Lenovo 2011 Annual Report Download - page 40

2010/11 Annual Report Lenovo Group Limited 43
Also essential to the internal control system are well
defined policies and procedures that are properly
documented and communicated to employees.
The Corporate policies form the basis of all our
major guidelines and procedures and set out the
control standards required for the functioning of our
business entities. The policies cover those required
for administrative and operating activities such as
performance monitoring, employee health and safety,
delegation of authority, personnel administration,
information security, and business continuity
management.
Additionally, the Company’s Code of Conduct
demonstrates Lenovo’s commitment to an environment
of uncompromising integrity and helps employees
determine when to ask for advice, and where to obtain
it. All Lenovo employees are required to comply with
the company’s Code of Conduct, which is available on
Lenovo’s intranet, and to participate in annual training to
reinforce the company’s commitment to compliance and
to conducting business with integrity. Lenovo regards
any violation of this Code as a serious matter and is
committed to follow up on all reported concerns.
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.
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.
To enable it to fulfill its mission, Internal Audit has
unrestricted access to all corporate operations, records,
data files, computer programs, property, and personnel.
To preserve the independence of the internal audit
function, the Head of Internal Audit reports directly to
the Audit Committee on all audit matters and to the
Chief Financial Officer on administrative matters. The
Head of Internal Audit is authorized to communicate
directly with the Chairman of the Board and other Board
members. To help ensure the quality of the Internal
Audit function and provide assurance that the Internal
Audit function is in conformity with the standards
of the Institute of Internal Auditors, Internal Audit
has implemented a comprehensive and continuous
quality assurance program covering all Internal Audit
activities. In addition, the Audit Committee periodically
commissions an independent external quality assurance
review of the Internal Audit function.
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. Using this
information Internal Audit develops a risk based audit
plan focusing on areas with significant risks or where
substantial changes have been made. The 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. In addition to reviews
performed by Internal and External Auditors, Lenovo
also places importance on self testing of key controls
by our management in order to ensure that their internal
controls are working as intended or necessary actions
have been taken to address control weaknesses.