Further key processes are Integrated Business Planning (IBP), monthly Contract Status Reviews, Quarterly Business Reviews (QBR) and Monthly Finance Reviews. The IBP approved annually by the Board, results in an agreed long-term strategy for each business group, together with detailed near-term budgets. The QBRs evaluate progress against the IBP and are chaired by the chief operating officers and the group managing director of the CS&S business.

The company is committed to the protection of its assets, which include human, property and financial resources, through an effective risk management process, underpinned where appropriate by insurance.

The internal audit team independently reviews the risk identification procedures and control processes implemented by management. It provides objective assurance as to the operation and validity of the systems of internal control through a programme of cyclical reviews making recommendations for business and control improvements.

Internal control
The overall responsibility for the system of internal control within BAE Systems rests with the directors of the company. Responsibility for establishing and operating detailed control procedures lies with the managing director of each operating business.

In February 2004 the directors completed a formal review of the effectiveness of the company’s internal controls. In order to assist the Board in this review, an Operational Assurance Statement OAS) was produced by each part of the business. It was signed off by the relevant managing director to confirm compliance with the Operational Framework, including operational and financial controls and risk management processes. The OAS is completed every half year and includes a formal assessment of business risk.

As with any system of internal control, the policies and procedures that are mandated in the Operational Framework are designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable and not absolute assurance against material misstatement or loss.

The responsibility for internal control procedures within joint ventures and other collaborations rests, on the whole, with the senior management of those operations. The company monitors its investments and exerts influence through Board representation.