Frontken Corporation Berhad 200401012517 (651020-T) • A N N U A L R E P O R T 2 0 2 1 55 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (CONT’D) INTERNAL AUDIT FUNCTION – ITS COMPOSITION AND SCOPE OF COVERAGE (CONT’D) Outsourced internal audit coverage – Group (save for Taiwan operations) (cont’d) The internal audit plan for the financial year was prepared based largely on the Group’s financial information and the relative risks of the business units to the achievement of the Group’s business objectives. This approach deployed aligns with the International Professional Practices Framework of the Institute of Internal Auditors Inc. (“IIA”), which encompasses, inter-alia, the Definition of Internal Auditing, Code of Ethics, Core Principles and International Standards for the Professional Practice of Internal Auditing, and the IIA Risk Based Internal Auditing Guidance. For the financial year ended 31 December 2021, Sterling could only cover the internal audit of one of the business units in Malaysia on the areas of concern, namely, Procurement and Sourcing; Engineering Services and Project Management and Safety, Health, and Environment. The audit was conducted wholly virtually and supplemented by documentary evidence and photographs and other best alternatives modes to close the gaps as much as possible in the absence of physical observations. Internal audit tests were carried out by the internal audit function to assess the adequacy and operating effectiveness of the business units’ system of internal controls in achieving corporate objectives. Transactions and activities were selected for testing on a sample basis. Due to travel restrictions under the Movement Control Order, the internal auditors have adapted the following to support the provision of assurance in the course of their audit: • Remotely performed the audit, assessed the possible impact of remote working has on the assessment of the control environment and practicalities as well as how the audit review would need to be undertaken to ensure internal audit assurance work is not compromised. Selected sample documents, obtained electronic documentation and requested evidence as far as possible in advance. • Identified all key stakeholders of the entity reviewed and understood their availability during planned fieldwork dates. Scheduled discussion time sessions with individuals to undertake remote walkthroughs, progress updates and discuss emerging findings and improvement actions. • Adopted the use of new technologies to deliver the review, such as Zoom for virtual meetings. Retained recording of such interactions to enhance internal audit evidence. • Conducted analytical review to deliver internal audit assurance works remotely and focus on outliers. Observations on systems weakness and areas for improvement, including recommended mitigating measures to address the concerns raised, were highlighted in internal audit reports presented to the Audit Committee during the financial year under review. In-house internal audit coverage (only Taiwan operations) The in-house internal auditor, Miss Kelly Huang, who is an accounting graduate, has a working experience of not less than 20 years covering internal audit, external audit and finance function. Independent of the activities she audits, the in-house internal auditor is tasked to assess the adequacy and operating effectiveness of the system of internal control of AGTC, the Company’s subsidiary helming the Taiwan operation. In carrying out her work, she adopted the internal audit guidelines from the Regulations Governing Establishment of Internal Control Systems by Public Companies issued by Taiwan Financial Supervisory Commission. The in-house internal auditor conducted an assessment of AGTC’s system of internal control during the financial year under review, focusing on selected significant areas as approved by the Board of AGTC and reported her observations, including Management’s response and action plans thereto, directly to the Board of AGTC. The in-house internal auditor also conducted a follow-up on the status of implementation of action plans by Management on the recommendations highlighted in previous reports. The Board of AGTC took note of the issues raised and questions were posed to Management on the timeliness of measures to address the concerns as reported.
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