Internal Control

Internal Controls and Risk Management

The Board is responsible for Rotork’s system of internal control and risk management, and meets at least annually to review the effectiveness of it.  Risk management and internal control can only provide reasonable, not absolute, assurance against material misstatement or loss, as it is designed to manage the risks rather than remove them altogether.  The risk management system covers controls which enable Rotork to respond appropriately to financial, operational, compliance and any other risks. Key elements include:

  • Robust assurance processes and controls over financial reporting procedures;
  • A formal schedule of reserved matters for the Board including responsibility for reviewing Group strategy;
  • Clearly defined levels of authority and a division of responsibilities throughout the Group;
  • Formal documentation procedures;
  • A formal whistleblowing policy with an external whistleblowing hotline; and
  • An internal audit function made up of accountants from head office and across subsidiaries supported by training in internal audit, best practice and control procedures to monitor and identify weaknesses in internal controls.

During the 2015 financial year, the Board placed considerable focus on risk management and mitigation, partly in response to the market conditions and partly as a result of the changes to the Code and associated new guidance issued by the Financial Reporting Council (FRC) in relation to risk management, internal control and related reporting. The risk management process was improved during the year as detailed on pages 67 and 68 of the Annual Report.