38 EXCEL FORCE MSC BERHAD INTERNAL AUDIT FUNCTIONS (CONT’D) Sterling reviews and addresses critical business processes, identifies risks associated with the internal control gaps, assesses the effectiveness and adequacy of the existing state of internal control of the Group and recommends possible improvements to the internal control process. This is to provide reasonable assurance that such systems continue to operate satisfactorily and effectively within the Group. The Internal Auditors use the Committee of Sponsoring Organisations of the Treadway Commission (COSO) Internal Control – Integrated Framework as a basis for evaluating the effectiveness of the internal control systems. Each quarterly audit is engaged by approximately 2 to 4 audit personnel depending on the areas of the audit. Quarterly audit reports and status reports on follow-up actions were tabled to the Audit Committee and Board during its quarterly Audit Committee Meetings. The Internal Auditors are free from any relationships or conflicts of interest, which could impair their objectivity and independence of the internal audit function. The Internal Auditors do not have any direct operational responsibility or authority over any of the activities audited. The Audit Committee is of the opinion that the internal audit function is effective and able to function independently. For the financial year ended 31 December 2021, four (4) internal audit reviews had been carried out by Internal Auditors: - Audit Period Reporting Month Name of Entity Audited Audited Areas January 2021 - March 2021 May 2021 Excel Force MSC Berhad • Sales and Business Development April 2021 - June 2021 August 2021 Excel Force MSC Berhad • Finance and Accounts and Procurement July 2021 - September 2021 November 2021 Excel Force MSC Berhad • Project Management October 2021 - December 2021 February 2022 Excel Force MSC Berhad • Research and Development and System Design Follow-up status reviews were also carried out to ensure weaknesses identified have been or are being addressed. During the financial year under review, Sterling presented their follow-up status reports on previously reported audited findings in respect of the following functional scopes of the Group: Reporting Month Name of Entity Functional Scopes May 2021 Excel Force MSC Berhad • Human Resources and Administration functions reported in August 2020. • Customer Services function reported in November 2020. • Management Information Services function reported in February 2021. August 2021 Excel Force MSC Berhad • Customer Services function reported in November 2020. • Management Information Services function reported in February 2021. • Sales and Business Development function reported in May 2021. November 2021 Excel Force MSC Berhad • Sales and Business Development function reported in May 2021. • Finance and Accounts and Procurement reported in August 2021. February 2022 Excel Force MSC Berhad • Project Management function reported in November 2021. Based on the internal audit reviews conducted, none of the weaknesses noted have resulted in material losses, contingencies, or uncertainties that would require separate disclosure in this Annual Report. THE KEY ELEMENTS OF THE GROUP’S INTERNAL CONTROL SYSTEM INCLUDE: 1. Organisation structure with defined lines of responsibility, authority and accountability; 2. Policies and procedures for key business processes are formalised and documented for implementation and continuous improvements; 3. Quarterly Boardmeetings and periodical management meetings are heldwhere information is provided to the Board and management covering financial performances and operations; 4. Training and development are provided as and when required by employees with the objective of enhancing their knowledge and competency; 5. Management accounts and reports are prepared regularly for monitoring of actual performance. 6. Board participation at the macro perspective in the performance monitoring of all subsidiary companies under the Group; Statement on Risk Management and Internal Control (cont’d)
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