During the year, the Committee agreed the approach and
scope of the audit work to be undertaken by the external auditor,
Deloitte LLP, and undertook an assessment of their qualification,
expertise and resources, independence and the effectiveness of
the external audit process. The Committee also reviewed and
agreed the terms of engagement, the fees, and areas of
responsibility and the work to be undertaken by the external
auditor, and agreed the fees payable in respect of the 2013/14
audit work. Details of the amounts paid to the external auditor
for their audit services are given in note 7 to the accounts on
page 92. In addition, the external auditor provided the
Committee with a schedule of each matter on which there was
an initial difference between them and management in relation
to the accounting treatment, and with the final decisions on
During the year, the Committee considered the effectiveness
and independence of the external auditor. In consideration
of its effectiveness, the Committee reviewed the experience
and expertise of the audit team, the fulfilment of the agreed
audit plan and any variations to it, feedback from the Group's
businesses and the contents of the external audit report.
In considering the independence of the external auditor, the
Committee received a statement of independence from the
auditor, a report describing their arrangements to identify,
report and manage any conflicts of interest, and reviewed
the extent of non-audit services provided to the Group. The
Committee concluded that it is satisfied with the effectiveness
and independence of the external auditor.
In addition to their statutory duties, the services of Deloitte LLP
are also engaged where, as a result of their position as external
auditor, they either must, or are best placed to, perform the work
in question. This is primarily work in relation to matters such as
shareholder circulars, Group borrowings, tax advice, regulatory
filings and certain business acquisitions and disposals. Other
work is awarded on the basis of competitive tendering.
The Committee reviewed and approved the scope of non-audit
services provided and proposed by the external auditor to ensure
that there was no impairment of independence and objectivity,
and subsequently monitored the non-audit work performed to
ensure it was within policy guidelines.
The Group has a policy on the use of its external auditor for
non-audit work and this is regularly reviewed. The external
auditor is precluded from engaging in non-audit services that
would compromise their independence or violate any laws or
regulations affecting their appointment as external auditor.
The approval of the Chairman of the Committee is required
prior to awarding contracts for non-audit services to the external
auditor, where in excess of specified amounts. The Group's
policy on the use of the external auditor for non-audit work
can be found on the Group's website.
During the year, Deloitte LLP charged the Group £1.8m
(2012/13: £1.6m) for audit and audit-related services and a
further £0.4m (2012/13: £0.4m) for non-audit services.
The Committee reviews and makes recommendations to the
Board with regard to the reappointment of the external auditor.
In doing so, the Committee takes into account auditor
independence and audit partner rotation. Deloitte LLP were
appointed as external auditor in 2009/10 following a formal
tender process. Panos Kakoullis was appointed lead audit
partner at that time and will step down following the conclusion
of the 2013/14 audit process, when he will be replaced by
Richard Muschamp. Richard will serve as lead audit partner
until the external audit contract is put out to tender, which will
be in 2019 at the latest. During the year under review, Deloitte
also replaced the lead audit partner for B&Q UK. The Committee
noted provision C.3.7 of the Code in relation to audit tendering
and has taken into account the UK Competition Commission's
recent decision to introduce mandatory audit tendering at
ten-year intervals, in making the decision to tender the external
audit contract by 2019 at the latest.
The Committee has recommended to the Board that Deloitte
LLP be proposed for re-appointment by shareholders as the
Company's external auditor at the forthcoming Annual General
Meeting. As a result of its work during the year, the Committee
has concluded that it acted in accordance with its terms of
reference and has ensured the independence and objectivity
of the external auditor.