The key function of the Executive Fair Trading Committee (EFTC) is to oversee the BBC Executive's compliance with our Fair Trading obligations. The EFTC comprises three non-executive directors; these are Dame Fiona Reynolds (Chair), Marcus Agius and Sally Davis. The meetings are also attended by the Chief Operating Officer, Chief Financial Officer, Controller, Fair Trading & BBC Compliance Officer, General Counsel and the Director of Risk and Assurance. Responsibilities of the EFTC include:
The BBC has a detailed operational Fair Trading framework which applies to all our activities and is outlined in our Fair Trading Guidelines.
These arrangements are subject to annual audit by independent auditors and separately have been accredited with the ISO 9001:2008 quality standard. The Auditor's report is set out below.
The BBC Agreement requires the BBC Executive to ensure that all our commercial services meet the following criteria. Commercial services must:
Having received reports from relevant senior management, the BBC Executive is satisfied that all commercial services have met the above criteria for the period 1 April 2011 to 31 March 2012.
The BBC has a published Fair Trading complaints and appeals process.
The BBC received four Fair Trading complaints during the year. Details of these, and those which went on appeal to the BBC Trust, can be found in our Fair Trading Bulletin and on the BBC Trust's appeals page.
The BBC has a well-established Fair Trading regime which is subject to both internal and external scrutiny. As a new non-executive director I took on responsibility as Chair of the Executive Fair Trading Committee (EFTC) from Val Gooding part way through the year and I would like to record my thanks to Val for her significant contribution in this role. I will ensure that the BBC continues to demonstrate and deliver on its commitment to its Fair Trading obligations.
Against a backdrop of continued change to the media landscape, this year has also seen some material changes to the Fair Trading regime. These include publication by the Trust of an updated Fair Trading Policy (as a result, the Executive Fair Trading Guidelines are being updated) and the conclusion of the Trust's governance review which further clarifies the roles and responsibilities of the Trust and Executive. Amongst other things this has facilitated a change in the constitution of the EFTC, which is now comprised solely of non-executive directors, and the transfer of responsibility to the Executive for commissioning the annual independent Fair Trading audit.
Overall, the Fair Trading regime continues to operate effectively with an unqualified audit opinion, continued accreditation of Fair Trading systems and processes with the ISO 9001:2008 standard and a relatively modest level of Fair Trading complaints totalling four during the year.
I am focused on ensuring that Fair Trading remains high on the Executive's agenda and that all stakeholders, including licence fee payers and those who might be impacted by the BBC's activities, can continue to be reassured that the BBC remains committed to and compliant with its Fair Trading obligations.
Dame Fiona Reynolds
Chairman of the Executive Fair Trading Committee
We have audited, in our role as the BBC's fair trading auditors, the system of internal controls established within the BBC to provide the BBC with reasonable assurance that the BBC Executive ('the Executive') has complied with the requirement of the BBC Trust's Fair Trading Policy and Competitive Impact Codes from 1 April 2011 to 31 October 2011, the BBC Trust's Fair Trading Policies and Framework from 1 November 2011 to 31 March 2012 and the Fair Trading Guidelines (where not inconsistent with the Fair Trading Policies and Framework) from 1 April 2011 to 31 March 2012 (‘the Fair Trading Arrangements').
Our instructions for this engagement, including the scope of work to be undertaken, were agreed with the BBC's Executive Fair Trading Committee (EFTC). These instructions include agreement that our audit should be conducted in accordance with International Standard on Assurance Engagements (ISAE) 3000, agreement on the limit of our liability in respect of this work and agreement that our duty of care in respect of this work is solely to the BBC. We are satisfied that the agreed scope of our audit was sufficient to enable us to express the opinion set out below.
The Trust is responsible for ensuring that the Executive trades fairly. It is also responsible for preparing the section within the BBC's Annual Report entitled ‘Trading Fairly', which includes a statement on fair trading.
The Executive is charged by the Trust with establishing and operating a system of internal controls designed to ensure compliance with the BBC's Fair Trading Arrangements for the year ended 31 March 2012, including identifying and assessing risks that could threaten fair trading and designing and implementing responses to such risks.
As the BBC's fair trading auditors, it is our responsibility to form an independent view, based on our audit work, as to the extent to which the BBC has established, and applied, a system of internal controls which provide reasonable assurance that it has complied with the requirements of its Fair Trading Arrangements for the year ended 31 March 2012. We have reviewed specific decisions reached by the BBC on fair trading issues only in so far as this is necessary to form an opinion on the application of the system of internal controls. We have also reviewed whether the Trust's statement on fair trading reflects our findings of the BBC's compliance with its system of internal controls and we report if it does not.
Our opinion has been prepared for and only for the BBC in accordance with our instructions which were agreed with the EFTC on behalf of the BBC. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any person other than the Trust or the Executive to whom this report is shown or into whose hands it may come, and no other person shall be entitled to rely on our opinion, save where expressly agreed by our prior consent in writing.
We have performed a reasonable assurance engagement as defined in ISAE 3000. The objective of a reasonable assurance engagement is to perform such procedures as to obtain information and explanations which we consider necessary in order to provide us with sufficient appropriate evidence to express a conclusion on the BBC's compliance with its Fair Trading Arrangements for the year ended 31 March 2012.
Our work consisted of enquiry and testing to enable us to form a view as to whether an appropriate system of internal controls was in place. We also reviewed the processing of a sample of material transactions to provide us with reasonable assurance that the system of internal control had been applied.
As with any system of control, it is not practicable to ensure that no errors or irregularities have occurred without being detected. Our audit work was designed to give the Executive reasonable assurance as to the adequacy of the system of internal controls which was in place and being applied to deliver compliance with the requirements of the Fair Trading Arrangements for the year ended 31 March 2012. Further, because fair trading issues require judgements which ultimately might be tested in a court of law, competition authority or elsewhere, there is always a risk of challenge even where the system of internal controls has been followed and decisions have been taken with the greatest care.
Based on the results of our procedures, in our opinion the BBC has established and has applied a system of internal controls that provide reasonable assurance that it has complied with the requirements of the Fair Trading Arrangements for the year ended 31 March 2012.
21 June 2012
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