Tiscali 2003 Annual Report Download - page 46

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Internal audit system
The Director responsible identifies the main business risks, submits them to the attention of the Board of Directors and imple-
ments the Board's recommendations by developing, managing and monitoring the internal audit system, for which a Co-ordinator
is appointed and equipped with the necessary means.
The Internal Audit Co-ordinator has no line manager, and reports directly to the Chief Executive, the Internal Audit Committee and
the Board of Statutory Auditors.
The Internal Audit Co-ordinator is appointed by the Chief Executive, at the recommendation of the Internal Audit Committee. The
advisory role of the Internal Audit Committee is a further safeguard of the professionalism and independence of the Internal Audit
Co-ordinator.
International theory and practice recommend that the Internal Audit Co-ordinator be in charge of verifying the adequacy and pro-
per functioning of the internal audit system and, in the event that it is found to be deficient, of suggesting corrective action.
Implementation of improvements to the internal audit system, as recommended by the Co-ordinator, is the responsibility of the
individual departments of Tiscali S.p.A. or other companies in the Group, on the basis of instructions from the Board of Directors.
Given the above, the Internal Audit Co-ordinator has been defined as the person with operational responsibility for co-ordinating
the activities of the Internal Audit department. This ensures professionalism and methodological efficiency, while maximising the
Co-ordinator's independence from the Company's organisational units, in respect of which his actions are fully autonomous.
The Internal Audit Co-ordinator reports to the Chief Executive, the Internal Audit Committee and the Board of Auditors at least
once every three months.
The Board of Directors, on the basis of inspections carried out and in consideration of the improvements being pursued, has found
the internal audit system to be adequate in relation to the Company's needs and to laws in force.
Adaptation to Legislative Decree 231 of 2001
During the second half of 2003 the Company initiated a project to adapt its Corporate Governance model to the standards con-
tained in Legislative Decree 231 of 2001. This decree extends liability for offences committed, under certain conditions, from
the individuals who work for the Company to the Company itself. The offences in question are essentially corporate violations
(including, for example, false reporting) and offences against public officials (such as extortion and bribery). The Company is not
liable for offences committed by its employees if it can prove that it adopted suitable procedures for preventing the offences
addressed by the decree, and that it diligently ensured their implementation.
A leading consulting firm with specialised expertise in the matter has been hired to oversee this project. The risk assessment phase
has been completed, and on the basis of its results the Company has nearly finished drafting the protocols and procedures requi-
red by Legislative Decree 231. The entire project is expected to be concluded by the time the half-yearly report to 30 June 2004
is approved. The Internal Audit Committee is responsible for monitoring observance of the protocols and procedures.
Related parties
It is Company practice to keep transactions with related parties to a minimum. Any transactions of this nature that are carried out
are conducted in such a way as to ensure compliance with legal and procedural standards pursuant to article 11.1 of the Code.
When transactions with related parties that may involve a direct or indirect interest of a Director are approved, the Director(s)
concerned must inform the Board of Directors of his (their) interest and abstain from voting, as recommended in article 11.2 of
the Code.