EasyJet 2008 Annual Report Download - page 33

easyJet plc
Annual report and accounts 2008
Corporate governance
continued
An ongoing process for the effective management of risk has been
defined by the Company Directors and has been adopted as follows:
• Ongoing assurance and risk management is provided through the various
monitoring reviews and reporting mechanisms embedded into the
business operations. Key monitoring reviews include those conducted
continuously in weekly meetings. Operational meetings include the
Safety Audit Group which meets monthly to discuss safety, security and
environmental risks. The Safety Review Board meets monthly, or more
regularly where events require, to review safety performance. In addition,
there are regular Commercial, Financial and IT functional meetings;
• The Executive Management Team meets monthly to consider significant
current risks. Individual department and overall business performance is
reviewed. The reporting of significant risks to the Executive Management
Team and the Board of the Company has been enhanced by the risk
management processes referred to above. Individual department and
overall business performance is reviewed;
• Written reporting of current significant risks is provided to the Board
on a monthly basis. Control weaknesses or failings are considered by
the Board if they arise;
• easyJet has had an Internal Audit function since 1 October 2006 which
considers, reviews and tests internal control matters throughout the
Group. Further details of the internal audit function’s operations are
set out below;
• An annual risk and control identification process, together with control
effectiveness testing, is conducted. The key risks to significant business
objectives are identified and the key controls to manage these risks
to the desired level are also identified;
• Action plans are set to address any control weaknesses or gaps
in controls identified.
The Directors reviewed the effectiveness of internal control, including
operating, financial, compliance and risk management controls, which
mitigate the significant risks identified. The procedures used by the
Directors to review the effectiveness of these controls include:
• Reports from management. Reporting is structured to ensure that
key issues are escalated through the management team and ultimately
to the Board as appropriate;
• Discussions with senior personnel throughout the Company;
• Consideration by the Audit Committee of any reports from
external auditors;
• The controls, which mitigate or minimise the high level risks, are tested
to ensure that they are in operation. The results of this testing are
reported to the Board which considers whether these high level
risks are effectively controlled.
Internal Audit
The Internal Audit function is a central element in easyJet’s approach to risk
management and reflects the importance placed on the internal control
processes within the business. Internal Audit’s work is focused on areas of
greatest risk to easyJet, as determined by managements’ risk identification
and assessment processes as validated by Executive Directors. The output
from this process is summarised in an audit plan, which is approved by the
Board and Audit Committee, and updated on a rolling bi-annual basis.
The Head of Internal Audit reports regularly to the Group Finance Director
and meets with the Chairman of the Audit Committee without the
presence of management on a regular basis. The Head of Internal Audit
was invited to and attended all of the Audit Committee meetings in
the year and has reported regularly on internal audit reviews to the
Executive Management Team meetings during the course of the year.
A formal audit charter is in place.
Role of Internal Audit
The Internal Audit department reviews the extent to which systems
of internal control:
• are effective;
• are adequate to manage easyJet’s significant risks;
• safeguard the Company’s assets.
The key objectives are to provide independent and objective assurance
on risks and controls to the Board and senior management; and to
assist the Board with meeting its corporate governance and regulatory
responsibilities.
The role of Internal Audit and the scope of its work continue to evolve
to take account of changes within the business and emerging best practice.
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