114 ITV plc Annual Report and Accounts 2023 ITV plc Annual Report and Accounts 2023 115 AUDIT AND RISK COMMITTEE REPORT CONTINUED G O VE R NAN The Committee concluded that overall it was Prior to the start of the year, the Committee values by management and other C CLIMATE-RELATED GOVERNANCE pleased with the quality and insight provided considered and approved the 2023 internal employees. A cultural assessment is E by the internal audits completed, particularly audit plan, which was structured to align with routinely incorporated in audit ratings. Our role Items covered the specialist audits, with material ITV’s strategic drivers and principal risks and Review of ITV’s global environmental and climate risk Reviewed: improvements in various control areas and addressed operational, financial, The Committee is satisfied that, during mitigation strategy, targets, progress and reporting in • Report from the independent provider of limited assurance over Greenhouse Gas (GHG) processes being implemented as a result of compliance and technology controls and a 2023, delivery of the approved internal compliance with the Task Force on Climate-related Financial emissions data, including Scope 1, 2 and 3 internal audit recommendations. In reaching number of key operational risks. The internal audit strategy and plan provided timely Disclosures (TCFD), Climate-related Financial Disclosures this conclusion the Committee audits performed provided assurance over and appropriate assurance on the (CFD) and other environmental reporting requirements, • ITV’s TCFD reporting, including ITV climate scenario analysis and consequential risks and and readiness for publishing a Climate Transition Plan, impact (including financial). acknowledged that the EY internal audit areas deemed to be of greater risk and effectiveness of controls in place to in accordance with the UK government’s Transition Plan • Climate risk embedded into ITV’s Principal Risks team is still familiarising itself with the relative importance to the Group in 2023. successfully manage relevant Group Taskforce recommendation, alongside preparation for • Roadmap to achieve Net Zero detailed in Climate Transition Plan, published alongside various businesses of the Group and The internal auditor also provided the principal risks. EU Corporate Sustainability Reporting Directive disclosure Annual Report and Accounts. developing appropriate relationships with Committee (and therefore the Board) with in 2026. senior management, whilst maintaining the valuable insight on the culture across the Assessing the integrity of the targets and data included in independence of management. Group and the reflection of the Group’s the reporting and obtaining appropriate assurance on its completeness, reasonableness and accuracy. EXTERNAL AUDITOR Climate-related governance The Committee also reviewed the The Committee is encouraged by the Our role Items covered The Committee plays a key role in the methodology and internal quality assurance continued progress made by management to processes over GHG emissions reporting, meet the minimum requirements for TCFD • Oversee the relationship with the external auditor • Regularly meeting with the external auditor in the absence of management governance of climate-related risks and following the implementation of a new disclosures, and in starting to deliver against • Review the quality and effectiveness of the external audit, • Review, challenge and subsequent approval of H1 review and FY23 audit strategy/plans opportunities and the Group’s compliance environmental reporting system across ITV, ITV’s ambitious environmental targets. The including approval of the annual audit plan, and the • PwC’s reports on the H1 review and FY23 audit progress, findings and conclusions with environmental and climate risk related and the results of the independent limited Committee also noted the significant procedures and controls designed to ensure auditor • Auditor opinion on FY23 financial statements regulatory reporting requirements. During independence and objectiveness 2023, management briefed the Committee assurance provided over carbon footprint improvements in the management of • Review and make recommendations to the Board on the • Recommendation to reappoint PwC at 2024 AGM on progress in further embedding climate data. ITV has appointed EcoAct as its environmental targets and climate-related tendering of the external audit contract, and the • Approval of non-audit services policy action, risks and opportunities into the sustainability partner to advise on TCFD and risks and opportunities and the continuing appointment, remuneration and terms of engagement of the • Approval of 2023 audit fee proposal running of the business (and potential CFD recommendations and best practice progress made to enhance the approach and external auditor • Consideration of the ongoing independence of the external auditor and the evidence of financial implications), including the planned and highlight areas for improvement. In to strengthen the quality of reporting that quality and effectiveness in the delivery of the audit publishing of its first Climate Transition Plan addition to reviewing ITV’s 2023 TCFD will continue into 2024. • Review outcome for FY22 external audit quality indicators (AQIs), setting of the 2023 AQI in 2024 and the steps taken to enhance ITV’s disclosure against TCFD and CFD measures and subsequent consideration and monitoring of performance against these, alignment to the TCFD and CFD criteria and recommendations, EcoAct has also A key area of focus for the Committee during including post the FY23 audit related disclosures. The Committee agreed assessed the report against the Climate 2024 will be ensuring the Company continues with management’s assessment that the Financial Disclosure recommendations, to respond appropriately to the rapidly financial impact of known risks and following changes to the Companies Act. changing and new regulations and reporting opportunities is not material. requirements, extending the limited External audit effectiveness • Audit plan and strategy: The Committee • Interaction with auditor: The numerous assurance to a wider set of indicators and and quality discussed PwC’s detailed audit plan and interactions with the auditor provided agreeing with management a timeline for strategy, including the intended scope of the Committee with an insight into the upgrading to reasonable assurance. The Committee is cognisant of the fact the audit, identification of significant and quality of the audit process and the that assessing external audit quality is a key elevated audit risks, the level of materiality audit leadership team, and with the responsibility within its remit. Set out below proposed and the principles of PwC’s opportunity to assess the auditor’s are the specific areas that the Committee centrally directed audit approach. The challenge of management’s views. In focused on in assessing audit quality, Committee welcomed the plan to enhance addition, the Committee Chair met INTERNAL AUDIT including relevant outcomes: the focus on utilising data-enabled regularly with the lead audit partner, Our role Items covered • Identification of Audit Quality Indicators auditing approaches to maximise receiving early insight to the progress of (AQIs): In 2022 seven AQIs were identified efficiencies and insight from the auditor’s the audit and any issues emerging, • Monitor and review the effectiveness and independence of • Performed an assessment of internal audit independence and effectiveness as useful in enabling the Committee to testing. Following discussion and including the auditor’s views or concerns the internal audit function • Approved the 2023 and 2024 internal audit plans challenge, the Committee agreed the regarding the capacity within the finance • Review and approve the internal audit plan and monitor its assess the effectiveness and quality of • Reviewed internal audit reports including a review of activity, key recommendations arising the external audit. In July 2023 the methodology adopted for determining teams, given the ongoing challenges implementation, approving any amendments to the plan from audits, themes across audits, status reports on action plans and regulatory and materiality and the scope of the audit. related to the introduction of the new • Review the continued appropriateness of the outsourcing of programme compliance Committee reviewed performance of these AQIs against the 2022 targets and • Auditor’s reporting (written and verbal) Oracle Fusion system and ways of working. the internal audit function, oversee the tendering of the • Annual review of risk acceptance of audit findings The Committee noted that PwC internal audit contract and approve the appointment of the concluded that the adoption of AQIs was a to the Committee: The Committee internal auditor and the remuneration and terms of • Meeting regularly with the internal auditor in the absence of management meaningful and valuable tool for all reviewed the effectiveness of the audit challenged management robustly on key engagement parties. Seven AQIs were identified and throughout the year, taking into account judgements and estimates, accounting have been used for the 2023 audit. A final (amongst other things) the delivery of the treatments and disclosures. The review of the performance of the AQIs approved audit strategy, approach to Committee also reviewed PwC’s 2023 against the 2023 targets will be adjusting the audit plan to reflect changes transparency report. Internal audit The Committee assesses the effectiveness Group CFO & COO (who also represented undertaken in May 2024. in risk assessment during the year and EY was appointed ITV’s internal auditor with of the internal audit throughout the year management’s views on the quality of the insight and robust challenge around the effect from April 2022. The Committee using a number of measures, including the internal audit provision). The discussion was key accounting judgements and in dealing continues to support ITV’s current model of a Committee’s private sessions with the guided by a series of questions circulated by with management. fully outsourced internal audit function, internal audit partner, reports from internal the Committee Chair, which included internal which allows best practice in terms of audit on the development and delivery of the auditor independence and objectivity, risk-based approach and auditing internal audit plan, communication of results resourcing, involvement in business techniques, continuous robust and of reviews performed and the completion of discussions on risk, and communications independent challenge, and the use of agreed actions arising from reviews. In between the internal auditor and the specialists in high-risk areas and across the addition, the Committee formally considered Committee. various geographies. the effectiveness and quality of the internal audit provision in a private discussion between the Committee members and