External auditor appointment
The re-appointment of Deloitte LLP as the Group’s external auditor is reviewed annually by the Audit and Risk Committee. Deloitte LLP was appointed auditor in 2011, with Deloitte CIS having been auditor of JSC Polymetal since 2007. James Leigh was appointed as audit partner in 2015. The Committee’s assessment of the external auditor’s performance and independence underpins its recommendation to the Board to propose to shareholders the re‑appointment of Deloitte LLP as auditor until the conclusion of the AGM in 2021. Resolutions to authorise the Board to re-appoint and determine the auditor’s remuneration will be proposed at the AGM on 27 April 2020. Dean Cook will take over as audit partner for 2020.
The Group has a policy of tendering the external audit at least every ten years. The most recent tendering process took place from January to May 2019, with a view to appointing the external auditor for the 2020 audit, which also coincided with the completion of the five-year term of our current audit partner. Deloitte LLP has been our auditor for 10 years, following Polymetal’s listing on the London Stock Exchange. Deloitte was invited to participate in this tendering process, along with other appropriately qualified international audit firms. The tender process was held in compliance with the Competition and Markets Authority regulations, applicable EU requirements and Financial Reporting Council (FRC) guidance.
Following the completion of the evaluation, the Audit and Risk Committee recommended Deloitte LLP to the Board for approval as external auditors for the year commencing 1 January 2020. The decision was driven by expertise, better resources and the audit approach to delivering high quality audit services to Polymetal. After considering the Committee’s recommendation, the Board proposed Deloitte LLP as auditor subject to shareholders’ approval at the Company’s 2020 AGM. Re-appointment of Deloitte was approved by 99.88% of the shareholders voting at 2020 AGM.
The auditors are required each year to confirm in writing to the Committee that they have complied with the independence rules of their profession and regulations governing independence, and that they have complied with the requirements of the Company’s policy on provision of non-audit services. The external auditor is required to maintain appropriate records to provide reasonable assurance that its independence from the Company is not impaired.
Review of the effectiveness of the external audit process and audit quality
The Audit and Risk Committee has adopted a formal framework in its review of the effectiveness of the external audit process and audit quality which focuses on the following areas:
- The audit partners, with particular focus on the lead audit engagement partner
- The audit team
- Planning and scope of the audit and identification of areas of audit risk
- Execution of the audit
- The role of management in an effective audit process
- Communications by the auditor with the Audit and Risk Committee, and how the auditor supports the work of the Audit and Risk Committee
- How the audit contributes insights and adds value
- The independence and objectivity of the audit firm and the quality of the formal audit report to shareholders.
An auditor assessment is completed annually by each member of the Audit and Risk Committee and by the CFO by way of a formal questionnaire. Feedback is also sought from the Group CEO, other members of the finance team, divisional management and the head of internal audit. The feedback from this process is considered by the Audit and Risk Committee, and is provided both to the auditor and to management. Action plans arising are also reviewed by the Committee.
The effectiveness of management in the external audit process is assessed principally in relation to the timely identification and resolution of areas of accounting judgement, the quality and timeliness of papers analysing those judgements, management’s approach to the value of the independent audit, the booking of audit adjustments arising (if any) and the timely provision of draft public documents for review by the auditor and the Audit and Risk Committee.
Non-audit services by the external auditors see in the Annual Report.