John Lewis Partnership plc annual report and accounts 2013

Audit and Risk Committee Report

 Composition 

David Anderson was appointed as Committee Chairman on 1 August 2012, following Jeff Hewitt’s retirement on 31 July 2012 and has been a member of the Committee throughout the year. The Committee also comprises David Barclay, Jane Burgess, Margaret Ewing, Baroness Hogg, Kevin Payne and Dan Smith.

The elected directors on the Committee are chosen by the elected directors of the Partnership Board in consultation with the Chairman. Johnny Aisher and Simon Fowler served as members until May 2012 and Kevin Payne and Dan Smith joined the Committee in May 2012.

The Committee’s terms of reference require the Partners’ Counsellor to be a member of the Committee. The change in Partners’ Counsellor during the year, as noted on page 33, meant that Patrick Lewis resigned as a member of the Committee and was succeeded by Jane Burgess.

Following Jeff Hewitt’s retirement as Chairman and member of the Committee on 31 July 2012, there followed a period during which the Company was actively seeking to recruit a new member of the Committee with recent and relevant financial experience. Margaret Ewing joined the Committee on 27 January 2013 as an external Committee member. She is a Fellow of the Institute of Chartered Accountants England and Wales and a Fellow of The Securities Institute and has recent and relevant financial experience in compliance with Code Provision 3.1. Margaret Ewing is regarded by the Partnership Board as independent of management and free from any business or other relationship that could materially interfere with the exercise of her independent and objective judgement.

In accordance with the Code Provision C.3.1, the Committee comprises three non-executive directors, as well as an independent external member. In addition, the Committee members include three elected directors and the Partners' Counsellor, who are independent of the executive and are therefore independent for the purpose of reviewing Audit and Risk Committee matters.

Three members of the Committee, including at least one elected director and one non- executive director constitute a quorum.

An induction programme is provided for new Committee members, tailored for individual 

directors and the external member. On-going training enables all of the Committee members to carry out their duties. The induction programme covers the role of the Committee and an overview of the Partnership’s governance mechanisms, including the main business operations and financial risks, together with further training for elected directors in relation to financial reporting. Each director’s experience and qualifications are noted on page 30 to 31.

Meetings

The Committee has an agenda linked to events in the Partnership’s financial calendar. The agenda is approved by the Committee Chairman and operates in accordance with its terms of reference and a forward planner for items to be considered by the Committee. Each Committee member has the right to ask for reports on matters of interest to be added to the agenda.

The external auditors attend the meetings of the Committee, as does the Group Finance Director, the Director, Finance, the Group Financial Controller, the Head of Internal Audit and Risk Management, and other executives, as appropriate. The Chairman may ask any attendee to leave the meeting. At each meeting the Committee meets with the external auditors and the Head of Internal Audit and Risk Management, without any executive director or other executives being present.

There have been five Audit and Risk Committee meetings during the year and Directors’ attendance at those meetings is shown in the table on page 42.

Role of the Committee

The Committee operates in accordance with terms of reference that were reviewed during the year and are available at www.johnlewispartnership.co.uk.

The Committee’s principal duties are assisting the Partnership Board in the discharge of its responsibilities in respect of:

• monitoring the integrity of the Company’s financial statements and announcements relating to financial performance and reviewing significant financial reporting judgements contained in them;

• reviewing and monitoring the effectiveness of the Partnership’s financial and non-financial internal controls and risk management systems;

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