MISC Annual Report 2017

MISC BERHAD | Annual Report 2017 152 BOARD AUDIT AND RISK COMMITTEE REPORT TERMS OF REFERENCE (TOR) The BARC is governed by its TOR, which was amended according to the requirements of the MMLR and Malaysian Code on Corporate Governance 2017 (MCCG 2017) and adopted by the Board effective 2 November 2017. The TOR of the BARC is available on the Company’s website at www.misc.com.my . SUMMARY OF WORK The meetings of the BARC and their tentative agendas are scheduled in advance of any new financial year to facilitate the BARC members to plan ahead and fit the year’s meetings into their schedules. The BARC meets every quarter to review and deliberate the quarterly and annual financial statements, the Enterprise Risk Management report, Group Internal Audit (GIA) reports, related party transaction matters and other relevant matters within the BARC’s Terms of Reference. Additional meetings are held as and when required. Minutes of BARC meetings which include records of the deliberations, decisions and resolutions of the meetings are properly maintained by the Secretary of the BARC. The President/Group CEO is invited to the BARC meetings to facilitate the discussion as well as to provide explanation on audit issues, risk management and financial matters as well as other matters within the Terms of Reference of the BARC. The Senior General Manager, Group Internal Audit of PETRONAS or his representative and the Head, GIA of MISC are also invited to the meetings to observe the proceedings and provide clarification on any relevant Internal Audit reports tabled to the BARC, together with relevant management personnel. The External Auditors are also invited to present their Audit Plan and Audit Results, Memorandum of Suggestions, and other relevant matters. During the financial year ended 31 December 2017, the following work was carried out by the BARC in discharging its functions and duties :- A. RISK MANAGEMENT • Reviewed the adequacy and effectiveness of Risk Management Framework and the on-going activities for identifying, evaluating, monitoring and mitigating risks. • Received and reviewed reports on key strategic and operational risk issues arising from quarterly Risk Management Committee (RMC) meetings, including identification of the risk appetite at the Enterprise level and review of the mitigation plans to address the said risks. • Discussed insights gained on annual review and periodic testing of internal control/risk management system. • Reviewed and endorsed the Group’s Financial Year 2017 Enterprise Risk Management (ERM) Risk Register emanating from the Annual Planning Cycle and ensured that appropriate systems and processes are in place to effectively monitor and manage the identified risks. • Reviewed the Statement on Risk Management and Internal Control for inclusion in the Company’s 2017 Annual Report pursuant to Paragraph 15.23 and Part II, Practice Note 9 of the MMLR. B. INTERNAL AUDIT • Reviewed and approved GIA’s long-term audit plan and Annual Internal Audit Plan (AIAP) as guided by the approved Enhanced Risk Based Internal Audit Framework of MISC in order to ensure adequacy of coverage on auditable entities and resources allocated. • Reviewed internal audit reports issued by GIA based on the approved AIAP and ensured that appropriate agreed corrective actions are taken by the Management on the gaps in controls or procedures as identified by GIA. • Reviewed the responses and action plans provided by the Management Committee on the deliberated audit reports. • Reviewed the adequacy and effectiveness of agreed corrective actions taken by management on all significant and secondary issues raised in the audit reports. • Reviewed the minutes of meetings of the Audit Committee of Malaysia Marine and Heavy Engineering Holdings Berhad and minutes of meetings of the Audit and Risk Management Committee of AET Tanker Holdings Sdn. Bhd. for overview of the state of risk management and internal control systems of the subsidiary companies. • Reviewed the adequacy of resources and competencies of GIA’s staff to execute the audit plan. • Conducted half-yearly and yearly assessment on the adequacy of GIA’s functions and resources, scope of work, service orientation, and its Annual Plan and Strategy. • Prior to BARC meetings, the Chairman of the BARC held private meetings and discussions with Head and senior staff of GIA on audit reports and any Internal Audit related matters.