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Corporate governanceCompany’s shareholders’ mandate for IPTs. The IPTs wereaudited by the internal auditors on a semi-annual basis andtheir findings reported to the Committee.The Committee reviewed the internal auditors’ and externalauditors’ plans to ensure they are sufficient for the review ofthe significant internal controls of the Company. TheCommittee also reviewed the independence and objectivityof the external auditors, which included the nature andextent of their non-audit services to the Company.Internal ControlsPrinciple 12 : Sound system of internal controlsThe Audit Committee reviews the reports submitted by theexternal and internal auditors relating to the effectiveness ofthe Company’s material internal controls, including financial,operational and compliance controls, risk management, andrisks of fraud and irregularities. The Committee also reviewsthe effectiveness of the actions taken by Management onthe recommendations made by the internal and externalauditors in this respect. The Board is satisfied that there areadequate internal controls in the Company.The system of internal controls established by the Companyis designed to manage and minimise the risk of failure inachieving Company’s goals and objectives. There are clearpolicies and procedures in ensuring adequacy of controls andeffective management of risks. However, it should berecognised that such a system is designed to providereasonable assurance, but is not an absolute guarantee,against material misstatement or loss.The Company has put in place a shareholder value-basedinternal control system in areas such as financial, operationaland compliance controls, and risk management. The principalaim of the internal control system is the management ofbusiness risks with a view to safeguarding shareholders’investments and the Company’s assets. The systemincludes, inter-alia, enterprise risk management and internalauditing. The Board monitors the Company’s risks throughthe Board Risk Committee, Audit Committee and GroupInternal Audit.The Company also has a whistle-blower protection policy toencourage the reporting in good faith of suspectedreportable conduct by establishing clearly definedprocesses through which such reports may be made withthe confidence that employees and other persons makingsuch reports will be treated fairly and, to the extentpossible, protected from reprisal.Board Risk CommitteeThe Company’s Board Risk Committee, which consists offive independent Directors, meets regularly at least fourtimes a year to review and guide Management on theGroup’s risk profile, the Company’s processes to identify andmanage significant risks, risk mitigation strategies and riskpolicies. The Committee is supported by Enterprise RiskManagement Committee (“ERMC”) comprising all the headsof department. ERMC reports to the Committee quarterly toensure that the actions to mitigate or reduce the risks thathave been identified have been implemented, and to reporton the effectiveness of the actions or improvements to therisk mitigating actions. The ERMC also reports to the BoardRisk Committee quarterly on the mitigating actions taken tocontrol the top 11 risks of the Group.Internal AuditPrinciple 13: Independent internal audit functionThe Company has its own in-house Internal AuditDepartment (“Group Internal Audit”) that is independent ofthe activities it audits. Group Internal Audit reports directly tothe Chairman of the Audit Committee and administratively tothe Director (Corporate Services).The key role of Group Internal Audit is to assist the AuditCommittee to ensure that the Company maintains anadequate system of internal controls by periodic reviews ofmaterial controls and procedures to test their effectiveness.Group Internal Audit is committed to meet or exceed theStandards for the Professional Practice of Internal Auditingset by The Institute of Internal Auditors Inc, which has itsheadquarters in USA, and has incorporated them into itsaudit practices.Using a risk-based audit methodology, Group Internal Auditplans its internal audit assignments annually in consultationwith, but independent of, Management. Its plan is submittedto and approved by the Audit Committee. Based on the risk52Corporate governanceKeppel Land LimitedReport to Shareholders 2006