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... and the Board as Chairman and Chief Executive. The Board recognises that this is to address current business needs and has balanced the power by: Appointing Roger Holmes to the Board as Managing Director of UK Retail; Appointing two new non-executive directors, Tony Ball and Kevin Lomax; Having a majority of non-executive directors on the Board, with a wide range of experience and expertise, who bring an independent judgement on issues of strategy, performance and resources; Retaining 100 % non-executive membership of the principal Corporate Governance Committees (Audit, Remuneration and Nomination). (Note: One of the most obvious threats to good governance is the concentration of power in the hands of a single dominant executive. The Committee's recommendation that, in principle, the roles of chairman and chief executive should be split remains but, where the roles are combined, the Committee now recommends that there should be a strong and independent element on the board with a recognised senior member. This represents a dilution from the recommendation in the earlier draft which too closely aligned non-executive directors with the interests of shareholders. Even though Marks & Spencer has one person working as Chairman and Chief Executive, they are still in compliance with the Code by appointing the above members and non-executives and splitting the power) As the Senior Independent Director retired, the non-executive directors nominated Brian Baldock for this position.
Sir David Staff is not considered independent for the purposes of the Combined Code because of his previously held executive position in the Group. (Note: non-executives should not be elected automatically but according to the board decision) All directors have access to the advice and services of the Company Secretary (Note: as recommended by the Code), Graham Oakley, who ensures that the Board, which meets at least eight times per year, receives appropriate and timely information for its decision making, that Board procedures are followed and that statutory and regulatory requirements are met. He also assists the Chairman in ensuring that all directors are properly briefed on issues arising at Board meetings. Directors receive appropriate induction training when they join the Group and coaching to develop individual skills as required. There is an established procedure whereby any director, wishing to do so in the furtherance of his or her duties, may take independent professional advice at the Group s expense (Note: as recommended by the Code).
Under the Company's Articles of Association, the nearest number to but not exceeding one third of the Board shall retire each year by rotation. The Board has resolved that all directors are required to offer themselves for re-election at least every three years and the Articles will be amended to reflect this practice when they are next revised. Committees The Board has delegated certain responsibilities to Board Committees, which operate within defined terms of reference, reporting regularly to the Board and include: Audit Committee: assists the Board in fulfilling its overview responsibilities, primarily reviewing the reporting of financial and non-financial information to shareholders, the systems of internal control and risk management, and the audit process. It comprises all the non-executive directors and also keeps under review the independence and objectivity of the external auditors. Remuneration Committee: ensures the executive directors and senior management are appropriately rewarded.
It comprises all the non-executive directors. (Note: All the remuneration data are published in the Annual Report as recommended by the Code) Nomination Committee: keeps under review the Board structure, size and composition; selects and proposes to the Board suitable candidates for appointment as directors of the Group. It comprises all the non-executive directors. Corporate Social Responsibility Committee: provides the Board with an overview of the social and ethical impact of the Group s activities including community involvement, environmental management and ethical trading. It comprises two executive directors, one non-executive director and three divisional directors. Evaluation of the Compliance According too my opinion, the company complies with the requirements of the Code of Best Practice. The directors confirm that for the year ended 31 March 2001 the Group complied with all the Code provisions and also the auditors did not comment on non-compliance of the Company, therefore I find the Company in full compliance with the Code of Best Practice.
The Internal Audit In Marks & Spencer the overall responsibility for the internal control belongs to The Board. This includes reviewing financial, operational and compliance controls and risk management procedures. The role of executive management is to implement the Boards policies on risk and control and present assurance on compliance with these policies. Further independent assurance of quality control is provided by an internal audit function, which operates across the Company.
All employees are accountable for operating within these policies. Because of the limitations that are inherent in any system of internal control, this system is designed to manage, rather than eliminate, the risk of failure to achieve corporate objectives. Accordingly, it can only provide reasonable but not absolute assurance against material misstatement or loss. The Board has put in place an organizational structure with formally defined lines of responsibility and delegation of authority. There are also established procedures for planning, capital expenditure, information and reporting systems, and for monitoring the companys businesses and their performances. The treasury policies are regularly reviewed by the Treasury Committee and any changes are approved by the Board.
The Corporate Social Responsibility ('CSR') Committee co-ordinates the Group's CSR strategy including community involvement, environmental management, ethical trading, health and safety and employment policy. Any significant findings or identified risks are closely examined so that appropriate action can be taken. The work of the internal audit department is focused on areas of priority as identified by risk analysis and in accordance with an annual audit plan approved each year by the Audit Committee and by the Board. The Board receives a full report from the Chief Internal Auditor each year on the department's work and findings and regular interim updates on specific issues.
One of main theme of the Code is a system of checks and balances intended to safeguard against an unhealthy concentration of power in the hands of few people. This is primarily to be achieved by increasing the role of non-executive directors. Boards now need a minimum of three non-executive directors, the majority of whom must be independent (their only connection with the company being their fees), to comply with the Code's requirements. The Code emphasizes the collective responsibility of the board for governance.
Once a system of internal controls is in place and the company has published statements of compliance it will be more difficult for an executive or group within the board either to abuse their position or to reverse the move towards good corporate governance. The burden for ensuring that internal controls are effective, through their presence on the audit sub-committee and their responsibility (as members of the board) for the directors' report that the business is a going concern, will remain with non-executive directors long after the good times have returned and interest in corporate governance has become less fashionable. The External Audit The external auditors are engaged to express an opinion on the financial statements. They review and test the systems of internal financial control and the data contained in the financial statements to the extent necessary to express their audit opinion. They discuss with management the reporting of operational results and the financial condition of the Group and present their findings to the Audit Committee. If they find any reason or way the company is not complying with the Code, they are obliged to report on it.
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Research essay sample on Corporate Social Responsibility Internal Audit
