The principal role of the Public Interest Committee (‘PIC’) is to enhance confidence in the public interest aspects of the firm’s activities with particular reference to high level, general oversight of the firm’s decision-making, stakeholder dialogue, risk management and quality control, remuneration policy and the issuance of selected annual reports to stakeholders.
This role is exercised primarily through the information and access to the Group Executive Board (‘GEB’) obtained through membership by one independent non-executive of the Group Governance Council (‘GGC’) and attendance at the Audit Quality Board by the second independent non-executive supplemented, where necessary, with additional reporting of the Group Executive Board and country Executives as specified below.
Terms of reference
In particular, the Public Interest Committee exercises its high level, general oversight at Group level of the following areas:
- decision-making by management (based upon minutes of the GEB and Partner meetings and discussions with GEB for which GEB makes itself available as deemed necessary by the PIC)
- the system for quality control (based upon the reports of the GEB and GGC risk sub committee)
- remuneration policy, monitoring both the substance of and compliance with the firm’s policy (based upon participation in and reporting of the remuneration sub committee)
- risk management, including consideration of potential or actual reputational risks (based upon the reports of GEB and the GGC risk sub committee)
- the Group’s processes for monitoring complaints related to the firm’s work, including issues raised under whistle-blowing policies and procedures (based upon GEB policies reporting and monitoring)
- stakeholder dialogue including the review and approval of the Group’s transparency reporting prepared by GEB.
In exercising its oversight at group level, the Public Interest Committee has particular regard to issues arising under the various headings in relation to Mazars in Ireland and the United Kingdom. These terms of reference will be reviewed annually and additional specific member firms in other countries may be included if they become subject to an audit firm governance code or equivalent and with the agreement of PIC.
In the case of the firm in each of Ireland and the United Kingdom and the firm in such other countries as may be subject to an audit firm governance code or equivalent in the future, the Public Interest Committee:
- exchanges annually with those holding relevant positions in the governance structure in the country
- meets if required with appropriate stakeholders of the firms on an annual basis
- is responsible for approving any annual reports required under the relevant governance code based upon reports drafted in the relevant country and with the acknowledgement of the relevant responsible partners as to the accuracy and completeness of such documents. The relevant responsible partners make themselves available to the PIC on a timely basis as required.
The PIC agrees procedures for dealing with any disagreements between it and the GGC, GEB or any other parts of the group governance structure or between it and the firm in those countries where the firm applies an audit firm governance code or equivalent.
The PIC approves any reports published at group level in relation to its membership, activities or conclusions.
The PIC uses its best endeavours to comply with the audit firm governance codes of Ireland and the United Kingdom and those, or their equivalent, in any other countries applicable to the firm in the future except to the extent that it is agreed by the PIC to depart from a particular provision and this decision is supported by the GGC. The relevant partners in each country provide the PIC, at least annually, with a summary of the key elements of the governance codes including actual or expected changes or amendments.
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 professional indemnity cover is in place in respect of any 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 chairman of the GGC. Such agreement would not be unreasonably withheld.
The membership of the PIC comprises the independent non-executive member of the GGC and the UK appointed independent non-executive. Other members of the GGC may be asked to join meetings of the committee but are not entitled to participate in decision making.
The independent non-executives satisfy the following independence criteria and notify the chairman of the GGC 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
- 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.
On resigning, an independent non-executive shall offer their reason for resigning which may be made public if this is expected by one or more of the audit firm governance codes applicable to the firm.
New members of the PIC are selected by the GGC after consultation with the continuing independent non-executives but the final decision rests with the GGC. The chair of the PIC is decided by the GGC, if such a position is deemed necessary.
The PIC determines its frequency of meetings but it is expected there will be two ‘in person’ meetings each year with additional teleconference calls as necessary.
The members of the PIC may, at their discretion, invite partners or staff of Mazars to attend part or all of a meeting but for an appropriate part of at least one meeting the independent non-executives shall meet on their own without others present.
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