Section image

Seven Suckers

Cherries
oil on canvas
22 x 20 in
1981

Penny Machines
oil on canvas
23¾ x 29¾ in
1961

Stack of Books
oil on canvas
30 x 24 in
n.d.

Seven Suckers
oil on canvas
19 x 23 in
1970

Twin Jackpots
oil on canvas
30 x 46 in
1962

Ties
oil on canvas
20 x 26 in
1980

Cake Slices
oil on canvas
20 x 16 in
n.d.

Review of the Audit Committee

Report by Paul Spencer
Chairman of the Audit Committee

Dear share owner

During 2009, Tim Shriver, Jeffrey Rosen and Colin Day were my colleagues on the committee.

We held eight meetings during the year, which were also attended (by invitation for all or part of any meeting) by the external auditors, the Company’s chairman, the Group finance director, the senior independent director, the director of internal audit, the Group chief counsel, deputy Group chief counsel and the Company Secretary. Preparatory meetings were also held with the internal and external auditors as well as members of the Company’s senior management including the heads of the Tax, Treasury, Legal and Group Reporting teams. The committee received presentations from the heads of Tax, Mergers & Acquisitions, IT and Corporate Responsibility. The committee also received reports from the Disclosure Committee in relation to the Disclosure Committee’s review and work on financial reports. The Board received regular reports on all matters of particular significance arising at the committee meetings.

The committee’s terms of reference, which are reviewed with the Board annually and most recently in February 2010, are available for inspection on the Company’s website at www.wpp.com and are on display prior to and at all general meetings of the Company.

During the year, the committee and its members were formally assessed by the chairman of the Company for their technical suitability to be members of the committee and also for the committee’s overall effectiveness. The Board has designated me as the committee’s financial expert for Sarbanes-Oxley Act (SOX) purposes and as having recent and relevant financial experience for the purposes of the Combined Code.

The committee has once again overseen the progress towards compliance with Section 404 of SOX for 2009, through regular status reports submitted by the internal and external auditors.

The committee received and reviewed regular reports on both our Right to Speak helpline, which is made available to our people to enable them to communicate confidentially on matters of concern and the actions taken in response to those calls.

The committee has established a policy regarding non-audit services that may be provided by the external auditors, which prohibits certain categories of work in line with relevant guidance on independence, such as ethical standards issued by the Auditing Practices Board and SOX. Other categories of work may be provided by the auditors if it is appropriate for them to do so. The provision of such services and associated fees are pre-approved by the committee, either as individual assignments or as aggregate amounts for specified categories of services. All fees are summarised periodically for the committee to assess the aggregate value of non-audit fees against audit fees. The level of fees for 2009 is shown in note 3.

In line with the committee’s responsibility to review and appoint the external auditors and approve their remuneration and terms of engagement, in 2009 the committee assessed whether to tender the external audit.

Having monitored Deloitte’s independence, objectivity and performance in 2009 as in prior years since Deloitte’s original appointment in 2002, with reference to a detailed assessment prepared by the director of internal audit and frequent reports during the year from Deloitte covering, inter alia, their team and required audit partner rotation plans, the overall audit strategy and the progress and results of the audit, the committee decided it was in the Group’s and share owners’ interests not to tender the external audit in 2010 and recommends the reappointment of Deloitte.

Other work carried out by the committee in 2009 included:

  • monitoring the integrity of the Company’s financial statements and reviewing significant financial reporting judgements;
  • reviewing internal financial control and internal audit activities;
  • assisting the Board in meeting its responsibilities in respect of reviewing and reporting on the systems and key elements of risk management as they affect the Group;
  • reviewing the Group Treasury policy with particular focus on debtors, funding and the continued ability of the Group to adopt the going concern basis in preparing financial statements;
  • reviewing reports on any material litigation involving Group companies;
  • reviewing the Group’s mergers and acquisitions strategy and the debt financing by the Group;
  • reviewing the Group’s Code of Conduct and supporting training programs;
  • reviewing the Group’s tax strategy;
  • reviewing the Group’s IT functions and strategy;
  • monitoring the accounting and legal reporting requirements, including all relevant regulations of the UK Listing Authority, the SEC and NASDAQ and the Jersey Financial Services Commission with which the Company must comply; and
  • in conjunction with Paul Richardson, the director responsible for corporate responsibility in 2009, ensuring systems are in place to monitor social, environmental and ethical issues which may affect the Group (other than issues which fall within the remit of the Compensation Committee).

I would like to thank my colleagues on the committee, the head office executives and the external advisors for their help in another challenging year.

 

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