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106


John Lewis Partnership plc Annual Report and Accounts 2015 Audit and Risk Committee report (continued)


External audit activities


PricewaterhouseCoopers LLP are the Partnership’s auditors and also provide the Committee with relevant reports, reviews, information and advice throughout the year, as set out in their engagement letter.


Evaluation and re-appointment of auditors


The Committee is responsible for making a recommendation to the Partnership Board, relating to the appointment, reappointment or removal of the external auditors. During the year, the Committee conducted an evaluation of the auditors’ performance. Members of the Committee and senior finance executives within the Partnership were provided with an opportunity, through an evaluation questionnaire, to comment on the effectiveness of the external auditors and the audit process. The outcome of the evaluation was reviewed by the Committee which concluded the effectiveness of the external auditors and the audit process were satisfactory.


Audit firm tendering


It is the Committee’s policy to ensure that there is audit partner rotation every five years to safeguard the external auditor’s objectivity and independence. The year ended 31 January 2015 is the fourth year of the current audit engagement partner’s appointment.


In 2012/13, the Committee adopted a policy in line with the Code relating to tendering the external audit contract at least every ten years.


The Committee will continue to monitor the implementation in the UK of the legislative changes proposed by the European Union and ongoing review by the UK Competition Commission on audit tendering and rotation.


The Partnership has not undertaken an audit tender in the last 20 years but has initiated a tender process for the 2016/17 financial year.


Auditors’ independence and objectivity and non-audit services


The Committee continually reviews the nature and extent of non-audit services provided to the Partnership by the external auditors and receives confirmation from them, at least annually, that in their professional judgement, they are independent with respect to the audit.


The Committee recognises that the independence of the external auditors is a fundamental safeguard for the interests of the Partnership’s co-owners. The Partnership has a non-audit services policy that allows the external auditor to be appointed to provide non-audit services in exceptional circumstances. The policy is summarised below.


Any proposal to engage the external auditor to perform non-audit services must be referred to the Acting Group Finance Director for approval. Where fees exceed £100,000, the proposal must be approved by the Chair of the Committee and where fees exceed £250,000, the proposal must be approved by the Committee. Details of the amounts paid to the external auditors are given in note 7 to the consolidated financial statements. The Committee will review this policy in the light of the legislative changes proposed by the European Union.


Having undertaken a review of the non-audit services provided during the year, at both the half year and year end, the Committee is satisfied that these services did not prejudice the external auditors’ independence.


Summary of non-audit services policy


a The auditors are prohibited from supplying most categories of non-audit services.


a Prohibited services include bookkeeping or other services related to the accounting records or financial statements, internal audit services, taxation services and any other work that could compromise the independence of the external auditor or is prohibited by UK regulator’s ethical guidance.


a There is a specific approval process for any work to be undertaken by the external auditor.


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