The work of the Committee during 2014
The Committee has an annual work plan aligned with the financial reporting cycle of the company. The Committee’s activities fall into three principal areas: accounting and financial reporting; internal control management; and external audit and the external auditors.
Accounting and financial reporting
The Committee reviews the half year and annual financial statement and the significant financial reporting judgements. The significant accounting issues considered in relation to the 2014 financial statements are detailed in the Significant accounting issues section.
In conjunction with the Group Risk Committee, the Committee reviews the disclosures to be made in relation to internal control and risk management and principal risks and uncertainties. An important focus of the Committee in 2014 was assisting the Board in ensuring that the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the company’s performance, business model and strategy.
The Committee considered the corporate governance provisions which require the Board to make this statement on the report, together with information on the processes already in place or being introduced to support the statement to be made.
We have formalised our existing year-end governance processes and procedures to assist the Committee in assessing whether the annual report and accounts, taken as a whole, is fair, balanced and understandable (‘FBU’) and provides the information necessary for shareholders to assess the company’s performance, business model and strategy. This includes ensuring that all of those involved in the preparation of our annual report and accounts have been appropriately trained and fully briefed on the FBU requirements; internal legal verification of all factual statements, together with legal verification of descriptions used within the narrative; regular engagement and feedback with senior management on proposed content and changes and feedback from external advisors (corporate reporting specialists, remuneration and strategic reporting advisors, external auditors) to enhance the quality of our reporting. It also included a review of the use of non-GAAP measures and the use and definition of operating profit.
The Committee recommended to the Board that, when taken as a whole, the 2014 annual report and accounts is fair, balanced and understandable, and provides the information necessary for shareholders to assess the company’s performance, business model and strategy.
A major focus for the Committee this year has also been the company’s new disclosures in relation to economic capital. The Committee has worked closely with the Group Risk Committee in reviewing the key assumptions and methodologies of the risk based capital model as well as the proposed disclosures.
During the year, the Committee has also kept abreast of significant and emerging accounting developments, in particular the implementation of new IFRS accounting standards from 1 January 2014 and the work being undertaken by the International Accounting Standards Board on the implementation of a new IFRS standard on accounting for insurance contracts.