AREAS OF FOCUS DURING 2011.


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INTERNAL CONTROL AND RISK MANAGEMENT FRAMEWORK

AREAS OF ACCOUNTING JUDGEMENT

FINANCIAL REPORTING

EXTERNAL AUDITOR

INTERNAL AUDIT

Reviewing in depth the processes and controls around the Group’s annuities business and the pensions financial reporting processes.

Methodology for the calculation of the credit default provision.

Evaluating the consistency of Stock Exchange announcements and the Annual Report with the financial statements.

Receiving the external auditor’s views on areas of accounting judgement and the internal control environment.

Quarterly reports on internal audits undertaken, with detailed findings presented on areas assessed as high risk.

Detailed presentations from individual business areas by way of follow up to internal audits reporting on management’s responses to internal audit actions.

Examination of the responsibilities, team composition and segregation of duties within the Group Treasury function.

Mortality and longevity assumptions.

Review of the Group’s contingent liabilities.

Approval of the contingent liabilities note to the accounts.

Evaluating and approving the external audit plan for the year.

Quarterly reports on financial crime activity.

Assessing the processes and controls around projects, including the controls around establishment, definition and delivery.

[EEV] economic assumptions.

Consideration of matters relating to the adoption of the Group’s accounts on a going concern basis.

Approval of the going concern statement.

Approving the terms of engagement and fees for the external auditor.

Evaluating and approving the annual internal audit plan. During 2011, the Committee considered and approved revisions to the internal audit plan as it identified a need to reallocate internal audit resource to regulatory change programmes.

Evaluating the controls on the use of spreadsheets.

Experience variances.

 

Monitoring the independence of the external auditor, including overseeing the amount and nature of non-audit work undertaken by the external auditor and evaluating the balance of non-audit to audit work. The Group’s policy on the provision of non-audit services to the Group underpins the Committee’s work. The Committee must approve the engagement of the external auditor for non-audit work.

 

Analysis of the internal control and risk management processes, in conjunction with the review by the Group Risk Committee of the Group’s principal risks and uncertainties.

Tax matters:

 

 

 

the announcement of the reduction in corporate tax rates.

 

 

 

the treatment of deferred tax assets.

 

 

 

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