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This excerpt taken from the BP 20-F filed Mar 6, 2007.
Relationship with external auditors As outlined above, the lead audit partner from Ernst & Young attends all meetings of the audit committee at the request of the committee chairman. Other audit partners are also invited to attend meetings to participate in discussions relating to their areas of expertise, for example, during business segment reviews. During the year, the committee held two private meetings with the external auditors without the presence of executive management, in order to discuss any issues or concerns on the part of both the committee and the auditors. The performance of the external auditors is evaluated by the audit committee each year. Central to this evaluation is scrutiny of the external auditors’ independence, objectivity and viability. To maintain the independence of the external auditors, the provision of non-audit services is limited to tax and audit-related work that fall within specific categories. This work is pre-approved by the audit committee and all non-audit services are monitored quarterly. Fees paid to the external auditors during the year for audit and other services were $73 million, of which 16% was for non-audit work (see Financial statements – Note 20 on page 119). Non-audit services provided by Ernst & Young have been significantly reduced over recent years but, reflecting regulatory and reporting developments in the UK and US, audit fees have increased substantially. In addition to the restrictions on non-audit work, the objectivity and independence of the external auditors are augmented by the rotation of audit staff on a regular basis. A new lead audit partner is appointed every five years and other senior audit staff are moved every seven years. It is the policy of the company that no partners or senior staff connected with the BP audit may transfer to BP. After considering both the proposed fee structure and the audit engagement terms for 2007, the audit committee has recommended to the board that the reappointment of the auditors be proposed to shareholders at the 2007 AGM.
Internal audit
year and obtained satisfaction that the proposed work plan appropriately responded to the key risks facing the company and that internal audit had adequate staff and resources to complete its work. |
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