Whistleblowing and confidential reporting procedures The Group operates a confidential reporting and whistleblowing procedure (known as our “Whistleblowing Policy”). The policy aims to support the stewardship of the Group’s assets and the integrity of the Financial Statements as well as protecting colleague welfare. The procedure is reviewed annually by the Committee to ensure that it remains fit for purpose. The Group has appointed an independent third party reporting agent to be the first point of contact for those who do not wish to use normal internal line management channels for reporting their concerns. This is advertised internally via colleague noticeboards and our intranet. During the year, the Code of Ethics Policy was updated and all colleagues were asked to undertake refresher training. As part of this training, colleagues were reminded of the existence of the Whistleblowing Helpline. The Committee reviews any whistleblowing or confidential reporting of concerns raised during the year with respect to their nature, scale and any associated or consequential risks. Review of the Audit Committee’s effectiveness The Committee has reviewed and considered the effectiveness of its performance during the year. The review included the views of members of the Committee and of regular attendees at the various meetings (including the Executive Directors). I am satisfied that the degree of rigour and challenge applied in performing the Committee’s responsibilities is appropriate and effective and continues to improve. Please see page 84 for further details of the Committee evaluation process. Auditor’s independence and objectivity The Committee received a formal statement of independence from the external auditor. The Company also operates a rigorous policy designed to ensure that the auditor’s independence is not compromised by it undertaking inappropriate non-audit work. The Audit Committee’s approval is therefore required for any fees for any non-audit work undertaken by the auditor. However, the Company recognises that it can receive particular benefit from certain non-audit services provided by the external auditor due to its technical skill and detailed understanding of the Company’s business. During this financial year non-audit fees of £75,000 (2020: £50,000) were paid to the external auditor for the half year review. All significant pieces of non-audit work are put to informal tender to suitable parties that, if appropriate, can include the external auditor. Upon review as to suitability and price, the work will then be placed with the service provider recommended. If this is the external auditor, then Audit Committee approval is required. The external auditor was not engaged during the year to provide any services which may have given rise to a conflict of interest. The Committee is satisfied that the overall levels of audit and non-audit fees (i.e. the half year review fee) are not material relative to the income of the external auditor as a whole and therefore that the objectivity and independence of the external auditor were not compromised.
External auditor’s effectiveness and appointment The Committee reviews and makes recommendations regarding the reappointment of the external auditor following a formal review of the auditor’s performance following completion of the prior year Financial Statements’ audit. In making these recommendations the Committee considers: • The experience, industry knowledge and expertise of the auditor • The scope and planning of the audit and any variations from the plan • The quality of the processes adopted • The auditor’s explanations of significant risks to audit quality by reference to the Company’s specific circumstances and changes to the risks, including Covid-19 implications • The fees charged • Its attitude to and handling of key audit judgements • Its ability to challenge and communicate effectively with management • The quality of the final report • The FRC’s Audit Quality Review report relating to KPMG During the financial year, I attended regular meetings with KPMG’s engagement partner without management being present. This provided the opportunity for open dialogue. The engagement partner demonstrated her understanding of the Group’s business risks and the consequential impact on the Financial Statements. Feedback on the conduct of the audit from the engagement partner’s perspective is used to determine if any challenges in the prior year audit would be sufficiently addressed in the next audit cycle. The Group’s current auditor, KPMG LLP, has been in place since 1 November 2013 with a competitive audit tender process having last been undertaken in November 2011. Frances Simpson has replaced Mick Davies as KPMG’s engagement partner for the year ended 31 May 2021. The lead audit partner rotates at least every five years to ensure independence. The Group will continue to keep this position under review during the new financial year. The Group intends to remain in full compliance with the requirement to carry out a formal tender at least once every ten years; therefore, a formal tender is expected to be undertaken before November 2023. Therefore, having fully considered the effectiveness, independence and objectivity of the external auditor and the reports it has produced in the current financial year, the Committee has concluded that it is appropriate to recommend to the Board the reappointment of KPMG LLP as the Group’s external auditor for the next financial year.
NCC Group plc — Annual report and accounts for the year ended 31 May 2021
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