Cathay Pacific 2014 Annual Report Download - page 48

Cathay Pacific Airways Limited
46 Corporate Governance Report
Management structure: The Group has a clear
organisational structure that, to the extent required,
delegates the day-to-day responsibility for the design,
documentation and implementation of procedures and
monitoring of risk. Individuals appreciate where they will be
held accountable in this process.
A control self-assessment process requires management
to assess, through the use of detailed questionnaires, the
adequacy and effectiveness of controls over the reliability
of financial reporting, the effectiveness and efficiency of
operations and compliance with applicable laws and
regulations. This process and its results are reviewed by
internal auditors and form part of the Audit Committee’s
annual assessment of control effectiveness.
Controls and review: The control environment comprises
policies and procedures intended to ensure that relevant
management directives are carried out and actions that
may be needed to address risks are taken. These may
include approvals and verifications, reviews, safeguarding
of assets and segregation of duties. Control activities can
be divided into operations, financial reporting and
compliance, although there may, on occasion, be some
overlap between them. The typical control activities include:
• analytical reviews: for example, conducting reviews of
actual performance versus budgets, forecasts, prior
periods and competitors
• direct functional or activity management: reviews of
performance reports, conducted by managers in charge
of functions or activities
• information-processing: performing controls intended to
check the authorisation of transactions and the
accuracy and completeness of their reporting, for
example, exception reports
• physical controls: ensuring equipment, inventories,
securities and other assets are safeguarded and
subjected to periodic checks
• performance indicators: carrying out analyses of
different sets of data, operational and financial,
examining the relationships between them, and taking
corrective action where necessary
• segregation of duties: dividing and segregating duties
among different people, with a view to strengthening
checks and minimising the risk of errors and abuse.
The Company has in place effective processes and
systems for the identification, capture and reporting of
operational, financial and compliance-related information in
a form and time-frame intended to ensure that staff carry
out their designated responsibilities.
Internal audit: The Internal Audit Department performs
regular reviews of key risk areas and monitors compliance
with Group accounting, financial and operational
procedures. The role of Internal Audit is discussed further
on pages 47 and 48.
Audit Committee
The Audit Committee, consisting of four Non-Executive
Directors (Jack So, Fan Cheng, Irene Lee and Peter Wong),
assists the Board in discharging its responsibilities for
corporate governance and financial reporting. Three of the
Committee members are Independent Non-Executive
Directors, one of whom, Jack So, is Chairman. All the
members served for the whole of 2014.
The terms of reference of the Audit Committee follow the
guidelines set out by the Hong Kong Institute of Certified
Public Accountants and comply with the CG Code. They are
available on the Company’s website.
The Audit Committee met three times in 2014. Regular
attendees at the meetings are the Finance Director, the
Group Internal Audit Manager and the external auditors. The
Audit Committee meets at least twice a year with the
external auditors without the presence of management.
Each meeting receives written reports from the external
auditors and Internal Audit.
The work of the Committee during 2014 included reviews of
the following matters:
• the completeness, accuracy and integrity of formal
announcements relating to the Group’s performance
including the 2013 annual and 2014 interim reports and
announcements, with recommendations to the Board
for approval
• the Group’s compliance with regulatory and
statutory requirements
• the Group’s internal controls and risk
management systems
• the Group’s risk management processes
• the approval of the 2015 annual Internal Audit
programme and review of progress on the
2014 programme