RESPONSABILIDADES Y OBLIGACIONES DEL PROVEEDOR

Committee membership and appointment

The Audit Committee (AC) was chaired by Alex Romer-Lee, with Susanne Taverne, John Calendar and Christine Bogdanowicz-Bindert as its other members, all of whom are independent Non-Executive Directors. The Board of FCE has determined that Alex Romer-Lee has recent and relevant financial experience.

The Chairman of FCE, Nick Rothwell, John Coffey (Chief Risk Officer), Paul Kiernan (Finance Director), Lucy Millar (Director of the General Auditor’s Office), other members of the senior management team and the external auditors are invited to attend Committee meetings.

The AC’s terms of reference are available on the Group’s website at www.fcebank.com.

Activities during the year

During the year, the AC met on four occasions and the external auditors and Director of the General Auditor’s Office (GAO) were given the opportunity after each meeting to meet with the AC, without management being present.

The AC has a calendar of standard items within its remit which reflects the Group’s reporting cycle:

March

Annual report and financial statements Independent auditors report

External auditors’ appointment Independent audit fee review (2013) June

Capital adequacy Liquidity adequacy

External audit plan and scope August

Interim report and financial statements Regulatory compliance

Anti-Money Laundering

November

Accounting policy and disclosures Internal controls framework Internal audit report (GAO)

2014 independent audit fee budget approval

During the year, the AC has considered a number of matters under the general headings above. It monitored the integrity of the financial statements and the contents of any formal announcements relating to the Group’s financial performance and reviewed any significant financial judgements contained in them. The Committee considered provisions and impairments made by the Group as well as the related accounting. In addition it considered pensions and significant matters relating to litigation and claims pending against the Group.

The AC considered the Group’s funding and liquidity position and its impact on the Group’s financial and operational capabilities. The Committee also received regular updates from the Group’s Chief Risk Officer.

The Group has established a whistle-blowing procedure for the confidential and anonymous submission by employees of concerns regarding accounting, internal controls or auditing matters. A report on any such incidents reported was presented to each AC meeting, including details of any actions taken to deal with the matters raised. No issues material to FCE were dealt with by the AC during the reporting period.

Activities during the year continued

Throughout the year, the AC also reviewed and provided challenge on a number of other specific topics. These included:

- Accounting centralisation plans

- UK Regulatory structural changes, including the Single

Euro Payments Area (SEPA) and CRD IV projects. - Updates to Internal Audit service level agreements (SLA) - Senior Accounting Officer (SAO) Certification Process - Internal Audit Quality Assessment Review (QAR)

Audit Committee report

Internal Audit

Internal controls office (ICO)

ICO is the department within FCE that delivers control consultancy, process reviews, special investigations, due diligence, advice on systems’ controls and control training across all locations. ICO's experience across operations, accounting and systems enables informed operational reviews, and sharing of best practice. This ensures a high level of quality is maintained within FCE's processes, customer and dealer services and financial products. The department has created and delivered training in ongoing controls, which includes learning points derived from audits, control reviews and self-assessment processes. This matches industry leading-edge practices to assist

management in early identification of potential control risks which is an essential element of the process to ensure compliance with the US Sarbanes-Oxley Act. General auditor’s office (GAO)

Ford’s GAO is fully independent from FCE; its coverage is based on the relative risk assessment of each 'audit entity', which is defined as a collection of processes and systems that are closely related.

The GAO's mission is to provide objective assurance and advisory services to management and the Board of Ford and to the Group’s AC in order to improve the efficiency and effectiveness of Group operations and assist the Group in achieving its objectives through systemic and disciplined auditing.

During the period the AC has reviewed and monitored the performance and resources of the GAO and is satisfied that the general auditor has appropriate resources.

External Audit

PwC conducts audits of FCE's financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). PwC provides external audit opinions on FCE’s financial statements.

The appointment and re-appointment of the external auditor for the Ford group of companies is reviewed at parent company level. However, in accordance with its current terms of reference, the AC receive annual written

confirmation that a review had been undertaken by the Ford Audit Committee of PwC's continued independence, performance, significant relationships and compliance with relevant ethical and professional guidance. In addition, the AC reviews PwC's audit plan, its scope and cost

effectiveness and the audit fee. PwC's audit fees for 2013 are outlined in Note 9 'Profit before tax' on page 64 of these financial statements.

Independence

To help ensure that the auditors’ independence and objectivity are not prejudiced by the provision of non-audit services, the AC has agreed that the external auditors should be excluded from providing management, strategic or information technology consultancy services and all other non-audit related services, unless the firm appointed as external auditor is:

- the only provider of the specific expertise/service required; or

- the clear leader in the provision of the service and is able to provide that service on a competitively priced basis.

As auditors, PwC will undertake work that they must or are best placed to complete. This includes tax-related work, formalities related to borrowings, regulatory reports or work in respect of acquisitions and disposals.

Risk management and internal controls

ICO coordinates the Modular Control Review Programme (MCRP), which has been designed, implemented and revised over several years to embed the assessment of compliance with Company policy and procedures across the Group. The MCRP provides the means for the management of each location or activity to continually review that controls are operating effectively within their operation. The

performance of regular and appropriate checks embeds sound governance principles in key processes. The MCRP facilitates high levels of control self-assessment as part of good business practice. It also embodies the principles established by the UK’s Turnbull Committee on achieving the standards in the Combined Code of Corporate Governance. The MCRP was modified for, and provides a key structure in FCE's compliance with the US Sarbanes-Oxley Act.

Audit Committee report

Risk management and internal controls continued

ICO oversees the Operational Identified Comments (OIC) Committee, a sub-committee of the Executive Operational Risk Committee. OICs are process and procedural improvement opportunities discovered through self-

assessment processes, audits or other external reviews, or in the course of day-to-day operations. The OIC Committee is responsible for monitoring and validating OIC corrective action plans. The Executive Operational Risk committee receives routine and regular reports from both ICO and the OIC Committee. Occasionally, in light of significant developments or events, the Executive Operational Risk committee may commission ICO to undertake ad-hoc reviews, or special investigations.

BY ORDER OF THE AUDIT COMMITTEE Alex K Romer-Lee