Audit and Risk Committee

In accordance with the 2018 Code, the Board acknowledges its overall responsibility to shareholders to ensure that an adequate system of risk management and internal control is in place and for reviewing the effectiveness of this system. Such a system can only be designed to mitigate, rather than eliminate, the risk of failure to achieve business objectives, and can therefore only provide reasonable, and not absolute, assurance against material misstatement or loss. This is essential for reliable financial reporting and also for the effective management of the Group.

The internal control and risk management process for financial reporting processes is documented within the Essentra Accounting Manual (the “Manual”) that is updated as required. The Manual sets out the procedures and processes established for internal and external financial reporting and incorporates accounting policies that are adopted by the Company, as well as processes and controls relating to tax and treasury matters. The Manual sets out clear processes that cover, amongst other matters, segregation of duties, reporting responsibilities and review and approval requirements. The Manual prohibits management overrides and the processes set out within the Manual are also reflected within financial reporting systems and the framework for financial controls within the Group.

A Delegation of Authority is in place, that is also reviewed and updated on a regular basis, that identifies approval processes for different matters. The Manual is applied across the entire Group and supported by twice-yearly confirmations from management in relation to adherence to the Group accounting policies.

Further details on the Company’s risk management system and internal controls can be found on page 87 of the 2022 Annual Report.

The following enables the Board to review the effectiveness of the system of internal control and the financial reporting processes:

• the ARC meets regularly and reports to the Board, no less frequently than at every Board meeting following an ARC meeting
• the terms of reference provide a framework for the ARC to review and oversee the quality, integrity, appropriateness and effectiveness of the Group’s internal control framework
• the Board received updates from each business whilst they remained part of the Essentra Group, and subsequent to that, the MD of each of the businesses, alongside their Divisional Compliance Officer, provided updates on controls that were reported to the ARC
• during the period that was relevant for each business, every month, the three businesses submitted detailed operating and financial reports covering all aspects of performance. These were reviewed by the Chief Financial Officer and the Group’s central Finance function, and summary reports are communicated to the Chief Executive, GMC/GEC and the Board
• certificates were required from each of the businesses (for the period during which they were part of the Essentra Group) to confirm compliance with the Group’s policies (including financial) and procedures at both the Half Year and Full Year.

Audit and Risk Committee Terms of Reference PDF 0.2MB