Ni Hsin Berhad Annual Report 2018

Annual Report 2018 Ni Hsin Resources Berhad (653353-W) 29 INTERNAL AUDIT FUNCTION The internal audit function has the primary objective of carrying out reviews of the internal control system to determine if the internal control procedures have been complied with as well as to make recommendations to strengthen the internal control system so as to foster a strong management control environment. The Board is fully aware of the importance of the internal audit function and has outsourced this function to an independent professional service firm, namely IBDC (Malaysia) Sdn Bhd (“IBDC”) to provide an independent assurance the Board requires on the effectiveness and efficiency of the Group’s system of internal control. Details of the audit personnel from IBDC that carried out the internal audit work for the financial year ended 2018 are as follows:- Name Qualification & Accreditation Yeoh Chin Hoe Director-In-Charge • IIAM Chartered Audit Committee Director (No. 0039) • Fellow of Association of Chartered Certified Accountant (ACCA) • Member of Malaysia Institute of Accountants (MIA) • Member of Malaysia Institute of Certified Public Accountants (MICPA) • Master Degree in Business Administration (General Management) Bhavanpreet Kaur Senior Consultant • IIAM Associate Member (No. 210178) • Bachelor of Accounting (Hons.) Tan Han Min Associate Consultant • Bachelor of Commerce (Hons.) • ACCA Finalist The internal audit adopts a risk-based approach and prepares its audit strategy and plan based on the risk profiles from the comprehensive risk assessment of the specific business units of the Group. Scheduled internal audits are carried out by the internal auditors based on the annual internal audit plan presented to and approved by the ARMC. On a quarterly basis, the internal auditors present to the ARMC the internal audit reports which summarise the audit approach, scope, key risks, significant audit findings, the overall opinion for the internal control review, management comments on the audit findings and recommendations. The cost of internal audit function for the financial year ended 31 December 2018 was approximately RM52,000, which included expenses. The review of the adequacy and effectiveness of the risk management and internal control process has been undertaken by the internal audit function, and necessary actions have been taken to remedy significant failing or weaknesses identified for the financial year 2018. THE SYSTEM OF RISK MANAGEMENT AND INTERNAL CONTROL The system is designed to manage the principal risks attributed to the Group’s operations and due to the limitations that are inherent in any system, the Board takes cognizance that the system can only provide reasonable but not absolute assurance against material loss or misstatement. The key elements of the Group’s internal control system are as follows:- • An organisational structure with defined responsibilities and delegation of authorities for Committees of the Board and Operational Committees; • Company’s Policies and Procedures, which set out the guidelines and expected standards for the Group’s operations, are under regular review and update so as to maintain its effectiveness at all times; • A strategic planning and an annual budgeting process has been established, whereby all key operating subsidiaries of the Group are required to prepare budgets and business plans for the coming year; • Operational review meetings are held and attended by the Executive Directors and the department heads to assess the performance of the Group’s operations; • Monthly financial reporting by the subsidiaries to the holding company. Actual performance compared with budget is reviewed monthly with major variances being followed up and management action taken where necessary; Statement on Risk Management and Internal Control (continued)