JUST GROUP PLC Annual Report and Accounts 2021
GROUP AUDIT COMMITTEE REPORT CONTINUED
The Group has a policy in relation to the provision of non-audit services by our external auditor. All non-audit services provided by the external auditor are subject to review and approval by the Committee. The policy ensures that the Group benefits from the cumulative knowledge and experience of its external auditor while also ensuring that it maintains the same degree of objectivity and independence. During the year, the value of audit services to the Group was £2.4m (2020: £2.2m). The value of non-audit services during the year amounted to £0.7m (2020: £1.1m), comprising:
• a Group policy framework, which sets out risk management and control standards for the Group’s operations; and • defined procedures for the approval of major transactions and capital allocation. The Group has specific internal mechanisms that govern the financial reporting process and the disclosure controls and procedures around the approval of the Group’s financial statements. The results of the financial disclosure process are reported to the Committee to provide assurance that the Annual Report and Accounts is fair, balanced and understandable, including the opportunity to challenge members of management and the external auditor on the robustness of those processes. The Committee keeps under review the adequacy and effectiveness of the Group’s internal controls. It is the view of the Committee that the Group’s system of risk management and internal controls is currently appropriate to the Group’s needs. INTERNAL AUDIT Group Internal Audit is an internal function that provides independent and objective assurance to the Committee that the Group’s risk management, governance and internal control processes are operating effectively. The Committee considers and approves the Internal Audit plan annually and any changes to the plan during the year. The Internal Audit plan is constructed using a risk-based approach taking account of risk assessments, input from senior management and previous external and internal audit findings. Reports from the Director of Group Internal Audit include updates on audit activities, progress of the Internal Audit plan, the results of any unsatisfactory audits and the action plans to address these areas. The scope, extent and effectiveness of the activity of the Group Internal Audit team are regularly considered by the Committee. In 2021, the Committee: • continued to oversee the Group Internal Audit function with the Director of Group Internal Audit reporting directly to the Committee Chair; • oversaw the engagement of EY to work with the Group Internal Audit team on the combined internal audit assurance work to complete the Internal Audit plan for 2021; • reviewed and approved the rolling 12 month Internal Audit plan ensuring the alignment to the key risks of the business; • reviewed results from audits performed, including any unsatisfactory audit findings and related action plans; • reviewed open audit actions and monitored progress against them; • conducted an assessment of the Group Internal Audit function; and • reviewed and approved the Internal Audit Charter, which is available to view on the Group’s website. The Committee regularly considers the resource requirements of the Group Internal Audit team and oversees steps taken and any associated contingency plans to ensure it remains adequately resourced. The Committee remains satisfied that it has the appropriate resources and the relevant skills and experience to fulfil its role effectively. The Committee held private discussions with the Director of Group Internal Audit during the year. The Committee Chair also meets with the Director of Group Internal Audit regularly outside the formal Committee process and is accountable for the setting and appraisal of his objectives and performance with input from the Group Chief Executive Officer. During the year, the Committee Chair, in conjunction with the Director of Group Internal Audit, set key actions to continue to develop the Group Internal Audit function regarding its effectiveness, impact and influence, and the Committee received updates on the status of these actions.
£m
Audit-related assurance services (audit of regulatory returns)
0.5
Audit-related assurance services (other services)
0.2 0.1
Other assurance services
The ratio of non-audit services to audit services fees was 1:3.4. Non-audit services of £0.5mwere provided during 2021 in relation to the audit of the Group’s Solvency II regulatory returns and a further £0.2m of non-audit services were provided in relation to the review of the Group’s interim report. Other assurance services of £0.1mwere provided in relation to the Group’s debt issuance during the year. Non-audit services for 2021 were similar to the previous year. These non-audit services are considered to be closely related to the work performed by the external auditor of the Group and the Committee determined that the services provided would not impact the independence of the external auditor. As part of the evaluation of the objectivity and independence of the external auditor, the Committee has received and reviewed written confirmation that PwC has performed their own assessment of independence within the meaning of all UK regulatory and professional requirements and of the objectivity of the audit engagement partner and audit staff, and have also concluded that the independence is not impaired by the nature of the non-audit engagements undertaken during the year, the level of non-audit fees charged or any other facts or circumstances. The level of non-audit services offered reflects the external auditor’s knowledge and understanding of the Group. The Group has also appointed other accountancy firms to provide certain non-audit services in connection with internal audit, governance, tax and regulatory advice, and with regard to the implementation of IFRS 17. An analysis of auditor remuneration is shown in note 4 to the consolidated financial statements. The Committee has approved PwC’s remuneration and terms of engagement for 2021 and remains satisfied with the audit quality and that PwC continues to remain independent and objective. RISK MANAGEMENT AND INTERNAL CONTROL The Board has overall responsibility for establishing and maintaining the Group’s systems of internal control and for undertaking an annual review of the control systems in place. The Group operates a three lines of defence model. The first line of defence is line management who devise and operate the controls over the business. The second line functions are Risk Management, Compliance and Actuarial Assurance, which oversee the first line, ensure that the systems of internal controls are sufficient and are operated appropriately, and measure and report on risk to the GRCC. The third line is Group Internal Audit, who provides independent assurance to the Board and its committees that the first and second lines are operating appropriately. The Group’s internal control systems comprise the following key features: • clear and detailed matters reserved for the Board and terms of reference for each of its committees; • a clear organisational structure, with documented delegation of authority from the Board to senior management;
88
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