MISC Annual Report 2017

MISC BERHAD | Annual Report 2017 154 iv) enhancement of role relating to risk management and internal control areas; and v) inclusion of whistleblowing oversight by the BARC. • Reviewed and endorsed amendments to the RPTs and RRPTs Guidelines for MISC Group to be in line with the Companies Act 2016. • Reviewed the initiatives by Management in relation to Compliance and Ethics focusing on Anti-Bribery and Corruption. • The Chairman of the BARC was appointed as a Senior Independent Director of MISC. F. SHIP MANAGEMENT AUDIT (SMA) • Reviewed the SMA’s semi-annual and annual audit reports focusing on the efficiency and effectiveness of the maintenance of the Group’s vessels and floating assets. STATEMENT ON INTERNAL AUDIT FUNCTION The internal audit function of the Company was carried out in- house by the GIA Department. GIA undertakes a systematic and disciplined approach to evaluate and improve the effectiveness of governance, risk management and control processes within the MISC Group. The Head of Internal Audit reports functionally to the BARC and administratively to MISC President/ Group CEO. The Head of Internal Audit of the Company, Mohd Nasiruddin Abdul Razak, is a member of Malaysia Institute of Accountants (MIA), a Fellow of Institute of the Chartered Accountants in England and Wales (ICAEW) and a professional member of Institute of Internal Auditors (IIA) Malaysia. He holds a Bachelor degree in Accounting and Finance from University of Lancaster, United Kingdom. GIA adopts the Standards and Principles outlined in the Institute of Internal Auditors’ International Professional Practices Framework (IPPF) and the Committee of Sponsoring Organisations of the Treadway Commission (COSO) framework; a comprehensive, structured and widely used auditing approach, in conducting the audit activities. The conduct of internal audit work is also governed by the MISC Internal Audit Charter and GIA’s established procedures and guidelines. The annual audit plan and strategy 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 accounts inputs gathered from various sources (e.g. feedbacks from the Management and BARC) including trends from past audit engagements and their findings GIA conducts scheduled audits independently to ensure there were effective risk monitoring, internal controls, governance processes and compliance procedures to provide the level of assurance required by the Board. GIA also supports and conducts special reviews upon request by the Management or BARC. GIA submits its audit reports to the Management Committee (MC) for executive review. Subsequently, the reports together with deliberations by the MC were tabled at the BARC Meetings for decisions. At the Board Meetings, Chairman of the BARC highlighted the key audit issues and overall decisions and resolutions made during the BARC Meetings to the Board Members. The audit reports prepared by GIA provide details of audit findings and corresponding Agreed Corrective Actions (ACAs). The status of implementation of these ACAs are captured through the Quarterly Audit Status Reports, from which, the ACAs were monitored and analysed. The consolidated reports are submitted and presented to the MC and BARC for deliberation and endorsement on a quarterly basis. Such regular monitoring is essential to ensure the integrity and effectiveness of the Group's system of internal control. During the financial year, GIA had conducted the following audits as per the approved internal audit plan : 1. Audit on Financial Control Framework 2. Audit on Procurement Activities for Group Corporate Communication, Properties and Information Communication Technology 3. Audit on Demobilisation of MOPU Satu and MOPU Dua 4. Audit on Demobilisation of FSO Abu 5. Audit on FSO Benchamas 2 Project Activities 6. Audit on Compensation and Benefits 7. Audit on Management of Project Bid Submission for LNG and Offshore Business Units 8. Audit on LNG’s Carriers New Shipbuilding Activities 9. Audit on General Information Technology Control 10. Audit on Procurement Activities of Offshore Business Unit 11. Audit on FPSO Brasil (JV Entities) 12. Audit on FPSO Espirito Santo (JV Entities) 13. Audit on AET’s New Shipbuilding Activities 14. Audit on AET’s SAP Financial Accounting & Controlling and Material Management 15. Audit on AET’s Procurement Activities 16. Audit on AET’s Investment Projects’ Governance In addition, GIA had performed 9 special reviews during the financial year as requested by the Management. BOARD AUDIT AND RISK COMMITTEE REPORT