99
STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS
Ferrexpo plc Annual Report & Accounts 2021
The Audit Committee and the Board
continued to review ongoing litigation
affecting the Company throughout the year
(see Note 30 Commitments, contingencies
and legal disputes to the Consolidated
Financial Statements on pages 193 to 194,
and received regular update reports and
presentations from legal counsel.
Full details of the Group’s policy on credit,
liquidity and market risks and associated
uncertainties are set out in Note 27
Financial instruments to the Consolidated
Financial Statements on pages 184 to 191.
See also the Principal Risks section of the
Strategic Report from page 56.
Internal audit
The internal audit function has a Group-
wide remit, and the Head of Internal Audit
(who has mining experience) reports directly
to the Chair of the Audit Committee and to
the CFO.
The Committee reviews at least annually the
effectiveness of the internal audit function
by assessing outcomes against plan
targets, and is satisfied, following its 2021
assessment, with the rigour of the internal
audits and with management’s response to
the audit findings and recommendations.
The resources of internal audit are also
monitored to ensure appropriate expertise
and experience. An Internal Audit plan for
2022 was approved by the Audit Committee
in December 2021.
The Internal Audit plan for 2021, approved
bythe Audit Committee, focused on the
operational risks relating to sales and
marketing, FYM Procurement process, FPM
Inventory management, Group Compliance
audit, DP-Ferrotrans and Health & Safety risk
register review. The Committee received a
report from the Head of Internal Audit twice
during the year, and reviewed the progress of
the Internal Audit plan with the external
auditors and the Head of Internal Audit. The
reports include the Head of Internal Audit’s
assessment of the operation and
effectiveness of relevant elements of the
Company’s internal control systems, and
formed part of the Committee’s ongoing
monitoring and assessment of such systems.
External audit
Auditor independence and assessment
of audit process effectiveness
The Audit Committee and the Board place
great emphasis on the independence and
objectivity of the Company’s external
auditors when performing their role in the
Company’s reporting to shareholders.
The effectiveness of the audit process and
the overall performance, independence and
objectivity of the external auditors are
reviewed annually at the end of the annual
reporting cycle by the Audit Committee,
taking into account the views of
management. This review is undertaken
through a structured questionnaire,
assessing the auditor’s performance under
various headings: the robustness of the
audit, the quality of delivery, the calibre of
the audit team and value added advice. The
results of the survey indicated that, overall,
the external auditor’s performance was
considered very good by the respondees.
Certain areas for improvement were noted
but none impacted on the effectiveness of
the audit. The outcome of the 2021 review in
respect of the 2020 Annual Report and
Accounts was discussed with the relevant
partners of MHA MacIntyre Hudson.
The MHA MacIntyre Hudson audit for the
2019 financial year was reviewed by the
FRC’s Audit Quality Review team who
issued their Inspection Report in September
2021. The Committee reviewed the key
findings of the Inspection Report and
discussed them with MHA MacIntyre
Hudson, including the steps undertaken
toaddress the findings.
The auditors also provide to the Audit
Committee information about policies and
processes for maintaining independence and
monitoring compliance with relevant current
requirements, including those regarding the
rotation of audit partners and staff, the level
of fees that the Company pays in proportion
to the overall fee income of the firm. The
Committee concluded that the auditors are
providing the required quality in relation to
the audit and that they have constructively
challenged management where appropriate.
Taking into account the review of
independence and performance of the
external auditor, the Audit Committee has
recommended to the Board the
reappointment of MHA MacIntyre Hudson.
Resolutions reappointing MHA MacIntyre
Hudson as external auditor and authorising
the Directors to set the Auditor’s
remuneration will be proposed at the
2022AGM.
The Company has complied with the
Statutory Audit Services Order issued by the
UK Competition and Markets Authority for
the financial year ended 31 December 2021.
The Committee meets at least once a year
with the external Auditors without any
representation from management
beingpresent.
Non-audit services
The Audit Committee operates policies in
respect of the provision of non-audit
services and the employment of former
employees of the auditors. These policies
ensure that the external auditors are
restricted to providing only those services
which do not compromise their
independence under applicable guidance
and the FRC’s Ethical Standards. The policy
on the provision of non-audit services
prohibits the use of the auditors for the
provision of transaction or payroll
accounting, outsourcing of internal audit
and valuation of material financial statement
amounts. Any assignment that is proposed
to be given to the auditors above a value of
US$20,000 must first be approved by the
Audit Committee (who are routinely notified
of all non-audit services).
Fees for audit-related and non-audit related
services performed by the external auditors
during 2021 are shown in Note 7 Operating
expenses to the Consolidated Financial
Statements on page 158. For 2021, MHA
MacIntyre Hudson did not perform any
non-audit services.
Financial reporting
The Board has asked the Audit Committee
to advise whether it considers the 2021
Annual Report and Accounts, taken as a
whole, to be fair, balanced and
understandable and that it provides the
information necessary for shareholders to
assess the Company’s position,
performance, business model and strategy.
In providing its advice, the Committee noted
that the factual content of the Annual Report
and Accounts has been carefully checked
internally, and that the document has been
reviewed by senior management in order to
ensure consistency and overall balance. The
Committee has also conducted its own
detailed review of the disclosures in the
Annual Report and Accounts, taking into
account its own knowledge of Ferrexpo’s
strategy and performance, the consistency
between different sections of the report, the
accessibility of the structure and narrative
of the report, and the use of key
performance indicators.
The Committee is satisfied that, taken as a
whole, the 2021 Annual Report and
Accounts is fair, balanced and
understandable and that it provides the
information necessary for shareholders to
assess the Company’s position,
performance, business model and strategy,
and has advised the Board accordingly.
The Committee has also advised the Board
on the process which has been undertaken
in the year to support the longer-term
Viability Statement required under the
Corporate Governance Code. The Viability
Statement is set out in the Strategic Report
on page 73 and a statement setting out the
Board’s assessment of the Company as a
going concern is contained in the Directors’
Report on page 131 and Note 2 Basis of
preparation to the Consolidated Financial
Statements on page 152.
Whistleblowing policy
In accordance with the Corporate
Governance Code, the Board is responsible
for reviewing the Company’s whistleblowing
arrangements, and receives regular reports
from the Audit Committee and the Head of
Internal Audit which detail any new
whistleblowing incidents and, where
appropriate, steps taken to investigate such
incidents.
Graeme Dacomb
Chair of the Audit Committee
21 April 2022