Internal Controls - Contracts

• All new contracts have been reviewed and approved in line with both Divisional and Group policies prior to customer agreement

• All contracts are reviewed for compliance against the Group Contract Policy and, where necessary, any deviations from this policy eg greater than 5 years in length or containing unlimited liability are authorised.

• Approval has been sought and obtained from the Group Director of Financial Control prior to applying long term contract accounting and appropriate accounting has been applied to all contracts

• Profit is only recognized on long term contracts when;

• 1) the outcome of the contract can be reliably measured, and

• 2) it is probable that economic benefit will flow to the company as a result of the contract, and

• 3) the stage of completion can be reliably measured

For any contracts under Life Cycle Management (LCM)

• 1)Are monthly LCM meetings held and attended by Senior Management?

• 2) Are costs to complete reviewed and reassessed each month and signed off?