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External Auditor

 

The Committee reviews and makes recommendations to the Board with regard to the re-appointment of the external auditor. In doing so, the Committee takes into account auditor independence and audit partner rotation. Deloitte LLP were appointed in 2009/10, following a formal tender process. Richard Muschamp was appointed lead audit partner following the conclusion of the 2013/14 audit process.

During the year, the Committee agreed the approach to, and scope of, the audit work to be undertaken by the external auditor. The Committee also reviewed the terms of engagement and fees payable for the 2017/18 audit work. Details of the amounts paid to Deloitte for their audit services are given in note 7 to the accounts. The external auditor provides the Committee with a schedule of any matter on which there was an initial difference between them and management in relation to the accounting treatment, and the final decisions on these issues.

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 non-statutory audit services. This is primarily work in relation to matters such as the interim review, additional assurance procedures, shareholder circulars, regulatory filings and certain business acquisitions and disposals. Other work is awarded on the basis of competitive tendering. The Company's policy on the use of the external auditor for non-audit work can be found here.

The Committee considered the effectiveness and independence of the external auditor and reviewed the experience and expertise of the audit team, the fulfilment of the agreed audit plan and any variations to it, feedback from the company's businesses and the contents of the external audit report. 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 also reviewed the extent of non-audit services provided to the company. The Committee confirmed its satisfaction with both the effectiveness and independence of the external auditor. 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 AGM. 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.

The Committee has initiated a competitive tender process for the external auditor, to be completed in time for the selected firm to audit the 2019/20 financial results. The tender process is to be conducted in compliance with the provisions of the Statutory Audit Services for Large Companies Market Investigation (Mandatory Use of Competitive Tender Processes and Audit Committee Responsibilities) Order 2014. The Committee approved objective criteria for the initial technical screening exercise and the selection criteria to be applied during the tender process, ensuring that these criteria prioritise audit quality. Management provided confirmation that firms to be invited to tender would not face independence issues. Following review of the outcome of the technical screening exercise, the Committee selected the firms to be invited to tender, and approved the timetable and governance arrangements for the process. The Committee endorsed the composition of management's Core Tender Team and appointed a Selection Panel comprising the CFO and certain Committee members, who will recommend a preferred firm to the Committee.