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CDL Hospitality TrustS
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Internal Controls
Having regard to the risks to which the business is exposed, the likelihood of such risks occurring and
the costs of mitigating such risks, H-REIT’s internal controls structure has been designed and put in place
by Management to provide reasonable assurance against material fnancial misstatements or loss, for the
safeguarding of assets, for the maintenance of proper accounting records, for the provision of correct
and complete fnancial and other information, and in compliance with applicable laws and regulations.
Nevertheless, no internal controls system can provide absolute assurance in view of inherent limitations
of any internal controls system against the occurrence of human and system errors, poor judgement in
decision-making, losses, fraud or other irregularities.
H-REIT’s internal controls structure includes:
- an external audit program;
- an internal audit program;
- a risk management framework established for the identifcation, assessment, measurement and
monitoring of its key risks;
- the establishment and review from time to time of policies and procedures which govern and allow for
the monitoring of fnancial, operational and compliance controls; and
- a whistle-blowing program.
Based on the internal controls framework established, the independent reviews conducted by KPMG Services
Pte. Ltd. of H-REIT’s governance and internal controls framework and the assurance from Management,
the H-REIT Manager Board confrms, with the assistance of the AC and the RMC, that it has reviewed the
adequacy and efectiveness of H-REIT’s internal controls system that address H-REIT’s fnancial, operational
and compliance controls and concurs with the opinion of the AC and the RMC that the system of internal
controls in place as at 31 December 2012 is adequate and efective to address in all material respects the
fnancial, operational and compliance risks within the current scope of H-REIT’s business operations in order
for H-REIT to achieve its objectives.
Principle 13: Internal Audit
Internal Audit (“IA”) plays an important role in monitoring an efective system of internal controls. The
IA function of the Singapore hotels’ operations is performed by the internal audit team of Millennium &
Copthorne International Limited, a related corporation. A summary of the internal auditors’ reports are
extended to the AC, the Chief Executive Ofcer and the Chief Financial Ofcer of the H-REIT Manager. The
AC meets the internal auditors at least once annually without the presence of Management. The internal
auditors have been directed to meet or exceed the standards set by internationally recognised professional
bodies including the International Standards for the Professional Practice of Internal Auditing set by The
Institute of Internal Auditors.
The AC reviews the IA plan. Processes are in place such that material control weaknesses raised in the IA
reports are dealt with in a timely manner, with outstanding exceptions or recommendations being closely
monitored and reported back to the AC on a quarterly basis.
The AC reviews the activities of the internal auditors on a quarterly basis and is satisfed that the IA function
is independent of the activities which it audits; is adequately resourced; and has appropriate standing within
the H-REIT Manager to perform its role and responsibilities efectively.
Corporate Governance