Lenovo 2010 Annual Report Download - page 44

2009/10 Annual Report Lenovo Group Limited
42
CORPORATE GOVERNANCE
INTERNAL CONTROL
The Board acknowledges its responsibility to ensure the Company maintains sound and effective internal controls.
This is achieved through a defined management structure with specified limits of authority and defined control
responsibility to:
• Achieve business objectives and safeguard assets against unauthorized use or disposition;
• Ensure maintenance of proper accounting records for the provision of reliable financial information for internal
use or for publication; and
• Ensure compliance with the relevant legislation and regulations.
To achieve this, the Company has established an integrated framework of internal controls which is consistent with
the COSO (the Committee of Sponsoring Organizations of the Treadway Commission) framework.
Within this framework, management performs periodic enterprise wide risk assessments and continuously monitor
and report the progress of action plans to address the key risks. They also track and report on the implementation
of strategic initiatives, business plans, budgets and financial results. As part of the focus on financial integrity, all
relevant senior executives regularly verify the accuracy and completeness of the quarterly financial statements and
compliance with key internal controls.
While management is responsible for the design, implementation and maintenance of internal controls, the Board
and its Audit Committee oversee the actions of management and monitor the effectiveness of the established
controls. To assist the Audit Committee in its oversight and monitoring activities, the Company maintains an
independent worldwide Internal Audit function which provides objective assurance to the Audit Committee that the
system of internal controls is effective and operating as intended. The mission of Internal Audit is to provide the
Board of Directors and Lenovo management with:
• Independent and objective assessment of Lenovo’s system of internal control;
• Guidance in managing and controlling risks for Lenovo stakeholders;
• Proactive support to improve Lenovo’s control posture; and
• Independent investigations regarding allegations of fraud and violations of Lenovo’s Business Conduct
Guidelines.
In selecting the audits to perform each year, Internal Audit uses information collected throughout the year from
process owners, the risk assessment team, senior executives, external auditor and the Board. The developed audit
plan is reviewed by the Audit Committee, who are also given quarterly updates on the performance of the plan and
key findings. Ad hoc reviews may also be performed on areas of concern identified by management or the Audit
Committee. During the year, Internal Audit issued multiple reports covering most of the operational and financial
units worldwide.
The Company’s Code of Conduct captures Lenovo’s commitment to an environment of uncompromising integrity
and helps employees determine when to ask for advice, and where to seek it. Furthermore, in keeping with
best practices, Lenovo has also developed and implemented an Anti-Bribery and Anti-Corruption Policy which
reinforces the message in the Code of Conduct and provides additional specific guidance regarding compliance
with rules and laws related to bribery and corruption.