Annual report and accounts 2016
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Spanish corporate governance <strong>report</strong> continued<br />
vi) To establish the appropriate relationships with the external auditor in order to receive information on matters<br />
which may jeopardise its independence, for its examination by the Audit <strong>and</strong> Compliance Committee, <strong>and</strong> on<br />
any other matters relating to the audit process, <strong>and</strong>, as appropriate, the authorisation of permissible non-audit<br />
services as legally established, as well as any other communications provided for in the audit legislation<br />
<strong>and</strong> st<strong>and</strong>ards.<br />
In all cases, the declaration of their independence in relation to the entity or entities directly or indirectly related<br />
thereto must be received annually from the external auditors, as well as information on the additional services<br />
of any kind provided <strong>and</strong> the corresponding fees received.<br />
vii) To issue on an annual basis, prior to the issue of the auditor’s <strong>report</strong>, a <strong>report</strong> expressing an opinion on whether<br />
the independence of the auditor is compromised. This <strong>report</strong> must contain, in all cases, the assessment of the<br />
provision of the additional services referred to in the preceding paragraph, taken individually <strong>and</strong> as a whole,<br />
other than the statutory audit <strong>and</strong> in relation to the rules on independence or to audit regulations.<br />
viii) To develop <strong>and</strong> implement a policy on the engagement of the external auditors to supply additional non-audit<br />
services pursuant to the provisions of the UK Corporate Governance Code issued by the Financial<br />
Reporting Council.<br />
ix) To ensure that the external auditor has a yearly meeting with the Board of Directors in full to inform on the<br />
work undertaken <strong>and</strong> any developments in the Company’s risk <strong>and</strong> accounting positions.<br />
x) In the event of the external auditor’s resignation, to review any underlying circumstances.<br />
During <strong>2016</strong>, the Audit <strong>and</strong> Compliance Committee reviewed the work undertaken by the external auditors <strong>and</strong> assessed their<br />
independence, objectivity <strong>and</strong> performance. In doing so, it took into account relevant professional <strong>and</strong> regulatory requirements<br />
<strong>and</strong> the relationship with the auditor as a whole, including the provision of any non-audit services. The Audit <strong>and</strong> Compliance<br />
Committee monitored the auditors’ compliance with relevant regulatory, ethical <strong>and</strong> professional guidance on the rotation of<br />
partners, <strong>and</strong> assessed its qualifications, expertise, resources <strong>and</strong> the effectiveness of the audit process, including a <strong>report</strong> from the<br />
external auditor on its own internal quality procedures. The Audit <strong>and</strong> Compliance Committee decided not to tender the audit for<br />
the Company for fiscal year 2017.<br />
The Audit <strong>and</strong> Compliance Committee receives a quarterly <strong>report</strong> on compliance with the Group’s External Auditor Services Policy,<br />
which restricts the volume <strong>and</strong> types of non-audit services that Ernst & Young can provide throughout the Group.<br />
The Board of Directors approved in January <strong>2016</strong> a Shareholder Communication Policy regarding communication <strong>and</strong> contact with<br />
shareholders, institutional investors <strong>and</strong> proxy advisors that regulates the relationship <strong>and</strong> channels of communication of the<br />
Company with shareholders, institutional investors <strong>and</strong> proxy advisors. This policy complies in full with market abuse regulations<br />
<strong>and</strong> provides an equitable treatment to shareholders in the same position.<br />
In addition, the Company has a Group St<strong>and</strong>ing Instruction on business integrity in order to ensure compliance with competition<br />
<strong>and</strong> anti-bribery legislation. As stated in this Instruction, IAG <strong>and</strong> its staff are bound by values of integrity <strong>and</strong> responsibility; the<br />
Company is firmly committed to maintaining the highest st<strong>and</strong>ards of ethics, honesty, openness <strong>and</strong> accountability.<br />
This Instruction applies to all staff of IAG <strong>and</strong> its subsidiary companies <strong>and</strong> to suppliers <strong>and</strong> their representatives when working for<br />
IAG. A breach of these principles will be managed in accordance with the Company’s established disciplinary procedures or<br />
contract engagement terms. In accordance with this policy, staff should immediately <strong>report</strong> any actual or potential breaches of the<br />
Instruction to their line managers or, if not appropriate for whatever reason, to the Chief of Staff or General Counsel. All matters will<br />
be dealt with in confidence. Timely, appropriate <strong>and</strong> thorough investigations will be carried out into all cases of actual or suspected<br />
breaches whether discovered or <strong>report</strong>ed. There is also m<strong>and</strong>atory training providing specific guidance on how these policies<br />
apply to staff in their respective roles.<br />
This Instruction also prevents the offering or making of payments or the offering or promising of gifts to dishonestly influence a<br />
decision or to induce or reward a person for improper performance of their functions or job activity.<br />
The Company has established whistleblowing procedures so that staff can <strong>report</strong> any malpractice. In addition to this, there is a<br />
whistle blower hotline as an alternative for those employees who, for whatever reason, do not feel comfortable using internal<br />
procedures. This hotline is an independent, confidential call bureau. All calls are forwarded to the highest level of management<br />
within IAG.<br />
Conflict of interest situations are also covered within IAG’s employees’ regulations, establishing appropriate <strong>report</strong>ing obligations. If<br />
employees become aware of any potential conflicts of interest, these must be disclosed to the Company as soon as possible.<br />
INTERNATIONAL AIRLINES GROUP<br />
<strong>Annual</strong> Report <strong>and</strong> Accounts <strong>2016</strong>