Vtech 2015 Annual Report Download - page 38

VTech Holdings Limited Annual Report 2015
Corporate Governance Report
36
External Auditor
The Audit Committee reviews and monitors the external auditor’s
independence and objectivity. It also meets with the external
auditor to consider the nature, scope and results of their audit with
senior management.
During the financial year, the fees in respect of audit services
and tax services provided by KPMG, the external auditor, is
summarised below:
US$ million
Audit services 0.8
Audit related services 0.1
Tax services 0.6
Responsibilities in respect of Financial
Statements
The Directors are responsible for overseeing the preparation of
the consolidated financial statements for the year ended 31 March
2015 to give a true and fair view of the state of affairs of the Group
as at that date and of its profit and cash flows for the year then
ended. In doing so, the Directors have adopted the appropriate
accounting policies, applied them consistently in accordance
with the International Financial Reporting Standards and made
judgements and estimates that are prudent and reasonable in
preparing the consolidated financial statements on the going
concern basis.
The Directors are responsible for ensuring the maintenance of
proper accounting records, safeguarding of the assets of the
Company and taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The statement by the external auditor of the Company regarding
their responsibilities on the financial statements of the Group is
set out in the Independent Auditor’s Report on page 44 of this
Annual Report.
Company Secretary
The Company Secretary is an employee of the Company, reports to
the Chairman and is responsible for providing advices to the Board
for ensuring the Board procedures are followed. The Company
Secretary has taken no less than 15 hours of relevant professional
training duly complied with the training requirement under Rule
3.29 of the Listing Rules.
Internal Controls
The Directors have the overall responsibility for internal control,
including risk management, and set appropriate policies having
regard to the objectives of the Group. The Board, through the
Audit Committee, reviewed the overall effectiveness of the
Group’s system of internal control over financial, operational and
compliance issues, risk management process, information systems
security and effectiveness of financial reporting and compliance
with the Listing Rules, and is satisfied that such systems are
effective and adequate. The Board also considered that the
resources, qualifications and experience of staff of the Company’s
accounting and financial reporting function, and their training
programmes and budget were adequate.
The Group has put in place an organisational structure with
formal and clearly defined lines of responsibility and delegation
of authority. There are also established procedures for financial
planning, capital expenditure, treasury transactions, information
and reporting systems, and monitoring the Group’s businesses and
their performance.
Internal Audit Department
The Internal Audit Department reviews the effectiveness of the
internal control system. The Internal Audit Department carries
out an annual risk assessment on each identified audit area
and devises an annual audit plan according to the nature of
business and risk exposures, and the scope of work includes
financial and operational reviews. The audit plan is reviewed
and agreed by the Audit Committee. In addition to the agreed
schedule of work, the Internal Audit Department conducts other
review and investigative work as may be required. The Audit
Committee receives summary reports from the Internal Audit
Department periodically while the results of internal audit reviews
and responses to the recommended corrective actions are also
reported to the executive Directors. The Internal Audit Department
is also responsible for following up the corrective actions to ensure
that satisfactory controls are maintained.
Other Control and Management
Code of Conduct
The Company’s policy on code of conduct is also an important part
of the Group’s internal control process. Employees are required to
strictly follow the code of conduct to ensure the Group operates
to the highest standards of business behaviour and ethics in
our dealings with customers, business partners, shareholders,
employees, and the business community. The policy is reinforced
and monitored by an annual confirmation of compliance
in writing.
Whistleblowing Policy
The Group maintains a Whistleblowing Policy to facilitate the
raising of matters of serious concern by employees in confidence.
Procedures are established for employees to report complaints and
suspected internal malpractices directly to the Chief Compliance
Officer, who will review the complaints and determine the
appropriate mode of investigation and subsequent corrective
action. Recommendations on improvements are communicated
to the respective department’s senior management for
implementation. The Chief Compliance Officer reports the results
of his review of the complaints received to the Audit Committee
twice a year.
Risk Register
The Company maintains a risk register (the “Risk Register”) to
record the major and identifiable risks in the critical functions in
the operation of the Company. The Risk Register is being reviewed
by the Risk Management and Sustainability Committee twice a
year. At management level, department representatives of each
key business unit/function maintain a risk register documenting
the key risks and the response measures of the relevant risk. To
facilitate the review of the Risk Register by the Risk Management
and Sustainability Committee, Internal Audit Department will
review the operation of the risk management framework, including
the effectiveness of reporting to the highest levels, and the
continuing operation of appropriate risk responses.