Annual Report and Accounts 2016


John Lewis Partnership plc


85


Each of the five firms participated in a series of management meetings to gain an understanding of the Partnership, key accounting issues and key processes. Relevant documentation was also made available to the audit firms who were asked to submit a written response to the request for proposal.


The sub-committee and members of management reviewed the written proposals and met with each of the firms to discuss their proposal. These meetings included presentations and extensive questions and answer sessions with the audit firms. Each firm’s written and verbal responses were assessed against the key assessment criteria and a shortlist of two audit firms was selected.


The two shortlisted audit firms had a further meeting with the sub-committee and members of management on an agenda that was set by the sub-committee. The two shortlisted firms also met with the Chairman of the Partnership. After these meetings, the sub-committee recommended to the Committee that KPMG were best placed to deliver a high quality and insightful audit with appropriate retail experience.


As part of preparing to deliver the 2016/17 audit, KPMG will go through an induction process to enhance their understanding of the Partnership, our operations and processes.


The Committee thanked PricewaterhouseCoopers for their strong contribution as the Partnership’s auditors over many years.


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 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 whole Committee. Details of the amounts paid to the external auditors are given in note 2.4 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


In line with the Code, the auditors are prohibited from supplying most categories of non-audit services.


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.


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


Induction programme organised


Audit tender process


Sub-committee formed to run tender process


Request for proposal issued including key assessment criteria


Management meetings held and documentation made available


Written proposals received and reviewed


Face-to-face presentations and extensive Q and A


Sub-committee assessment made against written and verbal responses


Two shortlisted firms invited to attend further meetings with management and also the Chairman


Final candidate selected and recommended to the Committee


Committee recommended that KPMG be appointed for 2016/17


It’s Your Voice


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