Frontken Corporation Berhad 200401012517 (651020-T) • A N N U A L R E P O R T 2 0 2 1 56 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (CONT’D) INTERNAL AUDIT FUNCTION – ITS COMPOSITION AND SCOPE OF COVERAGE (CONT’D) In-house internal audit coverage (only Taiwan operations) (cont’d) The in-house internal audit plan for the financial year under review was prepared based largely on AGTC’s financial information and the relative risks to the achievement of AGTC’s business objectives. The in-house internal auditor adopted a process life cycle approach in identifying the auditable areas in AGTC. For the financial year ended 31 December 2021, the following areas were selected for internal audit with AGTC’s Board’s concurrence: Business areas covered Transactions/activities covered by internal audit, addressing the key business risks therein Property, plant and equipment management Acquisition, custody, repairs and maintenance, disposal, physical sighting, and insurance of assets. Production management Inventory and production costing Quality control, product composition labelling and scrap management Sales and receipts management Logistics management, order management, invoicing, discounts, returns, collections, credit control and receivables management Purchases and payments management Requisition, procurement, acceptance and inspection, payment and supplier management Information technology management System development and programme modification, application controls, input/output integrity Research and development management Blueprint control, R&D operations, custody of documentation and prototype manufacturing and product testing Computerised information processing system Segregation of functions, system development & programme management, programme and data access controls, file and equipment security, maintenance of hardware and software, system recovery and information flow security inspection Finance management Authorisation, custody and usage of Company seal, trade finance facilities control and management Labour and wage management Labour management, adequacy of trainings and functionary substitute system The internal audit plan and a summary of the findings of the in-house internal auditor were shared with the Audit Committee of the Company for information and comments, if any. For the financial year ended 31 December 2021, the Audit Committee of the Company as well as Board of AGTC reviewed the work of the internal audit functions, outsourced and in-house, as the case may be, their observations and recommendations in order to obtain assurance on the adequacy and operating effectiveness of the Group’s risk management and internal control system. The total cost incurred by the Group for the internal audit functions (both inhouse and outsourced) for the financial year under review amounted to approximately RM211,000 (2020: RM243,000).
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