Cathay Pacific 2007 Annual Report Download - page 42

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
criterion 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 code
provisions on internal control of the CG Code.
External Auditors
The external auditors are primarily responsible for
auditing and reporting on the annual accounts. In 2007
the total remuneration paid to the external auditors
was HK$28 million, being HK$10 million for audit and
HK$18 million for tax advice.
Airline Safety Review Committee
The Airline Safety Review Committee meets monthly
to review the Company’s exposure to operational risk.
It reviews the work of the Cabin Safety Review
Committee, the Operational Ramp Safety Committee
and the Engineering Mandatory Occurrence Report
Meeting. It is chaired by the Head of Corporate Safety
and comprises Directors and senior management of all
operational departments as well as senior management
from the ground handling company, HAS, and the
aircraft maintenance company, HAECO.
Investor Relations
The Company continues to enhance relationships and
communication with its investors. Extensive
information about the Company’s performance and
activities is provided in the Annual Report and the
Interim Report which are sent to shareholders. Regular
dialogue with institutional investors and analysts is in
place to keep them abreast of the Company’s
development. Inquiries from investors are dealt with in
an informative and timely manner. All shareholders are
encouraged to attend the annual general meeting to
discuss matters relating to the Company. Any inquiries
from shareholders can be addressed to the Corporate
Communication Department whose contact details are
given on page 96.
In order to promote effective communication,
the Company maintains its website at
www.cathaypacific.com on which financial and
other information relating to the Company and its
business is disclosed.
Shareholders may request an extraordinary general
meeting to be convened in accordance with Section
113 of the Companies Ordinance.
Corporate Governance
Cathay Pacific Airways Limited Annual Report 2007
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