108
Audit Committee report
deviations from the plan wer
e communicated
and appropriate.
It was additionally noted that
any COVID-19 r
elated changes were handled
eciently and eectively
. No necessary
improvements wer
e noted with regard to the
external auditor's judgment and
communication,
particularly as to technical
issues, estimates,
discussing potential issues
and management letter content.
Meeting attendance by the external auditor
– KPMG attend all scheduled Committee
meetings and, during the y
ear
, r
eported to the
Committee on the components of the audit plan,
additional or forthcoming requir
ements or
regulatory changes,
audit findings and interim
audit findings.
These reports,
the private
sessions held with the Committee, and the level
of challenge applied by the external auditor to
management, ar
e opportunities for KPMG to
demonstrate and articulate (and for the
Committee to assess and challenge, as
requir
ed) the quality of the audit work.
FRC Audit Quality Inspection Report (A
QR)
June 2020, the FRC published its A
QR for KPMG,
which was focused on the key ar
eas requiring
action by KPMG to safeguard and enhance audit
quality
. This pr
ovided the Committee with an
external perspective on the quality of audits by
KPMG,
and the Committee noted the FRC’s
comments that there had been consider
able
focus on audit quality at the top of the firm and
a number of improvements to the audit pr
actice
as a result.
However
, the r
eport also observed
that further increased consistency of high-
quality audits was requir
ed. In r
esponse to the
findings, KPMG subsequently updated the
Committee on the investment being made in
audit quality
, talent r
etention, diversity
,
and the
ongoing monitoring that was in place.
T
echnology and processes
– KPMG employ a
‘hub’ approach in or
der to perform
standardised testing for each loc
al market.
This
approach includes the use of data analytics
techniques, which supplies audit evidence over
significant quantities of data,
and this provides
a perspective on audit quality to the Committee.
Independence is an important element of the
external audit.
T
o ensure auditor objectivity and
independence, the Committee r
eviews potential
threats to independence and the associated
safeguards during the year
.
The safeguards that
KPMG had in place during the year to maintain
independence included annual confirmation by
KPMG sta of compliance with ethics and
independence policies and procedur
es. KPMG
also had in place underlying safeguards to
maintain independence by: instilling
professional v
alues; communications;
international accountability; risk management,
and independent reviews.
They also ensured
that there was appr
opriate pre-appr
oval for
non-audit services, which ar
e pro
vided only if
permissible under relevant ethic
al standards.
The Committee concluded that the external
auditor had maintained its independence
Non-audit services
KPMG provides other services to Experian.
T
o ensure auditor objectivity and independence,
we have a policy relating to pr
oviding such
services.
The policy includes financial limits
above which any pr
oposed non-audit services
must be pre-appr
oved,
depending on the
expenditure pr
oposed.
The Committee receives
half-yearly r
eports providing details of
non-audit assignments carried out by the
external auditor
, together with the r
elated fees.
Under the policy
, non-audit fees paid to KPMG
are c
apped at 30% of the fees for audit services,
except in exceptional circumstances.
Pre-appr
oval by the Audit Committee or
Audit Committee Chairman is requir
ed in
that situation. An analy
sis of fees paid to the
external auditor for the year ended 31 Mar
ch
2021 is set out in note 13 to the Group financial
statements.
Background
The Audit Committee annually review
s the
policy on the provision of non-audit services
and the recruitment of former auditor
employees,
and the latest review took place in
March 2021.
The policy
,
which is set out below
,
recognises the importance of the external
auditor’s independence and objectivity
.
Policy
The external auditor is prohibited fr
om
providing any services other than those
directly associated with the audit or r
equired
by legislation.
These are limited to:
Reporting requir
ed by a competent
authority or regulator under UK law or
–
Reporting to a regulator on client assets;
–
In relation to entities regulated under the
UK Financial Services and Markets Act
2000 (FSMA), r
eports under s166 and
–
Reporting to a regulator on regulatory
financial statements;
–
Reporting on a Solvency and Financial
Condition Report under EU Solvency II
Directive 2009
Reporting on internal financial controls
Reports requir
ed by or supplied to
com
petent
authorities/r
egulators
supervising the audited
en
tity
,
wher
e the
authority/regulator has either sp
ec
ifie
d t
he
auditor to provide the service or identified
to the entity that the auditor would be an
appropriate choice for service pr
ovider
Audit and other services provided as
auditor of the entity
, or as r
eporting
accountant, wher
e the services are r
equired
by law or regulation
Reviews of interim financial information;
and providing verific
ation of interim profits
Extended audit or assurance work wher
e
the work is integrated with the audit work
and is performed on the same principal
terms and conditions
Services which support the entity in
fulfilling an obligation requir
ed by law or
regulation,
where the pr
ovision of such
services is time critical and the subject
matter of the engagement is price sensitive
Reporting on government gr
ants
Reporting on covenant or loan agr
eements
which requir
e independent verification
Additional assurance work on material
included within the Annual Report
Services which have been the subject of an
application to a competent authority
.
The appointment of the external auditor for
any non-audit work up to US$50,000 must be
approved by the Global Financial Contr
oller
.
The appointment of the external auditor for
any non-audit work where the expected f
ees
are over US$50,000 and up to US$100,000
requir
es the approv
al, in adv
ance, of the Gr
oup
Chief Financial Ocer
.
Where the expected
fees are over US$100,000,
the approval of the
Chairman of the Audit Committee is requir
ed
in advance.
Where cumulative annual fees exceed the
30% annual limit, all expenditur
e must be
approved by the Chairman of the Audit
Committee (via the Global Financial
Controller),
up to 35%. Where cumulativ
e
annual fees exceed the 35% annual limit,
all expenditure must be appr
oved by the Audit
Committee. All expenditur
e is subject to a
tender process,
unless express permission is
provided by the Chairman of the Audit
Committee, the Chief Financial Ocer or the
Global Financial Controller based on the above
approv
al limits. An
y expenditure below
US$100,000 not subject to a tender will be
notified to the Chairman of the Audit
Committee.
Provision of non-audit servic
es
Continued opposite
Code principle
Audit, Risk and Internal Control