|
CORPORATE
GOVERNANCE AT CYTA
Over the past few years there
has been an increased effort internationally to implement the code of Corporate
Governance in companies that are listed on the world’s Stock Exchanges, in an
effort to protect the interests of both shareholders and stakeholders. At CYTA,
despite the fact that we have no obligation to comply with the principles of
Corporate Governance, we have nonetheless decided to adopt them wherever
possible and where they do not contravene the provisions of the
Telecommunications Law. The basic reason for this is our firm belief that good
Corporate Governance within our Organisation will enhance our ability to
successfully manage the contemporary challenges that will face us, due to
technological developments and the competitive environment. The responsibility
for good Corporate Governance at CYTA has always rested - and still does - with
all the members of the Board of Directors.
BOARD OF DIRECTORS
According to the Cyprus Code of Corporate Governance,
"every listed company should be governed by an effective
Board of Directors (BoD), which should lead and control the company".
Our Board is composed of nine non-executive members, who are appointed by the
Council of Ministers according to the relevant law. The Board has set up a
number of committees to help it with the fulfilment of its duties, one of which
is the Audit Committee. The Board meets regularly – about once a week – while
the various committees meet as and when required.
For a more effective
execution of its duties, the Board has access to independent consultation,
whenever deemed necessary. Furthermore, all Board Members have access to
information and to the services of the company’s Legal Advisor.
The remuneration of the
Board is decided by the Council of Ministers, while its relations with the
shareholder (Government) are determined by relevant provisions in the
Telecommunications Law.
AUDIT COMMITTEE
The Audit Committee was formed in 2004 and comprises entirely
of Members of the Board of CYTA.
The Committee held seven
meetings during 2005. In accordance with its mandate, the Committee reviewed,
inter alias, CYTA’s Financial Statements for 2004 together with the underlying
accounting principles, as well as the audit findings of the external auditors.
The Committee also reviewed the Management Accounts and Budgetary Control for
2004. During the year, the interim Financial Statements, Management Accounts and
rolling Budgets were also reviewed.
In the context of its
responsibility to review the effectiveness of internal audit systems, the
Committee assessed the audit work done by the Internal Audit Department (IAD) in 2004
and oversaw the implementation of the recommendations made. It also approved the
Annual Audit Programme for 2005, prepared on the basis of the results of the risk
assessment carried out for CYTA. This was also reviewed by the Committee.
Moreover, it reviewed other audit work carried out by the IAD during the year.
The Committee also
reviewed the services offered by the external auditors with the aim of ensuring
the auditors’ independence and objectivity.
RISK ASSESSMENT AND
RISK MANAGEMENT
Over the past few years we have been using workshops to assess risks throughout
CYTA. Specifically, the IAD undertakes the facilitation
and co-ordination of special workshops which cover all the Business Units of the
Organisation, as well as the main interdepartmental processes and major
projects. Participants in these workshops are representatives from different
levels of the hierarchy of each Unit that takes part. At first we examine
whether the goals of the Units are reflected by their activities and if they
contribute to the achievement of the corporate goals. Next, the risks that
threaten the achievement of those goals are identified, as well as the controls
that are already in place to mitigate them. Then, the risks are assessed based
on their impact on the Organisation and the probability of their occurring.
Finally, all corporate risks are prioritised and, on this basis, the Annual
Audit Program is prepared and subsequently submitted to Management and the Board
for approval.
INTERNAL CONTROL
ASSESSMENT
According to the Code of Corporate Governance applicable in Cyprus, the BoD must
maintain a sound system of internal control, to safeguard the shareholders’
investment and the company’s assets. In our Organisation, the basic goal of the
audits is the evaluation of the adequacy and effectiveness of the internal
controls that are embedded in the various procedures for the execution of the
activities and projects. The purpose of these assessments is the identification
of opportunities for improvement in the procedures as well as in the internal
controls. The ultimate aim, of course, is the enhancement of our ability to
achieve our goals. The results of the audit work are agreed with the audited
Units and are submitted to General Management as the supreme executive body for
approval of the necessary actions. An executive summary of the results of all
audit work is regularly submitted to the Board for information purposes.
According to
international best practices, the assessment of internal controls at the
corporate level is based on the COSO methodology. In 2005 we invited consultants
to train us on the implementation of the specific methodology.
 INTERNAL
AUDIT DEPARTMENT
In recent years, the IAD of our Organisation has
managed to discard its traditional image of the "policeman" auditor and to be
accepted within CYTA as an important function in the value added chain. The
role of the IAD is more of a consulting nature, since it uses modern
methodologies and tools for providing high quality services to its clients. It
is important to note that, during 2005, 75% of our internal auditors had
obtained the qualification of Certified Internal Auditor.
Furthermore, the
quality of our IAD has been assessed by the Institute of Internal Auditors in
areas such as compliance with international standards, the efficiency and
effectiveness of the auditors, the audit coverage of the Organisation, and the
assessment of techniques and audit methodologies followed. The image of the IAD
within CYTA has also been assessed.
The results show that our IAD compares very favourably with
the respective departments of much bigger firms all over the world.
^ top |
