Audit and Risk Committee

In accordance with the 2018 Code, the Board acknowledges its overall responsibility to shareholders to ensure that an adequate system of risk management and internal control is in place and for reviewing the effectiveness of this system. Such a system can only be designed to mitigate, rather than eliminate, the risk of failure to achieve business objectives, and can therefore only provide reasonable, and not absolute, assurance against material misstatement or loss. This is essential for reliable financial reporting and also for the effective management of the Group.

The internal control and risk management process for financial reporting processes is documented within the Essentra Accounting Manual (the “Manual”) that is updated on a regular basis. The Manual sets out the procedures and processes established for internal and external financial reporting and incorporates accounting policies that are adopted by the Company, as well as processes and controls relating to tax and treasury matters. The Manual sets out clear processes that cover, amongst other matters, segregation of duties, reporting responsibilities and review and approval requirements. The Manual prohibits management overrides and the processes set out within the Manual are also reflected within financial reporting systems and the framework for financial controls within the Group. A Delegation of Authority is in place, that is also reviewed and updated on a regular basis, that identifies approval processes for different matters. The Manual is applied across the entire Group and supported by twice yearly confirmations from divisional management in relation to adherence to the Group accounting policies.

Further details of the Company’s risk management system and internal controls can be found on pages 45 to 49 and 110 of the Annual Report.

The following enables the Board to review the effectiveness of the system of internal control and the financial reporting processes:

• the ARC meets regularly and reports to the Board, no less frequently than at every Board meeting following an ARC meeting
• the terms of reference provide a framework for the ARC to review and oversee the quality, integrity, appropriateness and effectiveness of the Group’s internal control framework
• the Board has met with divisional Managing Directors as has the ARC, who have discussed with them the internal control environment at local sites
• every month, each division submits detailed operating and financial reports covering all aspects of performance. These are reviewed by the Chief Financial Officer and the Group’s central Finance function, and summary reports are communicated to the GMC and the Board
• certificates are required from the businesses to confirm compliance with the Group’s policies (including financial) and procedures at both the half year and year end

Audit and Risk Committee Terms of Reference PDF 0.2MB