Management Dialogue
Ricky Tsang: Is Internal Audit about TIPS? 83
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    As Director – Corporate Audit Mr. Ricky Tsang pointed out, shareholders of a listed company do not normally get involved in management and daily operations of the company. The Listing Rules therefore require all listed companies in Hong Kong to establish an independent Audit Committee (the Committee) to regularly review the company's corporate governance and operations.


    "All of the Committee members for Hang Lung Group and Hang Lung Properties are Independent Non-Executive Directors," he said. "The Internal Audit Department reports directly to the Committee to enable it to discharge its responsibility. We need to submit an annual audit plan for the Committee's approval and then execute the plan accordingly. Based on our work, the Committee will report their assessment on effectiveness and adequacy of internal control and risk management in the annual reports to our stakeholders, which is also a requirement of the Listing Rules."


    The Three "I"s of Internal Audit

    The Internal Audit Department has a professional team capable of effectively reviewing the operations of each department so as to protect the Company from risks. As Ricky said, "Internal Audit includes three elements of 'I', namely 'Internal control and risk management', 'Independence' and 'Integrity'. The Internal Audit Department is responsible for reviewing the management of the Company's operations, and reporting the results to the Committee four times a year. If we come across anything suspicious, we shall take appropriate follow-up actions and conduct investigations in order to serve as the gate-keepers of our integrity."


    Business Partners

    There are 20 staff members in the Internal Audit Department based in the Hong Kong and Shanghai offices. Ricky expressed the view that staff members not only have acquired professional knowledge but they also embrace honorable values, have a high level of integrity and a strong team spirit. These factors are crucial in their conducting of audits and investigations without bias.


    Another important duty of Internal Audit is to review the risk management processes and internal control workflows of different departments to ensure these controls are in operation and recommend improvements for enhancing effectiveness and efficiency. Ricky added, "There is usually no conflict between Internal Audit and our auditee departments. We are more like business partners who support each other in making continuous improvements and striving for a win-win situation."


    Ruling Out Foul Play

    The Company's large-scale projects in Hong Kong and Mainland cities involve huge investments. In such an environment, the Internal Audit Department serves as an independent party for the project teams, receiving tender returns and monitoring tender opening process in order to ensure fairness and minimize any room for bribery and fraud.


    Internal Audit also pays close attention to the details of outsourced contracts. Ricky explained with an example, "During a regular review on the Mainland, we identified some abnormal in-out records submitted by an outsourced garbage contractor, and found that the daily number of trips made between the mall and the garbage station was impractical, indicating that the contractor had been claiming unreasonably high service charges." As the saying goes: a penny saved is a penny earned. Although this incident seems unremarkable and involves just a small amount, the Company could suffer huge losses if it occurs in every contract. As Internal Audit does not allow even one thread to come loose, the Company avoids any kind of foul play and continues to uphold the best control environment.


    The Four Keys of Ricky's Management Philosophy: TIPS

    Ricky not only agrees with the Company's business philosophy of We Do It Right, he also has his own management philosophy, called TIPS. He said, "'T' stands for 'Team spirit'; 'I' stands for 'Integrity'; 'P' stands for 'Positiveness'; and 'S' stands for 'Sustainability'. It is the responsibility for everyone and every company to build a sustainable future as a common goal."

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