The purpose of this Charter is to provide to all stakeholders an informal guide to the Firm’s PIC, how it operates and its priorities. It should be read in conjunction with the PIC’s Terms of Reference, which sets out our formal responsibilities. We hope you will find it helpful and we welcome constructive comment and feedback.
Role and Responsibilities of the PIC
Our principal role is to enhance confidence in the public interest aspects of the activities of the Firm, with particular reference to general oversight of the processes pertaining to its decision-making, stakeholder dialogue, risk management, including reputational risk, quality control – in particular, the control and promotion of audit quality - and remuneration policy. To enable us to fulfil our role, we are committed to oversight of the Firm’s culture and professional ethics, which we regard as being vitally important and integral to its sustained success, for the benefit of its partners, employees, clients and other stakeholders. We also oversee the processes relating to the effectiveness and quality of the Firm’s accountability to its stakeholders through its annual transparency report.
The PIC was set up to address the expectations of the UK Audit Firm Governance Code (‘the Code’), which Mazars LLP voluntarily applies.
The PIC currently comprises:
- Three Independent Non-Executives (‘INE’), one of whom is Chair of the PIC;
- The UK National Senior Partner; and
- The Head of Quality.
The summary biographies of the INEs can be found here.
The PIC comprises a majority of INEs as required by the Audit Firm Governance Code.
The INEs have letters of appointment, which set the terms and conditions on which they provide their services. These letters cover such matters as their independence criteria, their right to access information and their indemnity arrangements.
We meet four times a year in person (with connection via conference call as necessary) and, in addition, have four conference calls between meetings to ensure that INEs are kept up to date on the Firm’s activities. The dates for our meetings are determined in advance on an annual basis and we are expected to use our best endeavours to attend. Additional meetings may be convened in exceptional circumstances at the request of PIC members, if there are important matters that need to be considered at short notice.
We are quorate when at least the Chair and one other INE is present. The Chair may delegate their responsibilities to another INE in order to enable the PIC to be quorate if they are unable to attend. The UK Senior Partner and Head of Quality will attend as a PIC members with other partners and employees of the Firm and of Mazars Group attending PIC meetings by invitation of the Chair.
Our meetings generally take place at the Firm’s London office, but we may from time to time hold some of our in-person meetings at other UK offices to help raise the profile of the PIC and to enable the INEs, in particular, to broaden their understanding of local issues and perspectives.
Our meetings have an agenda, which is usually made available at least a week before the relevant meeting. Any PIC member can request that any relevant matter is considered by the PIC, such consideration being at the discretion of our Chair. Our meetings are minuted and action points prepared. The draft minutes and action points are generally circulated within two weeks of our meeting and are considered for approval at the subsequent meeting.
Meetings of the INEs
The INEs meet at least four times a year without any partners or staff present to compare views on the Firm’s governance and the responsibilities of those in charge of management and governance under the Code. Such meetings are usually scheduled to take place before or after the PIC meetings. The Chair leads the discussions at these meetings and is responsible for ensuring any relevant matters are communicated to the UK Senior Partner or whosoever is deemed appropriate.
Other Meetings and Activities involving the INEs
The INEs have regular contact with the Firm’s Ethics Partner who has an independent and confidential reporting line to them. The Ethics Partner submits a written report to the PIC at least twice a year, summarising how their responsibilities have been fulfilled and what issues have been addressed. He is responsible for ensuring all significant ethical matters are advised to the PIC and/or the INEs as appropriate in a timely and comprehensive manner. It is the responsibility of the Senior Partner to ensure that INEs are kept informed of significant ethical issues.
Mazars LLP has an independent whistle-blowing process and the results are reviewed by the PIC. The link for the whistleblowing line is here.
The INEs will have regular meetings with the Head of Audit in executive session or as part of the PIC meetings as necessary.
The INEs meet partners and staff who do not attend the PIC to help them discern the culture within the Firm. The discussions are non-attributable and are not minuted. However, the findings and recommendations arising from such meetings are reported to the UK Senior Partner and/or others, if appropriate. Such meetings are scheduled as part of the annual schedule of INE and PIC meetings.
The INEs are encouraged to be visible within the Firm to enable them to fulfil their responsibilities under the Code. From time to time, subject to prior agreement with the UK Senior Partner as well as the office concerned, the INEs visit offices to meet partners and staff to discuss matters of mutual interest. Requests by INEs to visit any Mazars LLP office or to meet with any employee in executive session will not be unreasonably withheld.
The INEs may from time to time have an interest in meeting with the Firm’s principal regulator, which is currently the Financial Reporting Council (FRC), to help ensure interests are aligned effectively and to discuss the Firm’s governance. The UK Senior Partner and/or the Head of Quality may be present for some or all of such meetings. In addition, the INEs may be requested by the Firm’s regulators to attend meetings. The nature of discussions at all meetings with regulators is reported to the PIC.
The INEs may meet individually or collectively with the INEs of other firms with the purpose of discussing emerging best practice. Matters of commercial or professional confidentiality are not discussed.
The PIC recognises the importance of it making an effective contribution and fulfilling its role and responsibilities in an effective manner. Therefore, we have decided to evaluate our effectiveness annually. This will be done using an internal facilitator, who will be assisted every third year by an external evaluator in order to benefit from independent scrutiny and counsel. The first evaluation will be in 2020 and the evaluation in 2021 will involve an external evaluator.
The PIC Secretary and How to Contact Us
The PIC Secretary can be contacted using the following email address firstname.lastname@example.org
Approval and Review
This Charter was approved by the PIC on 20 November 2019 and will be reviewed annually.
Our Priorities for 2020
In fulfilling our responsibilities during 2020 our priorities will include:
- Monitoring the implications of various initiatives in the UK relating to the audit market and how the UK Executive is addressing them.
- Overseeing the Firm’s actions arising from the FRC’s 2019 Audit Quality Review Report.
- Oversight of the Firm’s conflict of interest policy.
- Review of the management and governance structure of the audit practice.
- Review of the recruitment and education policy of the audit practice.
- Reviewing arrangements for succession planning for both INEs and senior executives.
- Improving our dialogue with investors, colleagues and stakeholders.
Right of Access to Information
The PIC is given access to the information which members of the committee regard as necessary to performing their role.
Appropriate insurance cover is in place in respect of any relevant legal action against any independent non-executive.
Access to Independent Professional Advice
The independent non-executives have the right to obtain independent professional advice in respect of their duties, subject to prior agreement with the Chair of the GGC and the UK National Senior Partner. Such agreement will not be unreasonably withheld.
The independent non-executives satisfy the following independence criteria and notify the Chair of the GGC and UK National Senior Partner of any change in their personal circumstances with regard to those criteria:
- the independent non-executives are unrelated to any Mazars member firm;
- the independent non-executives are not, and will not become, an executive director or member of the audit committee in any of Mazars’ audit clients and not have any significant shareholdings or other interests in them unless approved by both parties; and
- the independent non-executives are not, and will not be, in any other executive officer position, member of an advisory board or a Council of a competing organisation.
Appointment and resignation of Independent non-executives
On resigning, an independent non-executive shall offer their reason for resigning which may be made public if this is expected by The Audit Firm Governance Code.
New members of the PIC are selected by the UK National Senior Partner after consultation with the continuing independent non-executives.
Dialogue with Listed Company Shareholders and Listed Companies about matters covered by The Audit Firm Governance Code
Mazars maintains regular contact with those involved in governance at leading institutional investors. A meeting with leading institutional investors took place on 9 July 2018, at which both members of the PIC were present. At this meeting, we discussed the business performance of Mazars UK and provided an opportunity for the investor participants to raise firm-specific issues with regards to matters covered by the Audit Firm Governance Code including risk management, quality and disciplinary matters.
We engage in further dialogue with institutional investors on an individual basis on matters covered by the Audit Firm Governance Code and we participate in multi-firm meetings with institutional investors. Alongside a number of these investors, we also co-operate in the work of the Centre for Audit Committee and Investor Dialogue.
Listed companies and their shareholders wishing to enter into dialogue on matters covered by the Audit Firm Governance Code should contact Anthony.Carey@mazars.co.uk