Internal control and risk management

The board accepts final responsibility for the internal control and risk management systems of the Group.

All material risks in the Group have been identified and documented in a comprehensive risk framework per division. Proper internal control systems are in place and maintained through a divisionally controlled system. The timely execution of self-control procedures is controlled programmatically and compliance with self-control procedures is monitored internally.

The Sasguard Insurance Company Limited insures Group assets comprehensively. Sasguard is a subsidiary and has a limited insurance licence issued by the Financial Services Board. The Group is therefore self-insured, supported by external reinsurance cover for abnormal disasters and other material risks.

The daily treasury activities of the Group are limited to the raising of call and short-term loans, as well as short-term investments. Adequate borrowing facilities exist to ensure daily liquidity, whilst surplus funds may only be invested at institutions approved by the board.

Foreign currency trading is regulated by an approved policy to ensure optimal effectiveness between the buying and selling of currency.

Raw material purchases and the use of derivative financial instruments for the hedging of raw material costs are regulated by a comprehensive policy document approved by the board. Speculation with any financial instrument is specifically prohibited. Application of this policy is closely monitored by an executive committee under chairmanship of the managing director. Reports on the above procedures provide the board with reasonable assurance concerning the reporting of reliable financial information, as well as securing the Group’s assets.

Tip-offs Anonymous

Tip-offs Anonymous is an independent hotline service whereby any employee or stakeholder can on an anonymous and confidential basis report any dubious activity or unethical conduct in the Group. Reports are sent directly to the internal audit function and reported to the audit and risk committee.

Internal audit function

An independent internal audit function exists, with the head of internal audit reporting directly to the managing director with ready and regular access to the chairman of the audit and risk committee.

The department consists of eight people with relevant training and experience. The objectives, authority and responsibility of the independent internal audit function are fully described in an internal audit charter approved by the audit and risk committee. The internal audit department liaises closely with the external auditors to prevent duplication.

The internal audit of specialised information technology and the SAP ERP system environment has been outsourced to a division of PricewaterhouseCoopers Inc. This division functions independently from the external audit function.

Findings and recommendations of all internal audit processes are reported to management and the audit and risk committee.

Ethics

A new Code of Ethics has been drafted and has been circulated to each and every employee with a view that all employees may participate in the process of the design of the new Code of Ethics. The Code has been updated to include all relevant comments and will be adopted as an inherent cornerstone of the Pioneer Foods Way in the new year.