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Investor Presentaiton

Company Profile/Corporate Governance/Risk Management Risk Management The structure of Corporate Governance at AXTEL comprises business individuals with a high level of knowledge in the business field, all of them with expertise in different industries ensuring that our enterprise may be guided appropriately through the identification, assessment and decision making of key aspects for our growth. Their expertise enables us, at the same time, to identify and manage the potential risks to which we are exposed. The Internal Auditing area reports to the General Director and it is the organization responsible for monitoring the Internal Control System through which the -financial and non-financial- business processes of all the company are assessed: • Revenues • Supply Chain • Corporate Governance • Related parties • Asset safeguards • Information Technology ⚫ Law and Regulation Compliance The Key Risks for our company are determined through a risk assessment matrix according to the exposure we have in regards to the aspects identified and the likelihood they have in impacting our transactions. During 2011 the Internal Auditing area carried out a review of the Internal Control System without detecting deficiencies or material deviations. The most relevant processes for AXTEL related with the following subjects were reviewed in this period: • Revenue recognition • Capitalization of in-process projects • Capitalization of operation expenses • Inventories • Service delivery • Information Technology Strategies (TI) ⚫ Entity level Controls In order to ensure the appropriate management of the potential risks to which our company can be exposed, we have identified 49 factors related with the following aspects: ⚫. Risks related with the company • Risks related with the Telecommunications Industry in Mexico • Risks related with Mexico ⚫ Risks related with CPOs • Other risk factors 33
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