Annual Report 2016 - Page 50

Annual Report 2016 CORPORATE GOVERNANCE Business plans, annual budgets and investment proposals for each business, and for the Group, have been formally prepared, reviewed and approved by the Board. These include profit and loss and cash flow forecasts. Actual financial results and cash flows, including a comparison with budgets and forecasts, are regularly reported to the Board with variances being identified and used to initiate any action deemed appropriate. Forecasts of the Group’s compliance with its borrowing covenants are also prepared on a regular basis, and forecasts of the Group’s level of its undrawn and available borrowing facilities for liquidity purposes are also prepared and reported to the Board. Internal control The Board attaches considerable importance to its system of internal control and for reviewing its effectiveness, including its responsibility for taking reasonable steps for the safeguarding of the assets of the Company and the Group and for preventing and detecting fraud and other irregularities. Such a system is designed to manage rather than eliminate the risk, and can nonetheless provide only reasonable and not absolute assurance against misstatement or loss. There is an established internal control framework within the Group that is continually reviewed and updated taking into account the nature of the Group’s operations. 48 Internal Audit Specific topics covered by Internal Audit during the year included but were not limited to: • Review of the evidence and assumptions that support the planning Assurance Statement to Market Operator Services Limited and Ofwat in respect of the opening of non-household competition in the water industry • Review of business risks and controls • Review of Cyber Risks • Review of South Staffordshire Water PLC’s customer tariffs for the 2016/17 year • Review of change of Accounting Standards to FRS 102 A formal Business Risk Assurance Paper and Internal Audit Plan for South Staffordshire Water PLC, which seeks to examine and evaluate the effectiveness of the control environment and test specific areas that are considered a pr