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Accountability and Audit

Updated: 22 Mar 2016
The Board has overall responsibility for ensuring the integrity of the Group’s accounting and financial reporting systems, and that appropriate systems of internal control and risk management are in place.

Financial reporting

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The Board is committed to presenting a balanced, clear and comprehensible assessment of the Group’s performance, financial position and prospects to our shareholders and other stakeholders. This commitment encompasses all published information, including but not limited to the financial statements, regulatory announcements and other corporate communications. In addition, the Board is responsible for overseeing the preparation of the annual financial statements which give a true and fair view of the Group’s state of affairs, results and cash flows for the year.
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The Board is regularly provided by the management with sufficient explanation and information on the Group’s financial and operational performance as well as the development of major initiatives, especially those under the annual operating plan. In addition, the management provides the Board with management accounts and updates on a monthly basis, with a view to giving a balanced and understandable assessment of the Group’s performance, financial position and prospects to enable the Board as a whole and each Director to discharge their duties.
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The Board recognises that high quality, transparent and timely financial reporting is important to secure stakeholders’ confidence in the Group, and reviews and approves the annual, interim, and quarterly results for publication within 3 months, 2 months and 45 days respectively after the end of the relevant periods so as to keep our stakeholders abreast of the performance and latest development of HKEX.

Risk management and internal control

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The Board has the overall responsibility for evaluating and determining the nature and extent of the risks it is willing to take in achieving the Group’s strategic objectives, and maintaining sound and effective risk management and internal control systems for the Group (including reviewing their effectiveness) to safeguard our shareholders’ investment and the Group’s assets.
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The Board, through the Risk Committee and the Audit Committee, reviews the adequacy and effectiveness of the Group’s risk management and internal control systems.
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The Group’s risk governance structure is based on a “Three Lines of Defence” model, with oversight and directions from the Board and Group level risk committees at HKEX. Details of the Group’s risk governance structure are set out in the Risk Committee Report.
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The management and individual Divisions/Departments are responsible for the day-to-day management of operational risks and implementation of mitigation measures. All Division Heads are required to confirm annually that appropriate internal control policies and procedures have been established and complied with.
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The Risk Management Committee (statutory), a statutory committee established by the Board pursuant to Section 65 of the SFO (Chapter 571 of the Laws of Hong Kong), has the responsibility to oversee the policies on risk management matters relating to HKEX, SEHK and Hong Kong Futures Exchange Limited and their respective clearing houses.
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The Group Risk Management Department is responsible for providing the framework, support and tools to oversee existing and emerging risks and risk management practices across the Group including the enterprise risk infrastructure.
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Clearing Risk Management under Clearing Division is responsible for developing and implementing risk management strategies for cash, derivatives, fixed income and currency, and OTC clearing services.
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The Group Risk Management Policy Framework outlines the principles, governance, roles and responsibilities, and approach within a coherent risk management framework that addresses and prioritises risks that are material and relevant to the Group’s corporate goals. Details of the Group Risk Management Policy Framework are set out in the Risk Committee Report.
Internal audit
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Internal Audit Department (IAD), with its function independent of the Group’s business operations and complementary to that of the external auditor, plays an important role in monitoring HKEX’s internal governance and provides objective assurance to the Board that sound internal control systems are maintained and operated by the management in compliance with agreed processes and standards.
External audit
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The function of external audit is to provide the Board and our shareholders an objective assurance on whether the financial statements fairly represent the financial position and performance of HKEX in all material aspects.
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The Board, through the Audit Committee, considers the recommendations of the external auditor on the operational and financial risks identified during their annual audit of HKEX.
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