GOVERNANCE

The Board is responsible for establishing and maintaining a sound system of internal control in Communicorp Group Ltd. and for reviewing its effectiveness.

Our internal control systems are designed to manage the risk of failure to achieve the Group’s strategic objectives and provide reasonable but not absolute assurance against material misstatement or loss. An ongoing process has been established for identifying, evaluating and managing the significant risks faced by the Group.

The Group’s key internal control procedures include the following:

The Communicorp Management Structure

The Board has overall responsibility for the Group and there is a formal schedule of matters specifically reserved for decision by the Board. Each Executive Director has been given responsibility for specific aspects of the Group’s affairs. The Executive Directors together with key senior executives constitute a management committee, which meets to discuss day-to-day operational matters.

The Quality and Integrity of Communicorp Personnel

The integrity and competence of personnel is ensured through high recruitment standards and subsequent training courses. High quality personnel are seen as an essential part of the control environment and the ethical standards expected are communicated through a corporate procedures manual. The appointment of senior executives within the Group requires the approval of the Board.

The Identification of Business Risks

The Board is responsible for identifying the major business risks faced by the Group and for determining the appropriate course of action to manage those risks. These are reviewed regularly by the Board throughout the year assisted by periodic reports from the senior management group updating the Board on newly identified risk areas, controls established in known areas and scoring risks on the basis of impact on the Group, likelihood of events and controls in place.

The Communicorp Budgetary Process

Each year the Board approves the annual budget. Key risk areas are identified. Performance is monitored and relevant action taken throughout the year through the monthly reporting to the Board on variances from the budget, updated forecasts for the year together with information on the key risk areas.

The Communicorp Group Ltd. Audit Committee

The Audit Committee reviews the effectiveness of the internal control process with management and reports on it to the Board. The Audit Committee also considers and determines relevant action in respect of any control issues raised by the auditors.