Cathay Pacific 2014 Annual Report Download - page 49

ANNUAL REPORT 2014
47Corporate Governance Report
• periodic reports from Internal Audit and progress in
resolving any matters identified in them
• significant accounting and audit issues
• the Company’s policy regarding connected transactions
and the nature of such transactions
• the relationship with the external auditors as discussed
on page 48
• the Company’s compliance with the CG Code.
In 2015, the Committee reviewed, and recommended to the
Board for approval, the 2014 financial statements.
Assessing the Effectiveness of Internal Controls
On behalf of the Board, the Audit Committee reviews
annually the continued effectiveness of the Group’s
systems of internal controls dealing with risk and financial
accounting and reporting, the effectiveness and efficiency
of operations, compliance with laws and regulations, and
risk management functions.
This assessment considers:
• the scope and quality of management’s monitoring of
risks and of the systems of internal control, the work of
Internal Audit and the assurances provided by the
Finance Director
• the changes in the nature and extent of significant
risks since the previous review and the Group’s ability
to respond to changes in its business and the
external environment
• the extent and frequency with which the results of
monitoring are communicated, enabling the Committee
to build up a cumulative assessment of the state of
control in the Group and the effectiveness with which
risk is being managed
• the incidence of any significant control failings or
weaknesses that have been identified at any time during
the period and the extent to which they have resulted in
unforeseen outcomes or contingencies that have had,
could have had, or may in the future have, a material
impact on the Company’s financial performance
or position
• the effectiveness of the Company’s processes in
relation to financial reporting and statutory and
regulatory compliance
• areas of risk identified by management
• significant risks reported by Internal Audit
• work programmes proposed by both Internal Audit and
the external auditors
• significant issues arising from internal and external
audit reports
• the results of management’s control self
assessment exercise.
As a result of the above review, the Board confirms that the
Group’s internal control systems are adequate and effective
and have complied with the CG Code provisions on internal
control throughout the year and up to the date of this
annual report.
Expenditure Control Committee
The Expenditure Control Committee meets monthly to
evaluate and approve capital expenditure. It is chaired by
one Executive Director (Rupert Hogg) and includes two
other Executive Directors (W.E. James Barrington and
Martin Murray).
Company Secretary
The Company Secretary is an employee of the Company
and is appointed by the Board. The Company Secretary is
responsible for facilitating the Board’s processes and
communications among Board members, with shareholders
and with management. The Company Secretary undertakes
at least 15 hours of relevant professional training annually to
update his skills and knowledge.
Internal Audit Department
The Internal Audit Department provides an independent
review of the adequacy and effectiveness of the internal
control system. The audit plan, which is prepared based on
risk assessment methodology, is discussed and agreed
every year with the Audit Committee. In addition to its
agreed annual schedule of work, the Department conducts
other special reviews as required. The Group Internal Audit
Manager has direct access to the Audit Committee. Audit
reports are sent to the Chief Operating Officer, the Finance
Director, external auditors and the relevant management of
audited departments. A summary of major audit findings is
reported quarterly to the Board and reviewed by the Audit
Committee. As a key criterion of assessing the
effectiveness of the internal control system, the Board and
the Audit Committee actively monitor the number and
seriousness of findings raised by the Internal Audit
Department and also the corrective actions taken by
relevant departments.