Internal Audit and Control

It is the policy of Ayala to establish and support an Internal Audit function as a fundamental part of its Corporate Governance practices. The Internal Audit Unit reports functionally to the Audit Committee of the Board of Directors and administratively to the President and Chief Operating Officer or his designate.

Internal Audit adopts a risk-based audit approach in developing its annual work plan, which is re-assessed quarterly to consider emerging risks. The Audit Committee reviews and approves the annual work plan and all deviations therefrom, and ensures that internal audit examinations cover the evaluation of adequacy and effectiveness of controls encompassing the company’s governance, operations, information systems, reliability and integrity of financial and operational information, safeguarding of assets, and compliance with laws, rules and regulations. The committee also ensures that audit resources are reasonably allocated to the areas of highest risk.

The audit team is composed of certified public accountants, certified internal auditors, certified risk management assurance practitioners, IT auditors, and a Fellow of the Institute of Corporate Directors. The internal auditors are members of the Institute of Internal Auditors-Philippines and adopt the International Professional Practices Framework promulgated by the IIA Inc. (USA).

In November 2014, the Internal Audit Unit successfully completed a thorough third-party quality assessment review conducted by PricewaterhouseCoopers. Internal Audit continues to maintain the “Generally Conforms” rating from the 2007 external review. The rating, considered the highest possible score for the QAR, confirmed that Internal Audit’s activities conform to the International Standards for the Professional Practice of Internal Auditing.

Ayala’s Internal Audit also collaborates with the internal audit functions of the subsidiaries and affiliates to promote sharing of knowledge and/or best practices through the Ayala Group Internal Audit Network.

In 2014, the annual AGIAN conference was held with the theme “Sustaining Relevance through Innovation” to emphasize that internal auditors must innovate to stay relevant. Internal Audit has to align with the strategic objectives of the organization, collaborate with other assurance providers, take advantage of technology to make internal audit more efficient and effective, and ensure that the risk management process and internal controls support or encourage innovation.

To ensure that internal auditors are equipped with the required auditing skills during the conduct of their reviews, the company provides continuing training and development programs from specific job skills to long-term professional development to its internal auditors.

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