During the year under review the audit committee was chaired by Mr Manser, who has been chairman of the committee since May 2002. Mr Manser qualified as a chartered accountant in 1964 and was made a Fellow of the Institute of Chartered Accountants in 1976. He has held the following senior positions: managing director of Jardine Fleming Hong Kong, managing director of the Save and Prosper Group, group chief executive of Robert Fleming Holdings and chairman of Robert Fleming Holdings Ltd.
Lord Fellowes, Mr Morland and Ms De Lisi served on the committee throughout the year. Mr Levett served on the committee until his retirement at the AGM in July 2004. Mr Morland has been a member of the committee from its first meeting on 13 April 1999. Lord Fellowes was appointed to the committee on 1 June 2001 and Ms De Lisi was appointed on 4 September 2002. The chairman has recent and relevant financial experience, as does Ms De Lisi who holds US accounting qualifications and has experience in treasury, finance and M&A transactions.
Meetings and attendance
The committee met four times during the year. The external auditors, the chief executive and the chief financial officer were in attendance at each meeting by invitation. Other members of the management team attended as required.
Terms of reference
The following is a summary of the committee’s terms of reference. A complete version is available for download from the company’s website.
The committee is responsible for establishing formal and transparent arrangements for considering how it should apply financial reporting and internal control principles and for maintaining an appropriate relationship with the company’s auditors. Specifically, the committee’s duties include:
- To review, and challenge where necessary, the annual financial statements and interim and preliminary announcements before their submission to the board for approval.
- To examine and review the internal control environment within the group and review the group’s statement on internal control systems prior to endorsement by the board.
- To make recommendations to the board regarding the appointment, re-appointment and removal of the external auditors and to approve the remuneration and terms of engagement of the external auditors.
- To review annually the effectiveness of the internal audit function throughout the group in the context of the company’s overall risk management system, with particular focus on the charter, annual work plans, activities, staffing, organisational and reporting structure and status of the function.
- To review the effectiveness of the system for monitoring compliance with laws and regulations (including the group’s bi-annual letters of representation) and the results of management’s investigation and follow-up (including disciplinary action) of any instances of non-compliance.
In February 2005 the committee reviewed its terms of reference and recommended certain changes to the board. These changes were considered and approved by the board in April 2005.
Operation of the committee
The audit committee reports its activities and makes recommendations to the board. During the year, the audit committee discharged its responsibilities as they are defined in the committee’s terms of reference. It was involved in ensuring that appropriate controls and processes were in place to identify all significant business, strategic, statutory and financial risks and that these risks were being effectively monitored and managed. The committee has encouraged a project to review and upgrade internal controls across the group, which is in progress, with the target of achieving substantive compliance with the Sarbanes- Oxley standards applicable to foreign companies required to register with the SEC in the USA (although SABMiller is not currently required to register).
The committee has been engaged in ensuring that appropriate standards of governance, reporting and compliance are being met. It has also advised the board on issues relating to the application of accounting standards as they relate to published financial information, in particular the transition to IFRS.
The chief internal auditor has direct access to the audit committee chairman. The audit committee has access to subsidiary internal audit practitioners. The reports of the divisional audit committees are also available to the audit committee. More detail can be found in the sections on risk management and internal control.
During the year, the committee met with the external auditors and chief internal auditor without management being present.
The committee critically reviewed its own performance during the year by means of a questionnaire which each member of the committee completed independently. The committee chairman then reviewed the responses and conducted one-to-one discussions with members of the committee where he felt it was necessary. The results of the self-assessment and any action plans arising were then reported to the board after discussion with the chairman of the board.
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