The internal audit activities conform to the concepts and principles enunciated in the definition of internal auditing as an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. Internal audit services are performed in accordance with the International Standards for the Professional Practice of Internal Auditing.
The internal audit group is led by a chief audit executive and includes 23 other staff with professional qualifications, which include Certified Internal Auditors, Certified Information Systems Auditors and Certified Public Accountants. The tasks of the internal audit group are set out in the Corporate Audit Charter and the Code of Corporate Governance of Meralco. To provide for independence of the internal audit group, the chief audit executive reports functionally to the AuditCom and administratively to the President and CEO in a manner outlined in the Corporate Audit Charter.
Ms. Helen T. de Guzman, the First Vice President and Chief Audit Executive of the Manila Electric Company or MERALCO, heads the company’s Corporate (Internal) Audits. Prior to her internal audit posting, she held other positions within the MERALCO group and other companies as external auditor, accounting officer, finance and administrative officer, comptroller, assistant general manager, treasury operations officer & assistant treasurer and compliance officer.
Ms. De Guzman is a Certified Internal Auditor, a Certified Public Accountant, an Executive MBA degree holder from the Asian Institute of Management, and a Fellow of the Institute of Corporate Directors of the Philippines. She likewise belongs to the core group of independent validators of the Institute of Internal Auditors Philippines (IIAP) and is a qualified team leader for external quality assessment reviews.
Annually, a risk-based internal audit plan is prepared and approved by the AuditCom.
The internal audit group issues reports to Senior Management and the Audit and Risk Management Committee on the results of reviews and audits covering various operational units of the Company and its subsidiaries including specific areas of concern identified by Management. Significant concerns, which have been reported by the internal audit group, and the implementation of responsive remedial measures, are monitored by Management and by the AuditCom.
SyCip Gorres Velayo & Co. (SGV & Co.) was reappointed as the independent external auditor of the Company through the approval of shareholders in the Annual General Meeting on May 28, 2013.
The engagement partner assigned to the Company in 2014 is Martin C. Guantes who has extensive accounting and auditing experience. The appointment is in accordance with the SEC regulation on the qualification of external auditors.
The AuditCom ensures that the independence of the external auditors is maintained. In line with this, the AuditCom does not allow engagement of SGV in any non-audit work that (i) will conflict with their duties as external auditors or (ii) may impair or pose a threat to their independence. Any non-audit work, if allowed, is disclosed in the Meralco Annual Report.
During the year, the external auditors provided the following audit and permissible non-audit services to Meralco and its subsidiaries.
|CONSOLIDATED EXTERNAL AUDITOR'S FEES* (in million Php)|
|Financial Statements Audit||7.3||7.1||7.0|
|Audit of financial statements in accordance with the requirements of the Business Separation and Unbundling Plan of the ERC||0.3||0.3||0.3|
|The non-audit services do not exceed the audit services. In fact, no non-audit services were performed by the external auditors in 2015. * Exclusive of Value-added Tax (VAT)|
There has been no disagreement with the external auditors on any matter of accounting principles or practices or auditing scope or procedure, and financial statement disclosure.