3. The Limits of Authority (“LOA”) manual provides a framework of authority and accountability within the organisation and facilitates sound and timely corporate decision making at the appropriate level in the organisation’s hierarchy. 4. To enhance the quality of the Group’s financial reports, the Group continues the execution of the PETRONAS Financial Control Framework (“FCF”). FCF is a structured process of ensuring the adequacy and effectiveness of internal controls operating at various levels within the Group at all times. FCF requires documentation of process workflows, control descriptions, testing on control effectiveness as well as remediation of control gaps. On a semi-annual basis, the process owner at various management levels and operating entities is required to complete and submit a Letter of Assurance which provides confirmation of compliance to specified controls for the accountable business areas. If ineffective controls exist, the process owner will have to put in place appropriate remediation plans and the control owner will monitor the execution plans to ensure the controls are mitigated by the next FCF’s process. The FCF process is further enhanced with the implementation of limited controls testing between PETRONAS group of companies during the year under review. 5. The Group continues to practice the PETRONAS Debt Compliance Management (“DCM”) initiative, the objective of which is, to provide assurance that debt covenants of its external borrowings are being observed and complied with. 6. There is a clear process for investment appraisal of equity investment or divestment and capital expenditure including, but not limited to, the generation of ideas, risk assessment, financial appraisal, due diligence procedures, authorisation, implementation and control of the project. 7. MISC’s Procurement Manual (“MPM”) provides the overall procurement principles, scope, functions, governance, operational procurement processes, procedures and exceptions to be adopted in relation to procurement activities within MISC. Tender Committees and Quotation Committees are established to ensure procurement activities are conducted in an effective, transparent and fair manner whereas Vendor Performance Review Committee is established to review, deliberate and endorse on overall vendor performance matters including application for suspension, blacklisting, uplifting and reinstatement. 8. Information and Communications Technology (“ICT”) is extensively employed in MISC to automate work processes and to collect key business information. MISC’s information and communication system, which acts as an enabler to improve business processes, work productivity and decision making, are implemented throughout the Group. The Information and Communications Technology Steering Committee (“ITSC”) provides strategic directions and guidance to ICT initiatives. Progress of ICT initiatives is monitored and reported at the ITSC meetings to ensure smooth implementation of ICT initiatives. System reviews are initiated and conducted to ensure that adequate controls are in place in order to conform to the Company’s business objectives, policies and procedures. 9. The professionalism and competency of employees are enhanced through structured development programs and potential entrants or candidates are subject to a stringent recruitment process. A Performance Management System (“PMS”) is established with performance indicators to measure employees’ performance and performance reviews are conducted twice annually. Action plans to address employees’ developmental requirements are prepared and implemented in a timely manner. This is to ensure that employees are able to deliver the expected performance so that the Group can meet its plans and targets. MISC BERHAD • Annual Report 2016 142 Statement on risk management & internal control
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