• Reviewing the effectiveness of the Group’s internal control systems • Reviewing the nature and extent of significant financial risks and how they can be mitigated • Making recommendations to the Board in relation to the appointment of the external auditor, approving its remuneration and terms of engagement • Overseeing the relationship with the external auditor including, but not limited to, assessing its independence, objectivity and effectiveness • Reporting to the Board on the procedures for responding to whistleblowing, fraud or potential breaches of anti-bribery legislation A full copy of the Committee’s terms of reference can be found in the Investor Relations section of the Group’s website at www.nccgroup.trust/uk/about-us/investor-relations.
• Received a self-assessment of the finance controls highlighting enhancements made during the year, areas of continuous improvement and specific actions to implement minimum control standards • Reviewed a summary of why management considers the Annual Report is fair, balanced and understandable Composition The Audit Committee is chaired by me, a Chartered Accountant of 42 years’ standing. I have previously served as the Finance Director of Unipalm plc, before becoming Chief Financial Officer of Searchspace Limited until 2005. Both businesses operated in digital technology sectors. My earlier career included roles with BICC Group and accountants Arthur Andersen. I also am a member of the audit committee at Blue Prism Group plc and chair the audit committee at Nanoco Group plc (both listed companies) which provides me with additional external perspectives to bring to my chairing of this Committee. The Board considers that I have the recent and relevant experience required by the Code. The other members of the Committee who served throughout the year are Jonathan Brooks and Mike Ettling. All members of the Committee are considered to be independent and the Committee as a whole continues to have competence in the technology sector. Summary biographies of each member of the Committee are included on pages 74 and 75. Meeting frequency and attendance The terms of reference for the Committee require at least three meetings per year. During this financial year the Committee met seven times. As well as the members of the Committee, standing invitations are given to the Chair, the other independent Non-Executive Directors, the Chief Executive Officer, the Chief Financial Officer and the Group Financial Controller, with other attendees also appearing by invitation. The external auditor also attends each meeting. During the year the Committee met, on a number of occasions, with the external auditor without the Executive Directors being present. In addition, following the appointment in early 2020 of the Group’s Director of Global Governance, who heads up the Group’s internal audit function, a number of meetings were held with her without management being present. The attendance of individual Committee members at Audit Committee meetings is shown in the table below:
Activities during the year During the year, the Committee:
• Assessed the effectiveness of the 2020 external audit process • Considered and approved updated policies including policies on hedging, functional currencies and Individually Significant Items • Undertook a Committee evaluation exercise to assess where the Committee should best focus its attention • Received a summary of health and safety updates including new initiatives and activities • Considered recent technical updates including guidance issued by the Financial Reporting Council • Following the publication of the April 2021 IFRIC agenda decision, ensured compliance of change in accounting policy regarding configuration and customisation costs incurred in implementing Software-as-a-Service (SaaS). Reviewed associated prior year restatement disclosures • Received regular briefings from the Director of Global Governance summarising risk management and control issues • Reviewed the findings from the internal audit projects conducted during the year and approved the internal audit plan for the forthcoming year • Reviewed the findings from the audit for the year ended 31 May 2021 and from the auditor’s review of the half year results to 30 November 2020 • Reviewed all significant accounting areas and areas of key estimation including specific loss-making contracts and amounts recognised in respect of research and development tax credits. Reviewed KPMG audit conclusions in these areas • Reviewed the application of the Group’s revenue recognition with respect to Managed Detection and Response, a significant growth area for the Group, to ensure accordance with IFRS 15 • Reviewed management’s going concern and Viability Statement assessment, including Brexit and Covid-19 considerations. Reviewed KPMG audit conclusions in these areas • Reviewed the progress of Securing Growth Together and conducted a review of the reasons for any time and cost overruns experienced (e.g. systems implementation)
Attendee
Meetings attended
Chris Batterham
Jonathan Brooks 1
Mike Ettling 2
1 Absence due to sudden illness. 2 A bsence due to personal circumstances. At all times the Committee remained quorate.
NCC Group plc — Annual report and accounts for the year ended 31 May 2021
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