Audit committee

Owen O’Donnell

Owen O’Donnell
Chairman of the audit committee

Who is on the audit committee?

The committee comprises the following non-executive directors (all of whom are independent):

Date first appointed
Owen O’Donnell Sept 2008
Tim Scoble Oct 2013
Ian Burke June 2014

Until 18 March 2014 the board had an audit committee comprised of three independent non-executive directors. However, upon the resignation of the former audit committee chairman on 18 March 2014, the audit committee membership reduced to two independent non-executive directors, chaired by Owen O'Donnell. Pending recruitment of a new non-executive director to serve on the audit committee, the Company's chairman has joined the committee on a temporary basis so that there are three committee members.

A rolling agenda and topical items determine the committee's discussions.

The board is satisfied that the committee has recent and relevant financial experience.

At the invitation of the audit committee chairman, the chief executive, finance director, company secretary, director of group financial control and director of internal audit normally attend committee meetings, as does the external auditor. Other directors are encouraged to attend at least one committee meeting a year at which the external auditor is present.

The internal and external auditors also meet the committee without executive directors and other employees being present.

What is the role of the audit committee?

The audit committee assists the board in reviewing and maintaining internal controls, the management of risk and our compliance with the law and regulation.

It monitors and reviews the effectiveness of the Group's internal audit function.

It also assesses the integrity of all public financial statements before their submission to the board, ensuring we present a fair assessment of the Group’s ongoing position and prospects.

Any changes in accounting policies are authorised by the committee, which also reviews the objectivity and effectiveness of our external auditors every year.

The committee oversees the Company's internal code of conduct and monitors our whistle-blowing procedures, through which employees may, in confidence, raise concerns about possible improprieties in areas of financial reporting, financial control and other ethical matters.

The committee is regularly updated on accounting and legislative changes through briefing papers from the auditor, finance director and others.

How does the audit committee operate?

In addition to a private meeting between the audit committee chair and the external audit partner, the committee met with the auditor following each audit committee meeting in a closed session without executive directors to assess the objectivity and accuracy of financial reporting and to hear any other observations that the auditor had to make.

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How frequently did the audit committee meet during 2013/14?

The committee met formally three times in the year.

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What activities did the audit committee undertake during the year?

At its meetings in the year to 30 June 2014, the audit committee examined the effectiveness of the Group’s approach to:

  • internal control - by reviewing changes to controls made during the year, including the implementation of a new general ledger system for our digital channel; approving a revised 2013/14 internal operational audit plan, a revised corporate and systems audit cycle; reviewing the structure of the internal audit department and the level of internal audit resource. The committee also reviewed action plans to address failings or weaknesses identified in the Group's system of internal control.
  • risk management - by reviewing evidence of current and emerging risk and the Group's risk management processes;
  • financial reporting and significant financial issues - by assessing whether suitable accounting policies have been adopted and whether management has made appropriate estimates and judgements.

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Does the board evaluate the performance of the audit committee?

Part of the effectiveness of the external audit process was assessed by the use of a questionnaire, which posed questions in relation to different aspects of the external audit process. Those individuals employed by Rank most actively involved with the day-to-day aspects of the audit provided responses to certain questions asked of them. The responses were provided to audit committee members for discussion amongst themselves. Additionally, the audit committee considered the Financial Reporting Council's audit quality review findings of Ernst & Young LLP's group and subsidiary audit of Rank in respect of the 18-month period ended 30 June 2012 as outlined in its letter of 25 November 2013 to Ernst & Young LLP.

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