267694 EdinburghIT AR 2024 WEB - Flipbook - Page 37
THE EDINBURGH INVESTMENT TRUST PLC / GOVERNANCE / 35
ACCOUNTING MATTERS AND SIGNIFICANT AREAS
For the year-end, the following accounting matters were identified for specific consideration by the Committee:
Significant areas
How they were addressed
Accuracy of the portfolio valuation
and controls related to the valuation
process.
Actively traded listed investments are valued using stock exchange prices provided by
third-party pricing vendors. Investments that are unlisted or not actively traded are valued
using a variety of techniques to determine their fair value. This is set out in accounting
policies note 1C(v). Any such valuations are carefully considered by the Manager’s pricing
committee and the Committee.
Proof of the existence of portfolio
holdings.
The Manager and the depositary confirmed that the holdings shown in the accounting
records agreed with the custodian records.
Recognition of investment income
and the treatment of special
dividends
Investment income is recognised in accordance with accounting policies note 1F. The
Manager provides detailed revenue estimates for the Board’s review, and income is
assessed to ensure it is complete and accounted for correctly. Careful consideration is
given to special dividends. These are allocated to revenue or capital according to the
nature of the payment by the underlying company and the allocation is also reviewed
by the auditor.
The allocation of management fees
and finance costs between revenue
and capital
The allocation is reviewed by the Committee annually taking into account the longterm split of returns from the portfolio both historic and projected, yield, the objectives
of the Company, and the latest market practice of peers. The Committee last reviewed
the allocation at its meeting in May 2024.
These matters were discussed with the Manager and the
auditor in pre-year-end audit planning and were satisfactorily
addressed through consideration of reports provided by,
and discussed with, the Manager and the auditor at the
conclusion of the audit process. As detailed below, the
Company operates within a robust control environment and
the Committee oversees the effectiveness of the controls of
the Manager, custodian and administrator.
Consequently, and following a thorough review process
of the 2024 annual financial report, the Audit Committee
advised the Board that the report taken as a whole is fair,
balanced and understandable and provides the information
necessary for shareholders to assess the Company’s position
and performance, business model and strategy.
REVIEW OF THE EXTERNAL AUDITOR, INCLUDING
NON-AUDIT SERVICES
The Committee evaluated the performance and effectiveness
of the external auditor and their audit process. This included a
review of the audit planning, execution and reporting and the
quality of the audit work, results and audit team. This review
sought the view of the Manager in their dealings with the
auditor. The Committee also considered the independence
of PricewaterhouseCoopers LLP (PwC) and the objectivity of
the audit process. No significant modifications were required
to the external audit approach. Combining the output of all the
above, and the Audit Committee Chair’s and the Committee’s
direct interaction with PwC, the Committee concluded that it
continued to be satisfied with the performance of PwC and
that the auditor continued to display the necessary attributes
of objectivity and independence.
Prior to any engagement for non-audit services, the Audit
Committee considers whether the skills and experience of the
auditor make them a suitable supplier of such services and
ensures there is no threat to objectivity and independence in
the conduct of the audit as a result. Excluding VAT and any
expenses, the annual audit fee was £50,700 (2023: £48,000)
and the non-audit fee was £nil (2023: £nil), see Note 4 on
page 65. Non-audit services up to £5,000 do not require
approval in advance of the Audit Committee; amounts in
excess of this require the approval of the Audit Committee.
AUDITOR
PwC were appointed as the Company’s Auditors at the AGM
on 25 July 2019 and were re-appointed on 19 July 2023.
After due consideration, the Committee recommends the
re-appointment of PwC and their re-appointment will be put
forward to the Company’s shareholders at the 2024 AGM.
INTERNAL CONTROLS AND RISK MANAGEMENT
The Committee undertakes a robust assessment of the risks
to which the Company is exposed by reference to a risk
control summary, which maps the risks, mitigating controls
in place and relevant information reported to the Directors,
throughout the year. The resultant ratings of the mitigated
risks allow the Directors to concentrate on those risks that
are most significant and also form the basis of the list of
principal risks and uncertainties set out in the Strategic
Report on pages 19 to 22.
The Committee, on behalf of the Board, is responsible for
ensuring that the Company maintains a sound system of
internal control to mitigate risk and safeguard the Company’s
