remained in the ‘high’ category is in relation to the RFU’s relationship with the Premiership clubs. During the year we have held extensive negotiations with representatives of the clubs and have now finalised a new a new eight-year agreement to commence in July 2008. We believe that this agreement will be the foundation of a much closer and more harmonious relationship with the Premiership clubs and should resolve, to the extent possible, the long running ‘club v country’ issues.

Audit and Risk Panel

The Audit and Risk Panel consists of two members of the RFU Council and two other persons who are not members of the Council. In the year the Panel was chaired by Malcolm Duncan, who is the RFU Council Member for Staffordshire. The other members were John Brine (Council Member for Buckinghamshire), Roger Parsons and John Allen. All four members are Chartered Accountants. The Panel reports directly to the Management Board and has formal terms of reference which take into account the recommendations in the ‘Smith report’ on the role of audit committees, in particular the supervision of the relationship with the Union’s external auditors. The minutes of the meetings are circulated to all members of the Management Board.

The Panel met three times in the year and, in accordance with its terms of reference, reviewed the Union’s financial statements prior to their submission to the Management Board for approval and considered matters raised by the auditors; the Panel met separately with the Union’s auditors in accordance with good practice. The Panel also reviewed and recommended improvements to the RFU’s risk management process, as described more fully above. As part of the risk management review process, the Panel considered whether the Union should establish an internal audit function. The Panel concluded that, given the increasing size and diversity of the Union’s operations (in particular once the new commercial ventures in the South Stand are fully operational) it was an appropriate time to establish an internal audit function. Following a recommendation to the Management Board, the internal audit function was established in mid 2007 with the first audit plan due to be discussed at the first Panel meeting of 2007/08. The Panel during the year also considered the matter of