Cathay Pacific 2010 Annual Report Download - page 47

Cathay Pacific Airways Limited Annual Report 2010
45
Audit Committee
The Audit Committee is responsible to the Board and
consists of four non-executive Directors, three of whom
are independent. The members currently are Fan Cheng,
Irene Lee and Peter Wong. It is chaired by an
independent non-executive Director, Jack So.
The Committee 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, including the adequacy of the
resources, qualifications and experience of the staff of the
Company’s accounting and financial reporting function,
and their training programmes and budget. 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.
The Audit Committee held three meetings during 2010,
the attendance of which, taking into account dates of
appointment or resignation/cessation, was as follows:
Fan Cheng (1/3), Irene Lee (3/3), Jack So (3/3) and Peter
Wong (3/3).
Expenditure Control Committee
The Expenditure Control Committee meets monthly to
evaluate and approve capital expenditure. It is chaired by
one executive Director, John Slosar and includes two
other executive Directors, W.E. James Barrington and
James E. Hughes-Hallett.
Internal Control and Internal Audit
The internal control system has been designed to
safeguard corporate assets, maintain 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.
Corporate Governance