IX. REPORT OF THE AUDIT AND CONTROL COMMITTEE

COMPOSITION AND FUNCTIONS

The composition of the Audit and Control Committee in 2005 has remained unchanged with respect to the 2004. All committee members therefore continue to be External Directors, in accordance with the stipulations of the Board of Directors Regulations.

Neither has there been any change in its functions. This Committee, in accordance with the Board of Directors Regulations, is attributed duties in relation, primarily, to external auditors, the management of internal audits, financial information, corporate governance, and risk control. These areas of competence are described in detail in the Annual Corporate Governance Report.

The Committee met five times during 2005.

ACTIVITIES

Economic-financial information

The Audit and Control Committee assists the Board of Directors in ensuring that the financial information which the Company is required to report on a regular basis is correct and reliable.

Prior to examination by the Board of Directors and presentation to the appropriate authorities or markets, the Committee therefore analyses both the annual financial statements and quarterly and half-yearly data, in collaboration with the General Economic and Financial Management.

External audit


The Company’s external auditors appeared before the Committee in relation to the presentation of the annual accounts for 2004. During this meeting, they provided information with respect to the scope of the audits undertaken, the methods and time-scales used, the accounting principles and standards employed in the preparation of the accounts, and other issues relating to their duties.

The external auditors of other Group companies informed the Committee similarly in both manner and content.

In this connection, the Audit and Control Committee has proposed to the Board of Directors - which in turn will refer the matter for consideration by the General Meeting in 2006 -, that the appointment of the Company’s external auditor be renewed.

International Accounting Standards

In 2005 the Commission has been informed with respect to the advances made in the introduction, at internal level, of new accounting rules, and the main changes to the financial statements resulting from such introduction, the financial statements having been drawn up under these new rules in respect of the Company’s consolidated group for the first time.

Corporate governance

The Committee has performed various functions in the area of corporate governance:

• It examined the Annual Corporate Governance Report for 2004 prior to its submission to the Board of Directors.

• It analysed the new legal rules in relation to the manner of presenting information on related-party transactions.

• It reported on transactions taking place between directors and senior management and the Company and group companies, for subsequent approval by the Board of Directors.

Risk analysis and risk control systems

The examination of risk analysis work and risk control systems, undertaken by this Committee on a regular basis, has continued throughout 2005.

The Quality and Environmental Management has informed the Committee with respect to modifications arising in relation to information previously provided, most notably the inclusion in the analysis of new Group companies, the introduction of new evaluation processes, and the improvement of the policy with respect to insurance.

Control procedures

A project for the examination of control procedures in place within the Group has been started up during 2005 and is expected to be concluded in 2006. This study focuses on the systematisation and description of current controls and consideration shall be given to the introduction of other new control procedures, based either on regulatory criteria or comparative experiences.

Other activities

The Committee has analysed other issues with the collaboration of the Company’s different management units. It requested the undertaking of a study on environmental information, to verify the quality of the data of this kind prepared by the Company, the findings of such study being favourable. It has also examined in detail information of other kinds issued by Ferrovial externally, for the purpose of analysing, among other issues, the information reaching Board members.

Lastly, it should be mentioned that work has commenced on two projects for the specific examination, during 2006, of the risks present, on the one hand, in the Group’s different areas and activities, and on the other hand, in its information systems.

 

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