Lenovo 2013 Annual Report Download - page 70

AUDIT COMMITTEE REPORT
Lenovo Group Limited 2012/13 Annual Report
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• Received reports from and met with external auditor
and internal auditor to discuss the scope of their
review and findings;
• Reviewed and discussed with management on
significant judgements and key assumptions together
with presentational and disclosure issues associated
with accounting standards and interpretive guidance
affecting the Group’s financial statements and
financial results announcements; items reviewed and
discussed included (a) the accounting treatment for
the joint ventures with Compal Electronics, Inc. and
EMC Corporation respectively and the acquisitions
of Stoneware Inc. and CCE (or formally known as
Digiboard Eletrônica da Amazônia Ltda., Digibrás
Indústria do Brasil S.A. and Dual Mix Comércio de
Eletrônicos Ltda.); (b) the carrying value of the Group’s
goodwill and the reallocation thereof following the
restructuring of the geographical reporting segments
and (c) the provisions for warranty costs, indirect tax
receivables, slow moving inventories and doubtful
receivables;
• Reviewed worldwide accounting and finance business
transformation organization of the Group;
INTERNAL CONTROLS AND
RISK MANAGEMENT SYSTEMS
• Discussed the yearly internal audit plan of the Group
to ensure adequate scope, coverage over the activities
of the Group and the resource requirements of internal
audit to carry out its functions and also reviewed the
results of the internal audit work quarterly;
• Reviewed the effectiveness of the internal control
system (including the adequacy of resources, staff
qualification and experience, training programmes and
budget of the Group’s internal audit, accounting and
financial reporting function) operating in the Group
and reviewed the corrective actions taken by the
management;
• Reviewed the enterprise risk management of the
Group including a summary of the work performed in
FY2011/12 and the plan for FY2012/13; assessed the
risk universe and the high risk items and reviewed the
steps taken by management to control these risks;
• Reviewed the management letter point status and
management system in related to revenue recognition
and inventory, and reviewed the process taken by the
Group;
• Reviewed the management process of investment
projects and the internal controls related thereto, and
reviewed the steps taken by the management for its
improvement;
RELATIONSHIP WITH EXTERNAL AUDITOR
• Reviewed and considered the external auditor’s
statutory audit scope for the fiscal year 2012/13,
including their plan and the terms of engagement, and
the letter of representation to be given by the Board;
• Reviewed the results of the audit, the reports and
management letters submitted by external auditor,
which summarised matters arising from their audit
on the Group during the year ended March 31,
2013, together with management’s responses and/or
comments to the findings;
• Assessed the external auditor’s independence and
objectivity including a review of the non-audit services
provided by the external auditor;
• Evaluated the performance of PwC and recommended
to the Board for approval the re-appointment PwC as
external auditor of the Group for the year ended March
31, 2013;
OTHERS
• Reviewed the continuing connected transactions as
set out in the directors’ report of 2011/12 annual
report of the Company and received the external
auditor’s confirmation letter on continuing connected
transactions of the Group;
• Received and reviewed the reports from General
Counsel regarding legal matters of the Group;
• Reviewed the whistleblowing mechanism of the Group
for employees to raise concerns about possible
improprieties in financial reporting, internal controls or
other matters, and the proposed enhancements to this
mechanism;