Relationship with auditors
PricewaterhouseCoopers (PwC) were appointed as auditors of the company on 8 February 1999, subsequently becoming PricewaterhouseCoopers LLP in 2003.
The company has in place a formal policy on non-audit fees with which the external auditors are required to comply. The purpose of this policy is to ensure that the independence of the auditors is not impaired by the nature of non-audit work. As a reassurance, PwC confirms in a formal report to the audit committee that processes to ensure compliance with this policy are in place, and that these processes are monitored regularly. This report includes a statement that, in their opinion, PwC believes that the nature of their non-audit services has not impaired the audit of the company. Furthermore, PwC provides a full list of all major non-audit projects undertaken for the group during the year. (Please refer to note 4 to the financial statements which has a breakdown of non-audit services provided to the group by the auditors for the year under review.)
The company has also implemented an internal policy on auditor independence and non-audit services. This policy, developed against the background of the revised Combined Code and the stated intention of achieving substantive compliance with the requirements of the US Sarbanes-Oxley Act and related legislation in the medium term, determines that, amongst other things, appropriate consideration is given to the use of tendering and to the costs of the assignment.
The audit committee is satisfied that, for the period under review, the independence of the auditors has not been affected by the provision of non-audit services.
The committee has also implemented a formal system for the review of the external auditors’ effectiveness. This process involves the external auditors presenting their proposed audit strategy followed by the output of their initial discussions with management. At the audit committee meeting in May, the external auditors present the output of their detailed year-end work. In making its assessment of external auditor effectiveness, the committee reviews the audit representation letters before signature by management, reviews the external auditors’ summary of group and subsidiary issues and management’s response to the summary, and conducts an overall review of the effectiveness of the external audit process and the external auditors. This review is facilitated by the use of templates that rate effectiveness across 14 criteria.
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