34 LV= Annual Report 2012
Financial reporting l Met privately with the external auditor PwC; and
l Reviewed the half year and year end processes l Considered and monitored the independence
and financial statements of the group, which of the external auditor including any potential
encompassed the general insurance and life conflicts of interest.
business results, including recommending the
Annual Report to the board; The committee reviewed its terms of reference
l Analysed and scrutinized the key accounting and effectiveness in 2012, as it does at least
policies, judgments and actuarial assumptions annually, and a change to take ownership of the
with management, the external auditors and financial internal model, previously held by the Risk
the actuarial function holder. The committee Committee, was recommended to the board. For
specifically reviewed the assumptions for credit 2013 a group wide project is underway to review
risk default, the risk free rate, cost inflation and document the committee governance structure,
and allocation; including the terms of reference and delegated
l Considered management’s regular reviews of the authorities. In addition, the Audit Committee is
going concern status of the group; and also actively seeking to appoint an additional
l Monitored the financial results communicated to independent non-executive director to join the
members, including the Report and Accounts. committee in 2013 to further enhance
its effectiveness.
Internal audit
l Reviewed the effectiveness and activities of The Risk Commitee
the internal audit function and ensured that it Risk Committee is made up of:
has appropriate standing within the group. This l Mark Austen (chairman)
review included the results of an internal survey, l Dennis Holt
with the committee concluding that it was a l James Dean
high performing function, while also confirming l John Edwards.
support for focus on priority issues required by Ian Reynolds also served on the Risk Committee
the regulator and in keeping pace with a fast during 2012.
growing business;
l Met privately with the internal audit director; The Risk Committee meets at least four times a year
l Ensured that significant findings and with other attendees including, but not limited to:
recommendations made by the internal auditor l the chief executive;
and management’s proposed response were l the group finance director;
received, discussed and appropriately acted l the chief risk officer;
upon; and l the internal audit director; and
l Reviewed the proposed internal audit plan for the head of compliance.
the coming year to ensure that it addressed key
areas of risk and that there was appropriate It is the chairman’s practice to meet separately
co-ordination with the external auditor. with the chief risk officer ahead of most meetings.
The principal role of the committee is to consider
External audit the risks faced by LV= and advise the board. More
l Reviewed the performance of the external specifically its main activities during 2012 included:
auditor, including the chairman meeting privately l Agreeing and monitoring risk strategy, risk
with the auditor to give feedback. The committee appetite and individual limits for specific types of
concluded that the external auditor was effective risk (e.g. financial markets risk and credit risk);
and recommended the reappointment of the l Reviewing and assessing the risk oversight
external auditor for a further one year term, provided by management in connection with
agreeing the scope of the audit fee for the current and emerging risk exposures;
forthcoming period; l Assessing the impact of management’s strategic
l Agreed guidelines and monitored the use of plans on the risk profile of the group;
the external auditor for any non-audit related l Monitoring the effectiveness of management in
work to ensure its continued independence identifying and recording the principal risks;
was not prejudiced; l Gaining assurance that an appropriate culture
l Reviewed and approved the external auditor’s in relation to the management of risk continued
proposed audit scope and approach for the to be maintained, with particular focus on
current year as set out in its 2012 audit performance measurement;
plan, in the light of the group’s present l Scrutinising the Individual Capital Assessment
circumstances and changes in regulatory (ICA) prepared by management and
and other requirements; recommending its acceptance to the board; and
l Discussed with the external auditor any audit l Receiving reports from the chief risk officer
problems encountered in the normal course of and the head of compliance on a wide range of
audit work, including any restrictions on audit issues, including regulatory change.
scope or access to information as part of ensuring
that significant findings and recommendations
made by the external auditor and management’s
proposed response were received, discussed and
appropriately acted upon;