GOVERNANCE


Audit and Accountability

External Audit

The Company has established appropriate standards for the selection of an external auditor, and exercise effective oversight on the process to strengthen the external auditor’s independence and enhance audit quality. The selected external auditor should have adequate quality control procedures and the ability to understand the Company’s complex related party transactions, its counterparties, and valuations of such transactions.

The appointment, reappointment, removal, and fees of the external auditor are recommended by the Audit Committee, approved by the Board and ratified by the shareholders.

Following CHI’s Revised Manual of Corporate Governance, the external auditor position rotates every five (5) years or earlier, or the handling partner is replaced within the said time period.

The percentage of shareholders that ratified the appointment, reappointment, removal, and fees of the external auditor are provided in the results of the Annual Stockholders’ Meeting and Voting. They may be accessed through the following links:

 

Independent Public Accounts

SGV & Co. is the principal accountant and external auditor of CHI, with Dolmar C. Montañez as the partner-in-charge for the 2019 audit year.

The Audit Committee is empowered to independently review the integrity of financial reporting and oversee the independence of external auditors. The Committee, in its oversight function, is likewise responsible for reviewing all financial reports for compliance with the internal financial management handbook and pertinent accounting standards, including regulatory requirements. It also recommends to the Board and stockholders the appointment of external auditors and the setting of appropriate audit fees.

Audit and Audit Related Fees

The Company and its various subsidiaries and affiliates paid SGV the following fees in the past three years.

Audit Year Audit and Audit Related Fees Other Fees
2019 1,146 458
2018 1,300 477
2017 1,488 706

Figures are in thousand pesos and are exclusive of VAT and out-of-pocket expenses.

 

Internal Audit

The Internal Audit Department (IAD) is an independent unit that reports to the Audit Committee. Through this committee, IAD assists the Board in the discharge of its duties and responsibilities as provided for in the Code of Corporate Governance for Publicly Listed Companies.

The department provides independent and objective assurance and consultancy services to the company with the objective of adding value and assisting the organization in accomplishing its objectives through effective control, risk management, and governance processes.

Assurance services involve the internal auditor’s objective assessment of evidence to provide opinions or conclusions regarding an entity, operation, function, process, system or other subject matters.

Consulting services are advisory in nature and are generally performed at the specific request of the engagement client. The nature and scope of consulting engagement are subject to agreement with the engagement client.

The Internal Audit Plan is formulated annually. Any revisions and/or updates thereto within the year are presented to the Audit Committee for its approval.

The Department adopts an Internal Quality Assurance Improvement Program that involves periodic self-assessment and review. The department likewise conducts periodic departmental performance review against its commitments.

An external quality assurance review is conducted every five years.

Jennifer G. Sia serves as the company’s Internal Audit Manager.

 

Risk-based Audit Approach

IAD conducts its audits in compliance with the International Standards for the Professional Practice of Internal Auditing (ISPPIA).

In 2019, engagements were executed in accordance with the risk-based, process-focused approach. Regular audits of the Company’s high-risk key processes were conducted in accordance with an approved Internal Audit Plan, and special audits were undertaken as necessary.

The Internal Audit Activity is governed by its Charter:
Revised Internal Audit Activity Charter-2018

 

External Quality Assurance Review (EQAR)

An external assessment opinion by Punongbayan & Araullo (P&A), a member firm within Grant Thornton International Ltd, in 2019 concluded that the Company’s internal audit activities generally conforms with the International Standards for the Professional Practice of Internal Auditing (ISPPIA) as issued by the Institute of Internal Auditors (IIA).

Internal Auditing Standard 1312 of the Institute of Internal Auditors (IIA) requires external assessments be conducted at least once every five years by a qualified, independent assessor or assessment team from outside the Company.

Aside from compliance with IIA’s International Professional Practices Framework which includes the definition of Internal Auditing, the ISPPIA and the Code of Ethics, the EQAR covered the assessment of IAD’s compliance with its charter, plans, policies, procedures, practices and applicable legislative and regulatory requirements; expectations of the IAD as expressed by stakeholders (includes the Board of Directors and Audit Committee, Senior Management and IAD’s auditees); integration of the IAD into the organization’s governance process, including the attendant relationships between and among the key groups involved in that process; tools and techniques employed by the IAD; mix of knowledge, experience and within the staff, including staff focus on process improvement; and areas on which the IAD is able to add value to help improve the organization’s operations.

 

Internal Control and Compliance System Attestation

The Company’s Chief Executive Officer and Chief Audit Executive attest in writing, at least annually, that a sound internal audit, control and compliance system is in place and working effectively.

Please see below the annual attestation:
Internal Control and Compliance System Attestation