Corporate governance

10. Internal audit

The global internal audit function consists of local and regional internal audit functions operating in each of the group’s principal business units, centrally co-ordinated by the group internal audit team and led by the Chief Internal Auditor. As noted in section 5.3 of this report, during the year the Chief Internal Auditor left the company. While a permanent replacement is being recruited, an Interim Chief Internal Auditor has been appointed.

In keeping with the group’s decentralised collaborative management structure, the local internal audit functions report to local senior finance management but have direct access to local audit committees, group internal audit and the Chief Internal Auditor. The local and regional audit functions have continuous, unfettered interface with the group internal audit function, which reports directly to the Chief Financial Officer and has direct access to the audit committee through the Chief Internal Auditor. Internal audit activities are performed either by teams of appropriate, qualified and experienced employees, or through the engagement of external practitioners upon specified and agreed terms with equivalent access. The Chief Internal Auditor prepares formal reports for each audit committee meeting as to the consolidated activities and key findings of the global internal audit function.

The global internal audit function utilises a standardised group-wide internal audit methodology and has implemented a formal global quality assurance and effectiveness programme. Accordingly, detailed quality review assessments are performed with regard to the local and regional internal audit teams, to ensure compliance with defined quality and performance measures. This process provides a basis for the annual review of the effectiveness of the global internal audit function and results in a formal report (prepared by the Chief Internal Auditor) to the audit committee to support the committee’s formal annual assessment of the effectiveness of internal audit. In addition, periodic reviews by independent external consultants are undertaken when deemed necessary by the audit committee. The last independent review was completed in February 2008, reporting positive results and rating the group’s internal audit function as ‘high quality’.

The audit committee has therefore satisfied itself that adequate, objective internal audit assurance standards and procedures exist within the group, and that continuous improvement in the quality and objectivity of the global internal audit function remains a primary objective of the department.