Strategic report Governance Financial statements Other information AUDIT COMMITTEE REPORT CONTINUED External auditor effectiveness and independence Having considered the information and views presented to it, the The Committee is responsible for assessing the qualifications, Committee has concluded that the external audit process was expertise and resources of the external auditor, and for reviewing effective, that it is satisfied with the performance of the external the effectiveness of the audit process. In discharging these auditor, and that there are policies and procedures in place responsibilities, the Committee has considered information from adequately to protect the independence and objectivity of the a variety of sources. It received a report from the external auditor external auditor. Accordingly, the Committee has recommended to on its own internal quality control procedures, which included the Board that a resolution is put to the Company’s shareholders at reference to the outcome of the FRC’s 2020/21 AQR inspection the upcoming AGM for the reappointment of the external auditor. report. The views of the external auditor were also sought at the Non-audit fees Committee’s meetings, which included sessions without Executive The Committee considers its oversight of the non-audit services management present to discuss its remit and any issues arising provided to the Group to be a key component of discharging its from the audit. responsibility for monitoring the independence and objectivity The views of Executive management and the Committee of the external auditor. In addition to the report the Committee members were also sought on the efficiency of the year end received from the external auditor concerning the threats and process and the performanceof the external auditor. It wasnoted safeguards to its independence, the Committee received and that the external auditor has demonstrated challenge and reviewed reports from the Group’s Finance function prior to professional scepticism in performing its role. the publication of the Group’s interim and full year results on all In addition to its effectiveness, the Committee is responsible for non-audit services provided to the Group by the external auditor monitoring and assessing the independence and objectivity of the during the period under review. external auditor. In doing so, the Committee has considered the The Committee has responsibility for developing and FRC’s Revised Ethical Standard 2019, and paid particular attention recommending to the Board the Group’s policy on non-audit to the Group’s wider relationship with the external auditor through services supplied by the external auditor. The policy is specifically its provision of non-audit services to the Group, to the rotation of designed to ensure that the external auditor’s independence and the senior audit partner, and tothe external auditor’s tenure with objectivity is maintained. It sets out a number of permissible the Group, further information on which can be found below. non-audit services which the external auditor may carry out in line The Committee received a report from the external auditor with the FRC’s revised ethical standard. Other than where the confirming that, in line with the FRC’s Revised Ethical Standard threat to auditor independence is considered low and where the 2019 and having regard to the threats and safeguards to fee payable is clearly trivial, the receipt of such services must be independence, it had concluded that there were no matters that approved in advance by the Committee. impaired or restricted its objectivity as auditors to the Group. The policy also specifies, in line with the FRC’s Revised Ethical Standard 2019, that the maximum non-audit fees that the external auditor can receive from the Group is 70% of the average of the audit fees incurred by the Group over the previous three years. The full policy can be found on the Group’s website at www.hl.co.uk/ about-us/board-of-directors/corporate-governance. 84 Hargreaves Lansdown Report and Financial Statements 2021