Committee activities

During the year, the Audit Committee monitored and reviewed the standards of risk management and internal control over financial reporting, including the processes and procedures for ensuring that material business risks, including risks relating to IT security, fraud and related matters, are properly identified and managed, the effectiveness of internal control, financial reporting, accounting policies and procedures, and BT’s statements on internal controls before they were agreed by the Board for the Annual Report.
     It also reviewed the internal audit function and its relationship with the external auditors, including internal audit’s plans and performance.
     It reviewed the arrangements for dealing, in confidence, with complaints from employees and others about accounting or financial management impropriety, fraud, poor business practices and other matters, ensuring that arrangements are in place for the proportionate and independent investigation and appropriate follow up action.
     At each of its meetings, it reviewed with the group chief internal auditor and appropriate executives the implementation and effectiveness of key operational and functional change and remedial programmes including major contracts and IT programmes. The Committee also set aside time at every meeting to seek the views of the internal and external auditors in the absence of executives.
     In addition to carrying out those regular tasks described above under the Committee’s terms of reference, the Committee also carried out its annual consideration of the group’s risk register process, and reviewed BT’s system of internal control, its accounting systems, IT security and fraud and related matters.
     Additionally, the Committee has reviewed at each of its meetings during the 2008 financial year the steps being taken within the group with regard to the application of the Sarbanes-Oxley Act dealing with internal control over financial reporting.
     An independent review of Committee processes, conducted by Egon Zehnder, assessed performance and processes. This formed part of the annual Board and Committee evaluation. Committee members, and those others consulted, regard the Committee as effective on both behaviours and processes. There is a similar view too of the external audit process, which is regarded as effective, following an external evaluation by questionnaire. The Committee also reviewed the experience, skills and succession planning within the group’s finance function.
     The Group Finance Director, the Secretary, the chief internal auditor and the external auditors attend the Committee’s meetings. The Committee met four times during the 2008 financial year. The papers and minutes of Audit Committee meetings are sent to directors who are not members of the Committee.

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