Huawei 2011 Annual Report Download - page 29

24
/
Cyber Security
Against the backdrop of the exponential development
of information and communications technologies, cyber
security has emerged as a global issue and a global
challenge. At Huawei, establishing and implementing
an end-to-end global cyber security assurance system
is an integral part of our development strategy.
Huawei is always ready to cooperate extensively with
governments, customers, and industry peers to address
cyber security threats and challenges all over the world.
In 2011, Huawei released the Statement on Establishing a
Global Cyber Security Assurance System. This statement,
which has been approved by Huawei’s CEO, Mr. Ren
Zhengfei, underscores the strategic importance of cyber
security to Huawei. The Global Cyber Security Committee
– the highest level cyber security management body at
Huawei – held four meetings in 2011 to decide on and
approve Huawei's overall cyber security strategy. During
the same year, Mr. John Suffolk was appointed Huawei's
Global Cyber Security Ofcer. Mr. Suffolk reports directly
to the CEO and is tasked with formulating strategies for
the cyber security assurance system as well as managing
and overseeing the implementation of the system. This
cyber security assurance system encompasses all business
domains and departments at Huawei, including R&D,
supply chain, marketing, sales, engineering delivery, and
technical services.
Over the course of 2011, Huawei identified seven
strategic priorities in cyber security assurance: open and
transparent cooperation, compliance with rules and
regulations on security and privacy, end-to-end proactive
prevention, security verification by internationally
recognized bodies, traceability, anti-backdoor & anti-
tampering, and emergency responses. Notably, Huawei
leveraged quality management methodologies to
enhance cyber security requirements in our process
management system, business decision-making system,
and even to our employee business conduct guidelines.
Huawei has always been open and transparent in its
collaboration with all parties involved in addressing
the global issue of cyber security, and work with these
partners through a variety of platforms, organizations,
and channels. Leading global carriers have fully
acknowledged Huawei’s contributions in minimizing
security risks to their existing networks as a result of
close cooperation in responding to security emergencies.
In countries such as the US, Italy, and Spain, Huawei
commissioned local third-party testing institutes to
independently examine our products for security risks
and certify them for release. At the invitation of the
British Foreign & Commonwealth Office, Huawei
attended the London Conference on Cyberspace in
November 2011 and participated in active dialogue on
cyber security with industry peers.
Critical Accounting Estimates
The consolidated financial statements on which this
management discussion and analysis was based were
prepared in compliance with International Financial
Reporting Standards (IFRSs), see note 1(a) to the
Consolidated Financial Statements Summary and Notes
for details.
The application of IFRSs requires the company to make
judgments, estimates and assumptions that directly
affect its reported financial position and operation
results. The accounting estimates and assumptions
discussed in this section are those that the management
considers to be the most critical to the company's
consolidated nancial statements.
Revenue Recognition
Application of the accounting principles related to the
measurement and recognition of revenue requires the
company to make judgments and estimates. Even for
the same product, the company often has to interpret
contract terms to determine the appropriate accounting
treatments. When services, installation and training
etc., are rendered with product sales, the company
determines whether the deliverables should be treated
as separate units of accounting. When there are
multiple transactions with the same customer, signicant
judgments should be made whether separate contracts
are considered as part of one arrangement according to
the contracts terms and conditions. When the installed
equipment is accepted by customer in different periods,
the company should determine whether the completed
project is able to be used by customer, whether
the receivable is collectible and whether revenue is
recognized by stages.
Revenue recognition is also impacted by various factors,
including the credit-worthiness of the customer.
Estimates of these factors are evaluated periodically to
assess the adequacy of the estimates. If the estimates
were changed, revenue would be impacted.
Management Discussion and Analysis