MISC Annual Report 2017

MISC BERHAD | Annual Report 2017 148 MISC Group vessels are subjected to stringent audits, vetting and inspections to meet various regulatory and commercial requirements. These include vetting by oil majors, audits by the Malaysian Marine Department and ship classification societies to maintain international safety and security management certification under the relevant codes. In addition, MISC is also subjected to periodic management reviews by its customers’ risk management units. The President/Group Chief Executive Officer and Management Committee review Group HSSE performance on monthly basis and periodically review HSSE policies and strategies in line with business objectives. The BARC oversee the HSSE risk and control effectiveness through review of the assurance findings on quarterly basis. Group Internal Audit MISC Group Internal Audit (GIA) supports the BARC by providing independent feedback on the adequacy of risk management, governance and the efficiency and effectiveness of the internal control system. The GIA processes and activities are guided by the approved Internal Audit Charter and aligned with internal audit industry standards (i.e. The International Professional Practices Framework (IPPF). The GIA adopted the Committee of Sponsoring Organisations of the Treadway Commission (COSO) framework; a comprehensive, structured and widely used auditing approach, in conducting the audit works. Based on COSO framework, all aspects of controls are given emphasis in order to ensure risk is well managed and mitigated. The annual audit plan including the scope of works and resources are approved by BARC. The audit plan is established primarily using a risk based approach as well as taking into account inputs gathered from various sources (i.e. feedback from Management and BARC) including trends from past audit engagements and their findings. In addition, GIA also performed other reviews upon requests by Management. Further information on the internal audit functions are set out in BARC report on pages 154 to 155 of this Annual Report. OTHER MATTERS With regard to the associated companies and joint ventures, the Board does not regularly review the internal control system as the Board has no direct control over their operations. Nevertheless, MISC’s interests in the associated companies and jointly controlled entities are served via representations on the boards as well as review of management accounts and inquiries thereof. AFFIRMATION BY THE BOARD The Board has received assurance from the President/Group Chief Executive Officer and Vice President, Finance that the internal control and risk management systems of the Company and its subsidiaries for the year under review up to the date of approval of the statement are, in all material aspects, operating adequately and effectively. There were no material losses incurred during the financial year under review as a result of weaknesses of internal control. REVIEW BY EXTERNAL AUDITOR The external auditor, Messrs. Ernst & Young, have reviewed this Statement on Risk Management and Internal Control for inclusion in the Annual Report for the financial year ended 31 December 2017, in compliance with paragraph 15.23 of the Listing Requirements in accordance with guidelines issued by the Malaysian Institute of Accountants, and reported to the Board that nothing has come to their attention to cause them to believe that the statement intended to be included in the Annual Report is not prepared, in all material respects, in accordance with disclosures required by paragraph 41 and 42 of the Statement on Risk Management and Internal Control : Guidelines for Directors of Listed Issuer, or that the statement is factually inaccurate. CONCLUSION For the financial year under review, based on enquiry, information and assurance provided, the Board is satisfied that the system of internal control was generally satisfactory. Measures would continuously be taken to ensure ongoing adequacy and effectiveness of internal controls, and to safeguard the Group’s assets and shareholders’ investment. This statement is made in accordance with the resolution of the Board of Directors dated 21 February 2018. STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL