Dagang NeXchange Berhad Annual Report 2019

AUDIT COMMITTEE REPORT DAGANG NeXCHANGE BERHAD 76 4. Effectiveness of controls for Genaxis and IAC in respect to the following business processes:- (i) Human Resource Management; (ii) Hiring practices; (iii) Terminations process; (iv) Remuneration and compensation; (v) Claims processing; and (vi) Contract management. (d) Reviewed the Follow-up Internal Audit Reports issued during the year 2019 as follows:- 1. Customer Service Management and Service Level Agreement of Dagang Net. 2. Billing and collection, and implementation of new billing system of Dagang Net. 3. Revenue, purchasing and inventory management cycle and system of GMEC and Imizu. 4. Business development and project management, and billing and collection of DNeX Telco. (e) Assess the effectiveness of the internal audit functions. (iv) Risk Management Reviewed the consolidated risk management report and mitigation action plans for identified risks on a quarterly basis. (v) Related Party Transactions Reviewed the related party transactions and recurrent related party transactions entered into by the Company and its subsidiaries on a quarterly basis. 4. INTERNAL AUDIT FUNCTION The Company has outsourced its internal audit function to an independent professional consultancy firm. The internal audit function is carried out by Baker Tilly Monteiro Heng Governance Sdn. Bhd. since March 2014. It is headed and led by Mr. Kuan Yew Choong, who is a member of the Association of Chartered Certified Accountants (UK), the Institute of Internal Auditors, Malaysia and also, the Malaysian Institute of Accountants. There were a total of three (3) internal auditors, including the Head of the internal audit function, who were deployed by Baker Tilly for the internal audit works performed for DNeX Group during the financial year ended 31 December 2019. All the personnel deployed by Baker Tilly are free from any relationships or conflicts of interest in DNeX Group, which could impair their objectivity and independence during the course of their work. Baker Tilly reports directly to the Audit Committee and assists the Audit Committee in discharging its duties and responsibilities. The internal audit function is carried out by Baker Tilly based on the annual audit plan that is reviewed and approved by the Audit Committee. The audit plan includes review of the adequacy of operational controls, risk management and compliance with established policies, procedures, applicable law and regulations and management efficiency. The Audit Committee also reviews the adequacy of the scope, functions, competency and resources of the internal audit function to ensure that it is adequately resourced with competent and proficient internal auditors. Baker Tilly undertakes the internal audit activities based on Baker Tilly audit methodology which is closely consistent with the International Standards for the Professional Practice of Internal Auditing issued by the Institute of Internal Auditors. A summary of the work of the internal audit function for the financial year ended 31 December 2019 is as follows: (i) Prepared the Internal Audit Plan for approval of the Audit Committee. (ii) Issued Internal Audit Reports to the Audit Committee and Management, identifying weaknesses and issues as well as highlighting recommendations for improvement. Such recommendations were acted upon by Management within agreed timelines. (iii) Attended all Audit Committee meetings to table and discuss the audit reports and followed up on matters raised. (iv) Acted on suggestions made by the Audit Committee on concerns over operations or control. (v) Followed up on management corrective actions on audit issues raised during their course of audit. Determined whether corrective actions taken had generally achieved the desired results. As at 31 December 2019, the total cost incurred for the internal audit function was RM68,000.00 which relates to personnel cost on audit assignments (excluding out-of-pocket expenses and Sales and Services Tax).