I
annual report 2014
40
INTERNAL CONTROL SYSTEM
The Board is committed to articulating, implementing and reviewing the Group’s system of internal control and recognises
the importance of an effective internal audit function to continually evaluate and review the adequacy and effectiveness
of the Group’s system of internal control.
The key elements of the Group’s system of internal control include:
• Control Environment
Day-to-day affairs of the Group are actively monitored by the Executive Directors, with regular discussions and
meetings conducted with the management team to discuss on operational issues and performance as well as to
formulate appropriate business strategies and targets in response to the changes in business environment and risks
faced by the Group.
Quarterly financial reports and yearly audited financial statements are submitted to the Board for review and any
significant fluctuations are analysed and deliberated in a timely manner. Issues relating to the business operations,
where necessary, are also highlighted to the Board’s attention during the Board meetings.
The Board believes that active involvement by the Executive Directors on the day-to-day operations, coupled the
periodic review and monitoring on the financial performances and operations by the Board (which comprise both
the Executive Directors and Independent Non-Executive Directors), will articulate and reinforce the awareness on
the importance of a proper internal control system throughout the organisation.
•
Control Structure
The Board and Management have established an organisation structure with clearly defined lines of accountability
and delegated authority. This includes well-defined responsibilities of Board committees and various management
levels, including authorisation levels for all material aspects of the business.
• Audit Committee
A fully independent Audit Committee (“AC”) comprising exclusively Independent Non-Executive Directors is tasked
by the Board to assist in reviewing internal control issues identified and evaluating the adequacy and effectiveness
of the Group’s risk management and internal control systems.
The AC is accorded full and unrestricted access to both internal and external auditors, as well as the management
team. The AC, assisted by the Internal Auditors, holds discussion with the management to deliberate appropriate
action plans in addressing the identified internal control issues and reports to the Board accordingly.
Quarterly financial reports and the yearly audited financial statements are reviewed by the AC prior to their approvals
by the Board.
• Internal Audit
The internal audit function has been outsourced to a professional service provider, Total Advisors Sdn Bhd, to assist
the AC in evaluating and reviewing the adequacy and effectiveness of the Group’s system of internal control. To
ensure independence, the internal auditors report directly to the AC.
During the financial year under review, the internal audit of the Group was carried out in accordance with a risk based
two years audit plan approved by the AC. The review by the internal auditors provides an objective and independent
assessment of the adequacy, efficiency and effectiveness of the Group’s system of internal control.
The internal auditors’ findings and where necessary, recommended improvements are presented to the AC at
their meetings. The internal audit reports are also circulated to the Management so that the recommendations for
improvements to internal controls are implemented. In addition to that, the internal auditors also carried out follow-
up reviews to ensure the recommendations are implemented within the required time frame.
Statement on Risk Management and Internal Control (Cont’d)
