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 RM43,750 for FY2022. 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 ARMC. 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 ARMC’s approval. 2. Carry out audit activities on business units of the Group to ascertain the adequacy and integrity of their system of internal controls, governance, risk management capability and adequacy of the management team. The assessment on recurrent related party transaction procedures is carried out annually. 3. Report to the Management upon completion of each audit on any significant control lapses and/or deficiencies noted from the reviews and the root-cause analysis results (where applicable), for their verification and corrective action plan. 4. Report to the ARMC on all significant non-compliance, internal control weaknesses, root-cause analysis results (where applicable), and agreed actions taken by Management to resolve the audit issues identified. 5. The internal audit results are communicated with ratings on the overall adequacy and effectiveness of management’s risk management and internal control effectiveness in relation to the approved internal audit focus (coverage) areas. This rating reflects the internal audit conclusion or opinion. There are also implementation priority ratings for each internal audit findings. This rating communicates the level of urgency that an improvement shall be implemented. 6. Follow-up on internal audit issues identified to ascertain whether agreed corrective action plan has been carried out by the Management and provide updates to the ARMC. WEAKNESSES IN INTERNAL CONTROLS WHICH RESULTED IN MATERIAL LOSSES There were no major weaknesses in internal controls which resulted in material losses during the financial year under review until the date of approval of this Statement. REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS The external auditors have reviewed this Statement on Risk Management and Internal Control and reported to the Board that nothing has come to their attention that causes them to believe the Statement is inconsistent with their understanding of the process adopted by the Board in reviewing the adequacy and integrity of the Group’s internal control system. This statement is made in accordance with the resolution of the Board of Directors dated 30 March 2023. STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL Kimlun Corporation Berhad | Registration No. 200901023978 (867077-X) 63
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