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The work of the Committee is outlined on page 46. During 2012, we gave particular emphasis to the following matters: 

– the impairment charges recorded in the 2012 financial statements, in particular, in respect of the Group’s minority stake in Corporación Uniland, S.A. (‘Uniland’). For further details, please see note 10 to the financial statements on page 90; 

– the models used for, and the outcome of, the goodwill impairment and sensitivity analysis referred to in note 15 to the financial statements; 

– the plans and initiatives in place to mitigate the Group’s pension scheme liabilities; 

– the implementation of significant IT projects across the Group; 

– the Group’s enterprise risk management systems; 

– the rules of the Public Company Accounting Oversight Board (‘PCAOB’) and, in particular, the potential effects on auditor independence of Ernst & Young providing those tax-related services included in the Group’s policy on non-audit services. 

The Committee also met with senior finance personnel from the Group’s operations to discuss inter-alia, internal audit review findings, the implementation of resulting changes to control structures, work in relation to improving the control environment in each Division, co-ordination with the work of the external auditors and actions being taken to prevent fraud. In addition, the Committee met with the Head of Compliance and Ethics to review the Group’s compliance and ethics programme, including the compliance organisation, new or revised codes and policies and the core training modules (incorporating Code of Business Conduct, Anti-Bribery Corruption & Fraud and Competition Law). 

As part of its response to the difficult trading conditions in recent years, the Group has implemented a programme of cost savings and has periodically announced updates on the annualised savings under that programme. The Head of Internal Audit reviews these savings, and the related implementation costs, and reports his findings each year to the Committee. 

## Governance developments 

Updates to the UK Corporate Governance Code, which are effective for accounting periods beginning on or after 1 October 2012, were published in September 2012. Among the changes introduced in the revised Code was a requirement that FTSE350 companies should put the external audit out to tender at least once every 10 years. To avoid any major disruptions to the audit market resulting from a large number of companies tendering at the same time, the UK Financial Reporting Council (FRC) has suggested some transitional arrangements whereby the timing of audit tenders would be aligned with the cycle for rotating the audit engagement partner, which for CRH would be after the 2015 audit. We will consider the new provisions in detail during the course of 2013, when forthcoming additional guidance on this matter is published by the FRC. We also await, with interest, clarification on EU proposals in the area of audit tenure, which may require mandatory audit rotation after a set period. Other changes to the UK Corporate Governance Code included revised provisions regarding reporting to the Board and to shareholders. 

## Terms of reference 

In order to take account of the updates to the UK Corporate Governance Code referred to above, the Committee’s Terms of Reference have been updated. 

Jan Maarten de Jong Audit Committee Chairman February 2013 

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