20 PIA Annual Report 2004
• Free valuable resources to focus on
core airline business
ISO 9001:2000
Quality Management System Certification
Program has been launched which will
facilitate entering into global
alliances/code-sharing agreements with
other quality carriers. System
implementation and development is to be
completed during 2005 and system
improvement and maturity for certification
is targeted for December 31, 2005.
Roll out of 777-200LR
The roll out of PIA’s 777-200LR took place
at the Boeing factory in Seattle in January
2005. PIA is the launch customer for this
aircraft type which has the longest range.
PIA has ordered two aircraft and their
delivery is expected in January/February
2006. With the delivery of 777-200LR in
early 2006, PIA would be operating direct
services from Pakistan to USA.
Code of Corporate
Governance
The Board of Directors of the Corporation
has always strived to adopt best practices
in managing the Corporation and
providing policy guidelines. The
promulgation of Code of Corporate
Governance through amendments in the
Listing Regulations of Stock Exchanges
has further defined the responsibilities of
the directors in this regard. Corporate
Governance strengthens investors’ trust
and ensures a long- term partnership that
helps in fulfilling the quest for achieving
significant value addition, growth and
profits. The Corporation has made
reasonable progress towards
implementation of principles contained in
the Code and status of compliance is set
out in the compliance statement.
CORPORATE &
FINANCIAL
REPORTING
FRAMEWORK
AND INTERNAL
CONTROL
The directors to the best of their knowledge
and belief provide following opinions to
comply with the Code of Corporate
Governance:
a) The financial statements, prepared by
the management of Pakistan
International Airlines Corporation,
present fairly its state of affairs, the
result of its operations, cash flows and
changes in equity.
b) Proper books of account of the
Corporation have been maintained.
c) Appropriate accounting policies have
been consistently applied in
preparation of financial statements
accounting estimates are based on
reasonable and prudent judgment.
d) Approved Accounting Standards, as
applicable in Pakistan, have been
followed in preparation of financial
statements and any departure
therefrom has been adequately
disclosed.
e) Board’s statement on internal control:
The Corporation has a comprehensive
framework of internal controls in all
areas of its operations. The Board
had identified certain areas, which
required improvements to reinforce
the internal control system. These
included the new revenue accounting
system, revamping of stores and
spares and strengthening of Internal
Audit Department with the assistance
of an independent firm of chartered
accountants. Significant progress has
been achieved in all these areas.
Further, during the year the
programmed cyclic count of stores
and spares continued. In order to
further strengthen the internal controls
and enhance the efficiency of
management reporting the
Corporation has drawn up definitive
plans to implement ‘Enterprise
Resource Planning (ERP)’ solution for
all of its key functions which shall
21
include inventory accounting and
management systems.
The Board is ultimately responsible
for the Corporation’s system of internal
control and reviewing its effectiveness.
However, such a system is designed
to manage rather than eliminate the
risk of failure to achieve objectives,
and by its nature can provide only
reasonable and not absolute
assurance against material
misstatement or loss.
The principal features of internal control
include:
1) The Board has established an audit
committee, the members of which
comprises wholly non-executive
directors. The audit Committee
operates under terms of reference set
out in the code of corporate
governance. It reviews the approach
adopted by the Corporation’s internal
audit division and the scope of, and
relationship with the external auditors.
It also receives reports from the internal
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