A control self-assessment process requires management to Internal audit: Independent of management, the assess, through the use of detailed questionnaires, the Internal Audit Department (“IA”) reports directly to the adequacy and effectiveness of risk management and Audit Committee and performs regular reviews of key internal controls over the reliability of financial reporting, risk areas and monitors compliance with Group the effectiveness and efficiency of operations and accounting, financial and operational procedures. The compliance with applicable laws and regulations. This role of IA is discussed further on pages 104 to 105. process and its results are reviewed by internal auditors and form part of the Audit Committee’s annual assessment Audit Committee of control effectiveness. The Audit Committee, consisting of three Non- Controls and review: The control environment comprises Executive Directors, M.Y. Wu, L.K.L. Cheng and M.J. policies and procedures intended to ensure that relevant Murray, assists the Board in discharging its management directives are carried out and actions that responsibilities for corporate governance and financial may be needed to address risks are taken. These may reporting. Two of the Committee members are include approvals and verifications, reviews, safeguarding Independent Non-Executive Directors, one of whom, of assets and segregation of duties. Control activities can M.Y. Wu, is Chairman. All the members served for the be divided into operations, financial reporting and whole of 2022. compliance, although there may, on occasion, be some The terms of reference of the Audit Committee follow overlap between them. The typical control activities the guidelines set out by the Hong Kong Institute of include: Certified Public Accountants and comply with the CG • analytical reviews: for example, conducting reviews of Code. They are available on the Company’s website. actual performance versus budgets, forecasts, prior The Audit Committee met three times in 2022. Regular periods and competitors attendees at the meetings are the Finance Director, the • direct functional or activity management: reviews of Head of Internal Audit of the Swire group and the performance reports, conducted by managers in charge external auditors. The Audit Committee meets at least of functions or activities twice a year with the external auditors, and at least • information-processing: performing controls intended to once a year with the Head of Internal Audit, in each check the authorisation of transactions and the case without the presence of management. Each accuracy and completeness of their reporting, for meeting receives written reports from the external example, exception reports auditors and IA. The external valuer (Cushman & • physical controls: ensuring equipment, inventories, Wakefield Limited) also attended two of the meetings. securities and other assets are safeguarded and subjected to periodic checks The work of the Committee during 2022 included • performance indicators: carrying out analyses of reviews of the following matters: different sets of data, operational and financial, • the completeness, accuracy and integrity of formal examining the relationships between them, and taking announcements relating to the Group’s performance corrective action where necessary including the 2021 annual and 2022 interim reports • segregation of duties: dividing and segregating duties and announcements, with recommendations to the among different people, with a view to strengthening Board for approval checks and minimising the risk of errors and abuse • the Group’s compliance with regulatory and The Company has in place effective processes and systems statutory requirements for the identification, capture and reporting of operational, • the Group’s risk management and internal control financial and compliance-related information in a form and systems time-frame intended to ensure that staff carry out their • the Group’s risk management processes designated responsibilities. • the Group’s cybersecurity 103 SWIRE PROPERTIES ANNUAL REPORT 2022