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RISK MANAGEMENT AND INTERNAL CONTROL
 
   
   
     
       RISK MANAGEMENT SYSTEM  
 
     The incumbent Board of Directors does not have a Risk Management Committee.  However, the Audit Committee's function already includes the assessment and management of enterprise risks.  As provided for in Section 16.3 of Code of Corporate Governance for the GOCC sector, it does not preclude the Governing Board of the GOCC from combining the functions of the committees into such combinations that will best serve the interest of the GOCC.
 
   
   

     
   

Risk Policy

 
 

The main risk arising from the Company's financial instruments is liquidity risk.  The Board of Directors and Management review and approve the polices for managing this risk.

 
 
 
   
   
   
   
   
 

Control System Setup

 

 
    
 
   
   
 
   
   
   
 

The Audit and Finance Committees is in charge of laying down and supervising the control mechanism:

 
 
 
   
   
     
     

     

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INTERNAL AUDIT AND CONTROL

 
 

Internal Control System

 
     While policies are set by the Board, Management is primarily responsible for the implementation and maintenance of the internal control system of the company. The Board through its Audit Committee oversees the actions of Management and monitors the effectiveness of the Internal Control System put in place.  Recommendations are provided by Management and/or the Board, and in some cases by the External Auditor - Commission on Audit (COA) to address certain issues and concerns of the company.
 
 
 
       
   

     The Board established an internal control audit system that can reasonably assure the Board, Management and stockholders that the company's key organizational and operational controls are faithfully complied with, effective and adequate.

   
   

Internal Audit

 
   
Role
Provides reliable and timely analysis, appraisals, recommendations and pertinent comments on the conformance / compliance of financial and business operations to established laws, norms, controls, rules and regulations to determine their integrity, effectivity and efficiency.
   
 

Scope
 
Compliance with established prevailing government policies, plans, procedures, rules and regulation
 Corporate assets and other resources
  Reliability and integrity of the financial anf operating information

 
   

Reporting Process
Submits report to the Audit Committee for their review and recommends resolution

   
         
   

     The appointment and/or removal of the Internal Auditor require the approval of the Audit Committee.

   
   

     The Board has established and identified the reporting line of the Internal Auditor to enable him to properly fulfill his duties and responsibilities. He shall functionally report directly to the Audit Committee. The Audit Committee shall ensure that, in the performance of the work of the Internal Auditor, he shall be free from interference by outside parties.

   
   
   
     
 

Mechanisms and Safeguards

 
   

     As a GOCC, the financial statements of the Company is statutorily mandated to be audited by Commission on Audit. The Company does not engage the service of Financial Analysts and Investment Banks. No restrictions on trading of the Company's shares in the Philippine Stock Exchange has been implemented because trading of shares has been suspended since May 2008.

   
   

     Chairman Herculano C. Co, Jr. and President and CEO Miguel E. Umali are the officers who will have to attest to the Company's full compliance with the SEC Code of Corporate Governance.