Cathay Pacific 2004 Annual Report Download - page 34

AUDIT COMMITTEE
The Audit Committee is responsible to the Board
and consists of four non-executive Directors, three
of whom are independent. The members are Vernon
Moore, Peter Lee and Jack So. It is chaired by an
independent non-executive Director, Raymond Or.
The Committee held three meetings during 2004
with 92% attendance. At these meetings,
it reviewed the completeness, accuracy and fairness
of the Company’s reports and accounts and provided
assurance to the Board that these comply with
accounting standards, stock exchange and legal
requirements. The Committee also reviewed the
adequacy and effectiveness of the internal control
and risk management systems. It reviewed the
work done by the internal and external auditors, the
relevant fees and terms, results of audits performed
by the external auditors and appropriate actions
required on significant control weaknesses.
The external auditors, the Finance Director and
the Internal Audit Manager also attended these
meetings.
EXPENDITURE CONTROL COMMITTEE
The Expenditure Control Committee meets monthly
to evaluate and approve capital expenditure. It is
chaired by one executive Director, Tony Tyler and
comprises the Finance Director, Robert Atkinson
and one executive officer, Augustus Tang.
INTERNAL CONTROL AND INTERNAL AUDIT
The internal control system has been designed
to safeguard corporate assets, maintaining proper
accounting records and ensure transactions are
executed in accordance with management’s
authorisation. The system comprises a well-
established organisational structure and
comprehensive policies and standards.
The Internal Audit Department provides an
independent review of the adequacy and
effectiveness of the internal control system.
The audit plan, which is prepared based on risk
assessment methodology, is discussed and agreed
every year with the Audit Committee. In addition to
its agreed annual schedule of work, the Department
conducts other special reviews as required.
The Internal Audit Manager has direct access to
the Audit Committee. Audit reports are sent to
the Chief Operating Officer, the Finance Director,
external auditors and the relevant management
of the auditee department. A summary of major
audit findings is reported quarterly to the Board and
reviewed by the Audit Committee. As a key criteria
of assessing the effectiveness of the internal control
system, the Board and the Committee actively
monitor the number and seriousness of findings
raised by the Internal Audit Department and also the
corrective actions taken by relevant departments.
Detailed control guidelines have been set and made
available to all employees of the Company regarding
handling and dissemination of corporate data which
is price sensitive.
Systems and procedures are in place to identify,
control and report on major risks, including
business, safety, legal, financial, environmental
and reputational risks. Exposures to these risks are
monitored by the Board with the assistance
of various committees and senior management.
The Board is responsible for the system of internal
control and for reviewing its effectiveness. For the
year under review, the Board considered that the
Company’s internal control system is adequate
and effective and the Company has complied with
the provisions on internal control of the Code on
Corporate Governance Practices of the Listing Rules.
Corporate Governance
30 Cathay Pacific Airways Limited 2004 Annual Report