Internal and External Auditors
Internal AuditorThe Company has an independent internal audit organization, which provides objective assurance and consulting services designed to add value and improve the organization’s operations. It helps organizations by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management in the Company, control and governance processes.
Internal Audit conducts its activities guided by the Institute of Internal Auditors’ (IIA) Professional Practices Framework primarily consisting of the International Standards, the Definition of Internal Auditing and the Code of Ethics, and the Company’s Code of Ethics. In the last quarter of 2010,
Internal Audit subjected its activities to an External Quality Assessment Review (EQAR) as part of its quality assurance and improvement program and as prescribed by the Standards. Punongbayan and Araullo (P&A) performed the EQAR and declared that the Corporate Audits of Meralco “generally conforms” to the IIA Standards. This further validates that these internal audit activities were in accordance with the International Standards for the Professional Practice of Internal Auditing (ISPPIA). The head of Corporate Audits reports functionally to the Audit and Risk Management Committee and administratively to the President and CEO.
External AuditorSyCip Gorres Velayo & Co. (SGV & Co.) was reappointed as the independent external auditor of the Company, through the approval of the shareholders in the Annual General Meeting.
The engagement partner assigned to the Company since 2008 is Mr. Gemilo J. San Pedro, who has extensive accounting and auditing experience. The appointment is in accordance with the SEC regulation that the audit partner principally handling the Company’s account is rotated every five years or sooner. In addition to serving as external auditor, SGV & Co. was engaged to provide non-audit services that included information and communication technology (ICT) security risk assessment in 2010, and for agreed upon procedures for the stockholders’ meeting in 2009.
The following consolidated fees (exclusive of VAT) were incurred by the Company and its subsidiaries for SGV & Co.’s services:
|Consolidated Audit Fees (in million Php)|
|Regular audit of the annual financial statements||8.8||11.2|
|Other audit-related services||-||1.0|
Other audit-related services in 2009 referred to under external auditors’ services are in relation to the Company’s filing of the Business Separation and Unbundling Plan Report and the Annual Report required by the ERC.
There has been no disagreement with the independent auditors on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure