Corporate Governance - Board of Directors
The Board of IFG Group plc is committed to maintaining the highest standards of corporate governance throughout the Group and applies the principles set out in section 1 of the Combined Code on Corporate Governance (June 2008) (the “Combined Code”), which was published by the Financial Reporting Council in the UK and adopted by the Irish Stock Exchange.
The Board of Directors
The Board provides leadership and maintains effective control over the activities of the IFG Group. The Board meets on a regular basis and has a formal schedule of matters reserved to it. The Board sets the Group’s strategic aims and specifies key developments towards the strategic objectives that are to be achieved by management within an agreed budget.
The Board consists of four Executive Directors and six Non-Executive Directors (see biographical details on Directors page) and either directly or indirectly through the operation of Committees of Directors and delegated authority, bring an independent judgment on issues of strategy, resources and standards of conduct. The Board has delegated responsibility for the management of the Group to the Group Chief Executive and, through him, to executive Directors and management. The Board has also delegated some additional responsibilities to Committees established by it whose powers, obligations, and responsibilities are set out in written terms of reference.
The executive Directors have extensive experience of the financial services business and are responsible for the operational management of the Group’s businesses. This specialist knowledge is backed up by the general business skills of each of the individual Directors involved and by the broadly based skills and knowledge of each of the non-executive Directors.
The full Board meets at least bi-monthly In addition, the Board Committees established for specific purposes being Audit, Remuneration, Internal Control and Risk and Nomination meet as required.
Internal Control and management of risk
The Board has established procedures necessary to implement the requirements of the Combined Code relating to internal control as reflected in the September 1999 guidance “Internal Control : Guidance for Directors on the Combined Code” (the Turnbull Guidance) and the Revised Guidance for Directors on the Combined Code (October 2005), and the updated version of the Combined Code (June 2008).
The Board has overall responsibility for the Group’s system of internal control. The system is designed to provide reasonable assurance of the safeguarding of assets and of shareholders’ investment and the reliability of financial information. Any such system can, however, provide only reasonable and not absolute assurance of these matters.
The Group adopts a prudent risk strategy weighing opportunities for potential gain against threats to its overall business objectives and profitability. The senior management of the Group addresses the opportunities and uncertainties relating to the business activities of the Group. The risk management process consists of the identification, evaluation and control of risks, which could threaten the achievement of the Group’s strategic, operational and financial objectives. The Group seeks to have in place the staff, processes and systems to (i) identify and understand the risks in the businesses (ii) select the appropriate risks to accept and (iii) avoid inappropriate risks.
The Group has an established system of internal control and risk management systems in relation to the Group’s financial reporting process and the Group’s process for preparation of consolidated accounts. These systems include policies and procedures to facilitate the maintenance of records that accurately and fairly reflect transactions, provide reasonable assurance that transactions are recorded as necessary to permit the preparation of financial statements in accordance with International Financial Reporting Standards (‘IFRS’) and that require reported data to be reviewed and reconciled.
The Board is responsible for the risk management framework and has delegated to the Internal Control and Risk Committee, in conjunction with the Group Chief Executive, the segmental Directors and the Head of Risk the authority to approve the risk framework of the operating subsidiaries. The Board receives, as an ongoing part of the reporting process of management information, regular updates on the key risks and issues. Within each business unit the Boards of the principal operating companies oversee the management of strategic risk and receive monthly operational and financial risk reports.
The principal components of the internal control and risk management process are:
Formal approval by the Board of matters reserved for their consideration including, inter alia, acquisitions and disposals, business strategy, treasury policies, specific risk management policies including insurance, substantial commitments including the granting of security and approval of accounts.
A detailed formal budgeting process for all Group businesses, including for capital expenditure, is undertaken annually and results in a Group budget, which is approved by the plc Board. For each business the actual performance is reported monthly to the Directors of the Group which enables progress against budget and longer term objectives to be monitored, trends to be evaluated and variances to be acted upon. Group forecasts for the year are updated regularly.
An organisational structure which defines authority limits and reporting procedures to management and the plc Board. Professional and experienced staff of the necessary calibre to fulfill their allotted responsibilities are appointed, both by recruitment and promotion.
A central risk and internal audit function which carries out internal audit activities across the Group. It operates under an internal audit charter which covers (i) the purposes and objectives of the Group’s internal audit function (ii) its authority and scope (ii) independence issues, (iv) standards of professionalism, performance monitoring, planning and reporting. The internal audit function also co-ordinates with a number of the segmental units who undertake control reviews on companies within their segments. At each meeting of the Internal Control and Risk Committee, and where appropriate to the Audit Committee, the Head of Risk submits a formal report on segmental reviews carried out in the period, including an update on progress against completion of the annual plan and a summary of the findings of the reviews undertaken.
Management control regimes have been implemented at either segmental or subsidiary company level and govern all areas of internal control and risk management. These are supplemented by appropriate Group wide control processes. Under this regime performance is reviewed periodically. Segmental and subsidiary company Boards regularly review relevant and timely financial information that is produced from the management information systems across the Group. Executive Directors regularly attend meetings of subsidiary companies at all Group locations and a review of procedures and practices takes place at these locations or at the Group centre.
The Group does not maintain common detailed accounting or operations manuals because of the diverse operations carried out by its segments, through guidance is issued from the Group centre. Where applicable, segments maintain their own operational manuals. Regular control review work is undertaken directly by the segments as part of their control process.
Group finance department manages the financial reporting processes to ensure the information which enables the Board to discharge its responsibilities, including the production of half year and annual accounts, is provided on a timely basis. It is supported by a network of finance managers throughout the Group who have the responsibility and accountability to provide information in keeping with the Group policies, procedures and internal best practice. Throughout the year the Group produces ‘latest estimates’ to predict the likely year end position. The latest estimates are compared with the annual budget and enables the Board to check performance and, where appropriate, to challenge sections of the business if actual or anticipated performance varies significantly from the annual budget.