Governance and management

Leadership

High on every partner’s agenda is a commitment to a strong ethical culture and the highest level of quality in everything we do. In both words and deeds, our partner group seeks to set the tone for the business and inspire our people to commit to the highest standards of behaviour.

We are committed to the highest standards of governance. We continually monitor developments in corporate governance so that we can benchmark our performance against them.

We adopt best practice in a way that is relevant to our activities, to the risk environment that we face and to the needs of our clients and people.

Management of our business

As an LLP, the firm does not have a traditional board structure. Instead, it is owned by its members, whose rights and obligations are set out in the firm’s constitution. The members vote to confirm the appointment of a National Managing Partner (Chief Executive Officer/CEO) in accordance with the constitution, which gives the CEO the authority to exercise strong and effective leadership of the business. This authority is underpinned by robust independent oversight on behalf of the members by the firm’s Partnership Committee.

The firm’s constitution sets out the rights and obligations of members and our governance framework, together with the key responsibilities for the management of our business.

The management of the firm is primarily the responsibility of the CEO, Scott Barnes, who is responsible for:

• ensuring that the firm operates within the LLP’s statement of principles formulating the firm’s strategy and policies
• the profitable management of the firm in a manner consistent with the interests of clients, our people and the firm
• the appointment, appraisal and (where necessary) removal of partners, and determining their remuneration.

Partnership Committee

The main role of the Partnership Committee is to monitor the CEO’s stewardship of the business. The Partnership Committee’s powers include the oversight, appointment, removal and remuneration of the National Managing Partner CEO. It is also responsible for the LLP’s statement of principles, which is the firm’s highest level statement of objectives, values and philosophy and is binding on the CEO. The statement of principles is approved by the members.

The Partnership Committee presently comprises 11 members elected by the members of the LLP, together with two additional ex officio members, the CE and one other member of the NLB. Elected Partnership Committee members are appointed for a period of three years and may serve for two further consecutive terms if they are re-elected. The Partnership Committee elects its own chairman whose powers and responsibilities are set out in the firm’s membership agreement. The current Chairman is Steve Maslin.

Assurance management

The Head of Assurance, Phil Crooks, has responsibility for audit quality and for setting the assurance strategy. The Assurance Strategic Management Group (SMG) was established by Phil in October 2008 to oversee the implementation of the assurance strategy and the members for the period under review include: Phil Crooks, Malcolm Gomersall, Andrew Howie, Charles Hutton-Potts (Audit Partners); Josephine Jackson (National Audit Technical), Mike Redfern (National Audit Methodology Partner) and Peter Rowley (National Director – Ethics and Assurance Quality Monitoring).

Risk management

At Grant Thornton, we recognise that risk is an integral part of our business activities – so we are committed to the active management of risk to ensure that our reputation and our business are protected from adverse commercial, legal or regulatory outcomes. While the CEO has overall responsibility for effective risk management, John Mew – as the NLB member responsible for Practice Protection and Special Projects – has specific responsibility for ensuring our risk management strategy, culture and supporting systems drive and underpin our strategic development. The key methods by which the firm manages these risks are set out below. Compliance with the corresponding procedures is also checked as part of the national internal audit reviews.

Risk Assurance Subcommittee

The Risk Assurance Subcommittee, which is a subcommittee of the Partnership Committee, comprises five elected members of the Partnership Committee, including its Chairman, Tim Lincoln, and Scott Barnes CEO. The subcommittee’s principal responsibility is to monitor the implementation and effectiveness of the firm’s risk management policies and strategy across all areas of the business and specifically to:

• monitor and review the effectiveness of the firm’s internal audit function and address any actions identified
• monitor the firm’s relationship with its external auditors. This includes overseeing the appointment process, approving the fees and assessing independence as well as receiving reports
• review and approve the annual financial statements before submission to the partners, and, in particular, critical accounting policies and practices and decisions requiring a major element of judgment.

The Risk Assurance Subcommittee usually meets four times per year. Additional attendees include, the Head of Business Risk and Quality Assurance, the Finance Partner, and the partner with responsibility for Practice Protection. The external auditors also attend three of the meetings to discuss the audit of the accounts and related matters.

Internal audit

Internal audit is an integral part of the firm’s risk management processes. It provides high-level assurances to the CEO and the Partnership Committee (through the Risk Assurance Subcommittee) that risks are being identified, understood and managed effectively. Each area of the business is subject to an internal audit review over a planned three-year cycle. This review, led by our Head of Business Risk and Quality Assurance, considers the effectiveness of the risk management framework within each business area and its compliance with the firm’s mandatory risk management policies and procedures.

Engagement with listed companies and their shareholders

It is intended that the INEs will have an open dialogue with institutional investors on issues on firm wide issues, though they will not discuss individual client matters. We have commenced a dialogue with ABI on how the institutional investor community will find it most helpful for this dialogue to occur and currently await the ABI's thoughts on this.