Lenovo 2016 Annual Report Download - page 84

82 Lenovo Group Limited 2015/16 Annual Report
CORPORATE GOVERNANCE REPORT
To assist the Board’s Audit Committee in its oversight and monitoring activities, the Company maintains
an independent, worldwide Internal Audit function. Internal Audit 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 and Lenovo management with:
• Independent and objective assessment of Lenovo’s system of internal controls;
• Guidance to Lenovo stakeholders for improving risk management;
• Proactive support to improve Lenovo’s control posture; and
• Independent investigations regarding certain allegations of fraud and violations of the Code and
other company policies.
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, the Audit Committee Chair and other Board
members as deemed necessary. 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 performs a risk assessment using information
collected from process owners, the enterprise risk management team, senior executives, the external
auditor and the Board along with an analysis of prior audit issues and other data. Internal Audit develops
an audit plan that prioritizes areas with significant risks or deemed to be strategic in nature to the
business. The audit plan is reviewed by the Audit Committee, which is also given quarterly updates on
the performance of the plan and key findings. As necessary throughout the year, the audit plan will be
modified to reflect emerging risks or changes to business plans. Ad hoc reviews of areas of concern
identified by management or the Audit Committee may also be performed. During the last year, Internal
Audit issued multiple reports covering all significant operational and financial units worldwide. In keeping
with best practices, Internal Audit regularly monitors the status of management action plans resulting
from audit findings to ensure completion and reports progress each quarter to the Audit Committee.
Audit Committee reporting also includes identified key control issues to provide the Audit Committee full
visibility to the status of Lenovo’s control environment.
Furthermore, Internal Audit is responsible for investigating certain allegations of potential violations
of the Code, or any other company policies as appropriate. Internal Audit partners with Legal, Ethics
and Compliance, Human Resources, and other subject matter experts where necessary to ensure the
appropriate expertise when performing these investigations. Management and the Audit Committee are
informed of the results of these investigations, any resulting required actions, and status updates on
actions.