MISC Annual Report 2018

BOARD AUDIT & RISK COMMITTEE REPORT The BARC of MISC was established with the objective of assisting the Board in fulfilling its responsibilities primarily relating to financial management, financial accounting, risk management framework and process, and systems of internal control of the Group. COMPOSITION The BARC comprises of 4 members, the majority of whom are Independent Non-Executive Directors of the Company. The Chairman of the BARC, Dato’ Sekhar Krishnan, is a member of the Malaysian Institute of Accountants and the Malaysian Institute of Certified Public Accountants. The composition of the BARC and qualifications of its members comply with Paragraph 15.09(1) of the MMLR of Bursa Securities. As at the date of this report, the composition of the BARC is as follows: Members Date of Appointment as BARC Member DATO’ SEKHAR KRISHNAN Chairman Senior Independent Non- Executive Director 1 March 2015 (Re-designated as Chairman on 28 May 2015) DATUK NASARUDIN MD IDRIS Member Independent Non-Executive Director 20 April 2017 LIM BENG CHOON Member Independent Non-Executive Director 16 August 2012 LIZA MUSTAPHA Member Non-Independent Non- Executive Director 1 September 2017 TERMS OF REFERENCE The BARC is governed by its own Terms of Reference (TOR), which is consistent with the requirements of the MMLR and best practices of the Malaysian Code on Corporate Governance 2017 (MCCG 2017). For more information on the BARC’s TOR, please refer to MISC’s corporate website at www.misc.com.my. MEETINGS The BARC met 9 times during the year under review. Details of each BARC member’s attendance are as follows: Name of Member Number of Meetings Attended in 2018 DATO’ SEKHAR KRISHNAN 9/9 DATUK NASARUDIN MD IDRIS 9/9 LIM BENG CHOON 9/9 LIZA MUSTAPHA 9/9 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 TOR. Additional meetings are convened as and when required. The President/Group CEO is invited to attend 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 BARC’s TOR. The Senior General Manager, GIA of PETRONAS or his representative and the Head, GIA of MISC are also invited to the BARC meetings to observe the proceedings and provide clarification on any relevant Internal Audit reports tabled to the BARC, together with the relevant management personnel. The External Auditors are invited to present their Audit Plan and Audit Results, Memorandum of Suggestions, and other relevant matters. BARC meetings together with the tentative agendas are scheduled in advance of any new financial year to allow the BARC members to plan ahead and incorporate the year’s meetings into their respective schedules. The agenda and meeting papers are distributed to the BARC members via a secured collaborative software, which eases the process of distribution of meeting papers and minimises leakage of sensitive information, as well as enabling the Directors to have access to the papers electronically, anytime and anywhere. All proceedings of the BARC meetings are duly recorded in the minutes and are properly kept by the Company Secretary. SUMMARY OF THE BARC’S WORK IN RESPECT OF FY2018 Appended below is a summary of the BARC’s work in respect of the financial year under review, in discharging its functions and duties: Financial Reporting • Reviewed the quarterly results for announcements to Bursa Securities, focusing on compliance with the Malaysian Financial Reporting Standards (MFRS), International Financial Reporting Standards (IFRS), the MMLR and other relevant regulatory requirements, before recommending the same for approval by the Board. • Reviewed the audited financial statements of the Company prior to submission to the Board for approval, upon being satisfied that the audited financial statements were drawn up in accordance with the MFRS, IFRS and provisions of the Companies Act 2016 in Malaysia. The abovementioned reviews were conducted together with the President/Group CEO and Vice President, Finance. Risk Management and Internal Controls • Reviewed and endorsed the MISC Group Risk Profile for FY2018. • Reviewed the adequacy and effectiveness of the MISC Group Risk Management Framework and the on-going activities for identifying, evaluating, monitoring and mitigating risks. • Discussed the Emerging Risks for MISC Group and the Proposed Way Forward. • 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 controls/risk management system, including the Anti-Bribery and Corruption Risk Assessment (ABC RA). The ABC RA exercise, an initiative to support the Compliance and Ethics Programme in the area of compliance risk assessment, was developed and benchmarked against Transparency International and United Nations Global Compact’s corruption risk assessment framework. • Reviewed and endorsed the Group’s FY2018 Enterprise Risk Management 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 (SORMIC) for inclusion in the Company’s 2018 Annual Report pursuant to Paragraph 15.23 and Part II, Practice Note 9 of the MMLR. DATO’ SEKHAR KRISHNAN Senior Independent Non-Executive Director BARC Chairman Dear Shareholders, On behalf of the Board Audit and Risk Committee (BARC) of MISC Berhad (MISC or the Company), I am pleased to present the BARC Report for the financial year ended 31 December 2018 (FY2018) in compliance with Paragraph 15.15 of the Main Market Listing Requirements (MMLR) of Bursa Malaysia Securities Berhad (Bursa Securities). HIGHLIGHTS OF THE YEAR OUR BUSINESS OUR LEADERSHIP OUR PERFORMANCE OUR COMMITMENT TO SUSTAINABILITY OUR GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 50 TH ANNUAL GENERAL MEETING 187 MISC BERHAD ANNUAL REPORT 2018 186