Corporate governance

The directors acknowledge the principles set out in the Combined Code issued in 1998 by the Committee on Corporate Governance and intend to comply with the main provisions thereof.

The company applies the principles of the Combined Code in the following ways:

Internal control

The directors are responsible for the group’s system of internal controls and for reviewing its effectiveness. The internal control systems are designed to meet the group’s particular needs and manage the risks to which it is exposed, and by its nature can only provide reasonable, but not absolute, assurance against misstatement or loss.

The Combined Code requires that the directors’ review the effectiveness of the group’s system of internal controls. This requirement extends this review to cover all controls, including:

• Financial;
• Operational;
• Compliance; and
• Risk management.

The directors confirm that there is an ongoing process for identifying, evaluating and managing the risks faced by the group,  and that this process is regularly reviewed by the directors, and accords with the Turnbull guidance.

The group operates in the care sector, one of the most closely monitored and regulated areas of business. Its services are subject to external inspections by registration and other authorities, which are followed up by publicly available reports. It also regularly conducts its own internal inspections.

With regard to financial matters, the group operates within a control environment, designed to provide reasonable assurance regarding the safeguarding of assets against unauthorised use or disposition, the maintenance of proper accounting records and the reliability of financial information used within the business or for publication.

Key established procedures are:

• The definition of the organisation structure and the appropriate delegation of responsibility to operational management;
• The definition of authorisation limits, both financial and otherwise;
• Written operational procedures;
• A system of financial reporting encompassing an annual budget, updated forecasts and the monthly reporting of actual results measured against both budget and forecast; and
• The regular assessment of risks facing the business and the reporting of operational performance to the board, including internal and external clinical audit reports.

The group’s Risk Management Steering Group (“RMSG”) oversees the group’s risk assessment process. The RMSG is chaired by the Finance Director and comprises representatives from each of the group’s operating divisions as well as key functional areas, including human resources and clinical governance.

The senior management of the operating divisions regularly review the systems of internal control in their respective divisions, which are supported by assessments of key business risks, controls and resulting exposures, and confirm their compliance with them. These assessments are reviewed by the RMSG and are subsequently reported to the group Executive Committee and the board.

The Audit Committee assists the board in fulfilling its oversight responsibilities, primarily reviewing the systems of internal control and risk management, and the audit process. The external auditor attends all relevant meetings.

The group has in place a formal internal audit function. The function reports to the Finance Director but with direct access to the Audit Committee. The Audit Committee approve the annual internal audit strategy and plan and approve the amount of resources allocated to the internal audit function.