STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL INTERNAL CONTROL The Group has established an organisation structure outlining the lines of responsibilities and authorities for planning, executing, controlling and monitoring the business operations aligned to business and operations requirements which supports the maintenance of a strong control environment. It has extended the responsibilities of the AC and of the Board to include the assessment of internal controls through the internal audit function. Other key elements of the system of internal control of the Group are as follows: - • The Board established a hierarchical organisation structure with proper segregation of duties for key functions of the operations of the Group; • Delegation of authority including authorisation limits at various levels of management and those requiring the Board’s approval are clearly defined to ensure accountability and responsibility; • Standard operating procedure manuals set out the policies and procedures for day to day operations to be carried out. Reviews are performed to ensure that documentation remains current, relevant and aligned with evolving business and operational needs; • Formation of committee to evaluate and approve related party project tenders; • Appointment of staff is based on the required level of qualification, experience and competency to fulfil their responsibilities. Training and development programmes are carried out to ensure that staff are kept up to date with the necessary competencies and knowledge to carry out their responsibilities towards achieving the Group’s objectives; • There is an annual budgeting process. The Board reviews the actual performance against budget; • Regular and comprehensive information are provided to the Board for monitoring and tracking of performance of the Group; • Periodic operational review meetings are held and attended by the Executive Directors, heads of department and key management staff to consider financial and operational issues of the Group as well as any management proposal; • Active involvement of directors in the operation and management of newly set up branch and subsidiary companies; • Centralised control of financial resources by head office of respective subsidiary companies; • Formalised whistleblowing policy and code of conduct are established to ensure high standards of conduct and ethics in the business operations; • Set out policies and procedures for anti-bribery and corruption and develop internal guidelines to ensure that the Group’s business is conducted in an ethical manner with integrity and honesty; • ISO 9001:2015 Quality Management System has been implemented for certain subsidiaries of the Company. Annual surveillance audits are conducted by a certification body to provide assurance of compliance with ISO 9001:2015; • Adequate insurance coverage and physical safeguarding of major assets are in place to guard against any mishap that may result in material losses to the Group; • The internal audit function provides reasonable assurance on the effectiveness of the system of internal control within the Group. Internal audits are conducted to review the effectiveness of the control procedures and are directed towards areas with significant risks as identified by the AC and Management, and the risk management process is being audited to provide assurance on the management of risks; and • Review of internal audit reports and follow-up on audit findings by the AC. The internal audit reports are deliberated by the AC and are subsequently presented to the Board on a quarterly basis where the AC sought clarifications from the Executive Directors on internal control matters and provided its views and recommendations on areas where improvements could be made. INTERNAL AUDIT FUNCTION The Group has outsourced its internal audit function to Tricor Axcelasia Sdn. Bhd. (the succeeding company of NGL Tricor Governance Sdn Bhd), a professional service firm. The firm and its assigned personnel are free from any relationships or conflicts of interest, which could impair their objectivity and independence. The internal audit function has been mandated to continually assess and monitor the Group’s system of internal control. The total cost paid or payable by the Group to the professional service firm amounted to RM56,250 for FY 2021. The internal audit function adopts a risk-based approach and prepares its audit strategy and plans based on the risk profiles of individual business units of the Group. These plans are updated periodically and approved by the AC. The internal audit function employs the widely used internal control guidance, the Internal Control - Integrated Framework issued by the Committee of Sponsoring Organisations (“COSO”) of the Treadway Commission in assessing and monitoring the effectiveness of the Group’s internal control. The monitoring, review and reporting arrangements undertaken by the Internal Auditor gives reasonable assurance that the internal controls embedded within the major business processes of the Group are appropriate to the Group’s operations to adequately manage the key risks of the Group. The key elements of the Group’s internal audit function are described below: 1. Prepare a detailed Audit Plan based on a risk-based methodology with the scope and frequency of the internal audit activities for the AC’s approval. K imlun Corporat ion Berhad Regi s t rat ion No. 200901023978 (867077-X) 57
RkJQdWJsaXNoZXIy NDgzMzc=