Telkom AR front.qxp

48
Telkom Annual Report 2009
Corporate governance (continued)
Telkom Audit Services (TAS) is an independent and
objective assurance and consulting function that
focuses on a balance between
value protection
Internal controls
Our internal control environment is
monitored by the ARC, which:
• Ensures that risks are identified and
assessed.
• Ascertains that all systems and
processes to prevent and/or mitigate
these risks are monitored; and
• Reviews the quality of reporting and
adherence to internal policies and other
governance best practices.
Our organisational structure facilitates and
allows the flow of information upstream,
downstream and across all business
activities. This is supported by formal
mechanisms in place to communicate the
responsibilities and expectations of
business activities at executive level.
Section 404 of the Sarbanes-Oxley Act
requires that companies listed on the NYSE
annually evaluate and report on the
effectiveness of their controls over financial
reporting. We submit progress reports at
least quarterly to the ARC which then
reports to the Board.
Our internal audit function plays a key role
in providing an objective view and
continuous assessment of the effectiveness
of the internal control systems throughout
the Group to both management and the
ARC.
Mechanisms are in place that capture and
report on identified internal control
and value enhancement
weaknesses, including processes that
ascertain the level at which deficiencies
are reported. Significant deficiencies and
material weaknesses in internal controls are
reported to top management, the Board or
the ARC, and the external auditors.
Telkom Audit Services (TAS)
TAS, in accordance with global best
practices, is a value-adding, independent
and objective assurance and consulting
function, designed to add value to, and
improve our operations. Its mandate is to
provide an independent assessment on the
reliability of financial reporting, validate
control systems and provide an oversight of
management and overall business
activities, bringing a systematic, disciplined
approach to the evaluation and
improvement of the effectiveness of risk
management, internal controls and
corporate governance processes. In
carrying out its mandate, TAS co-ordinates
with other control and monitoring functions
(enterprise risk management, compliance,
security, legal, ethics, environment and
external audit).
TAS is required to provide reasonable
assurance and to determine whether or not
our control processes and systems are
adequate and functioning to ensure that:
• Resources and assets are effective and
efficiently
protected;
used and adequately
• Risks are appropriately identified and
managed;
• Significant financial, managerial and
operating information is accurate,
reliable and timely;
• Employees’ actions are in compliance
with policies, standards, procedures,
applicable laws and regulations;
• Significant legislative or regulatory
issues impacting on us are recognised
and addressed appropriately; and
• An assessment is provided regularly of
the adequacy and effectiveness of our
corporate governance, risk and control
processes for controlling our activities
and managing our risks.
To ensure the independence of TAS, the
Group Executive: Telkom Audit Services
reports functionally to the ARC Chairman
and administratively to the Chief Financial
Officer and has direct access to the Chief
Executive Officer. In this context, the ARC
oversees processes related to financial risks
and internal controls, financial reporting
and the monitoring of internal and external
auditing processes. In carrying out its
duties, the team has unrestricted access to
all Telkom functions, records, property and
personnel.
The TAS team conducts audit work, or any
other task, in accordance with the internal
auditing standards set by the globally
recognised Institute of Internal Auditing
(IIA). This requires compliance with the
Standards or Professional Practice of
Internal Auditing (SPPIA) and, in particular,