services totalled £0.3 million. Non-audit fees as a percentage of audit fees totalled 22%. All such activities remained within the policy approved by the Board.
2015 audit plan
PwC’s audit plan set out the scope and objectives of the audit together with an overview of the planned approach, an assessment of the Group’s risks and controls, and proposed areas of audit focus. In my role as Chairman, I attended PwC’s audit planning meeting. Additionally, PwC worked with Corporate Audit and management to identify areas which indicated an increased risk of control breakdown. These areas were then targeted proactively to ensure they received the appropriate amount of attention during the audit.
Effectiveness and reappointment of PwC for 2015