MCG business
Audit and Risk Committee

Audit and Risk Committee

The Audit and Risk Committee oversees the Group's financial reporting and internal controls and provides the link between the Board and the external auditors.


The current membership of the Committee is:

Mr Julian Waldron (Chairman, member since 2008)

Ms Fiona Czerniawska (Member since 10 March 2017)


The UK Corporate Governance Code (the "Code") recommends that audit committees should comprise at least two members and that all members should be independent non-executive directors. The Committee comprises two independent non-executive directors.

The Code provides that at least one member of the Committee should have recent and relevant financial experience. Mr Waldron is the chief operating officer of a US/French listed group and the former chief financial officer of a French listed company and is considered to have such experience.

Role of the Committee

The role of the Committee is, in summary:

to monitor the integrity of the financial statements of the Company and any formal announcements relating to the Company's financial performance, reviewing significant financial reporting judgements contained in them;

to assist the Board in ensuring the annual report and accounts, taken as a whole, is fair balanced and understandable and provides the information necessary for shareholders to assess the Company's performance, business model and strategy;

to review the Group's internal financial controls and to review the Group's internal control and risk management systems;

to monitor and review the need for an internal audit function;

to make recommendations to the Board in relation to the appointment, reappointment and removal of the external auditor and to approve the remuneration and terms of engagement of the external auditor;

to review and monitor the external auditor's independence and objectivity and the effectiveness of the audit process; and

to develop and implement policy on the engagement of the external auditor to supply non-audit services, and to report to the Board, identifying any matters in respect of which it considers that action or improvement is needed and recommending the steps to be taken.

The Committee's terms of reference are reviewed each year and were last updated in 2017 to conform with current best practice and the revised Code and guidance from the Financial Reporting Council on audit committees. A pdf copy of the terms of reference is attached below.

Operation of the Committee

The Committee works with a structured annual agenda of matters tied in to the key events in the Company's financial reporting cycle, together with various standing items the Committee is required to consider.

The Chairman and Chief Executive, Finance Director, Group Head of Finance, other financial managers and external auditors are invited to attend Audit Committee meetings. The external auditor and the Committee meet privately at least once a year.

The Chairman of the Committee reports to the Board on the Committee's activities after each meeting, identifying relevant matters requiring communication to the Board and recommendations on the steps to be taken. The performance of the Committee is considered as part of the Board performance evaluation process. In addition, each year the Committee members complete a detailed self-assessment as an aid to maintaining the Committee's effectiveness.

The Committee discharges its responsibilities as follows:

Financial statements

The Committee reviews the interim financial statements and the annual report and accounts. Following discussion with both management and the external auditor, the Committee determines and takes steps to ensure the key risks of misstatement are addressed.

Presentations are made by management and the external auditor about the key technical and judgemental matters relevant to the financial statements. The Committee seeks to satisfy itself that it is appropriate for the Board to approve the financial statements.

Internal financial control and risk management systems

The Committee reviews the register of Group risks prepared by management and recommendations made by the external auditor. The Committee seeks to satisfy itself that it is appropriate for the Board to make the statements regarding internal controls included in the Corporate Governance Statement.

Internal audit function

The Committee has determined that, given the current size and nature of the Group's operations, a separate internal audit function is no longer required. This decision will be regularly reviewed in the future.

External auditor

The Committee oversees the relationship with the external auditor and ensures that the external auditor continues to be independent, objective and effective in its work, as well as considering the reappointment of the auditor each year in light of this.


The Committee undertakes a structured annual review of the independence and objectivity of the external auditor and, with the external auditor, has in place procedures to ensure this is not compromised. The procedures include:

  • Audit partner rotation - The Committee consider this is a key control in ensuring continued independence and objectivity by reducing the risk of familiarity.  The current audit partner was appointed with effect from the audit of the 2012 annual report and accounts and will rotate off the audit following the audit of the 2016 annual report and accounts.
  • Restrictions on the nature and amount of non-audit work - In accordance with the Code, the Committee has established policies that the auditor shall not provide any services that would potentially result in them auditing the result of their own work or which are prohibited under the US Sarbanes Oxley Act and procedures to ensure compliance with the policies. The Committee reviews annually its policy and procedures on this area to ensure they remain appropriate in the context of regulatory changes and changes in the nature of the Group's activities. Under the procedures in force in the year, the Committee pre-approves any permitted non-audit engagements with fees of more than £25,000 or which would cause the cumulative fees of such engagements for the year to exceed £100,000. At each Committee meeting a report is presented on non-audit activities and fees payable to the external auditor in order to ensure that the non-audit work is appropriate and relationship between non-audit fees and audit fees is not inappropriate. The policies have been revised to reflect the updated FRC Guidance on Audit Committees and to take into account the FRC's revised Ethical Standard 2016 applicable to auditors
  • The relationship of the auditor with senior management - The Committee reviews the relationship to ensure it has not become compromised due to familiarity or other factors.

Audit effectiveness

The Committee reviews the external audit plan proposed by the auditor and participated in the review of the quality of the service that they provide. The Committee's consideration includes:

  • a review of the external audit plan;
  • the auditor's assessment of Group accounting and business risks;
  • the auditor's own quality control procedure;
  • the auditor's assessment of the key risks of misstatement;
  • consideration of the audit strategy and its communication;
  • whether the staffing of the external audit has continuity whilst maintaining independence; and
  • communication of the findings to the Committee and the quality and key features of its work.

Audit tendering
Deloitte LLP has been the Group's auditor since 2001 when it was appointed under a tender process. Under the transitional arrangements for mandatory audit rotation, the Company will be required to rotate the audit by the financial year ended 2024 and plans to complete a competitive tender process by this time. Notwithstanding these requirements and current plans, the Committee will continue to consider the tender of the audit annually depending on the current auditor's performance and its assessment of the current auditor's independence

There are no contractual obligations that act to restrict the Committee's choice of external auditor. The Committee considers the results of the procedures outlined above, and recommends to the Board whether the external auditor may be reappointed.

PdfAudit Committee terms of reference