BT is one of the world’s
leading communications services companies operating in over 170 countries. A
review of our business is given in the ‘BT in review’ section.
We are committed to
operating in accordance with best practice in business integrity,
maintaining the highest standards of financial reporting, corporate
governance and ethics. The directors consider that BT has, throughout the
year, complied with the provisions set out in Section 1 of the 2006 Combined
Code on Corporate Governance.
Board and board
It is BT’s policy that the
Board will comprise a majority of independent non-executive directors. The
roles of the Chairman and the Chief Executive are separate. The
non-executive directors provide a strong, independent element on the Board.
Non-executive directors are appointed initially for three years at the end
of which the appointment may be continued by mutual agreement. The Chairman
and the non-executive directors hold regular meetings without the executive
directors being present. The Chairman ensures that the views of the
shareholders are known to the Board and considered appropriately.
The Board’s main focus is
overall strategic direction, development and control. A formal statement of
its role is available on BT’s website. The Board normally meets nine times
The Board carries out annual
evaluations of Board and Board Committee performance and effectiveness.
To meet best corporate governance
practice, the Audit Committee, the Remuneration
Committee and the Nominating Committee have
long been an established part of BT’s system of governance. The Audit
Committee is made up entirely of independent non-executive
directors. The Board considers that members of the Committee have recent and
relevant financial experience. The Audit Committee reviews
BT’s published financial results, the Annual Report & Form 20-F and
other published information for statutory and regulatory compliance and
reports its views to the Board. It recommends the appointment, reappointment
and remuneration of the external auditors and ensures that key partners are
rotated at appropriate intervals. The Board has policies determining what
non-audit services the external auditors can provide, in order to safeguard
their independence and objectivity.
The Nominating Committee
has agreed and reviews the combination of experience, skills and
other attributes which the non-executive directors should bring to the
Board, using this evaluation to recommend any proposed changes to the Board.
The Equality of Access Board
monitors BT’s compliance with the Undertakings made to Ofcom
following Ofcom’s strategic review of telecommunications.
The Chief Executive chairs the Operating
Committee, which meets weekly.
The Board also has a Committee
for Responsible and Sustainable Business and a Pension
Scheme Performance Review Group.
The Audit Committee,
the Remuneration Committee and the Nominating
Committee, and the Equality of Access Board, have written terms
of reference, which are available on our website at www.bt.com/committees
and risk management
The Board is responsible for
the group’s systems of internal control and risk management and reviews
each year the effectiveness of those systems. These systems are designed to
manage, rather than eliminate, the risk of failure to achieve business
objectives; any system can provide only reasonable and not absolute
assurance against material misstatement or loss.
BT has processes for
identifying, evaluating and managing the significant risks faced by the
group. These processes have been in place for the whole of the 2008
financial year and have continued up to the date on which this document was
BT’s management is
responsible for establishing and maintaining adequate internal control over
financial reporting for the group. Management has concluded that at 31 March
2008, BT’s internal control over financial reporting was effective.