KEY ELEMENTS OF RISK MANAGEMENT AND INTERNAL CONTROL SYSTEM (continued) Internal Audit Function (continued) During the financial year under review, the following functions’ processes and/or identified key risk areas of the Group’s major operations were reviewed by the Internal Auditors: (continued) Manufacturing Division (Malaysia & Vietnam): (continued) • Inventory • Finance and Information Technology • Inventory costing (raw materials, work-in-progress, semi-finished & finished goods) • Sales & credit control • Annual stock check • Related party transaction Manufacturing Division (China): • Sales • Procurement • Inventory • Fixed assets • Human resource Corporate, Property Development & Construction and Agriculture Divisions: - Audit on compliance with organisation policies and procedures including: (i) Compliance with Companies Act 2016 (ii) Updated Malaysian Code on Corporate Governance (iii) Bursa Securities’ Listing Requirements (iv) Compliance with PRG’s Anti Bribery Management System requirements. - Risk-based audit on the identified key risk areas of the Property Development Division including: (i) Limited land bank (ii) Economy uncertainty - competitive market & slowdown in property market (iii) Slow response from sales of Bumiputra lots (iv) Filing, documentation and data storage (v) Corruption risk (vi) Change in interest rate - Risk-based audit on the identified key risk areas of the Construction Division including: (i) Limited financial resources for new projects such as requirement of performance bond - Melaka Project (ii) Securing new project and sustainability (iii) Branding & market recognition (iv) Company policies on incentives are not comparative to market (v) Corruption risk (vi) Exposure to safety & health and environmental risk - Melaka Project - Risk-based audit on the identified key risk areas of the Agriculture Division including: (i) Export issue (ii) Low sales (iii) Theft risk (iv) Insufficient manpower and lack of resources (v) Corruption risk The findings arising from the above reviews have been reported to the Management for their feedback and response and for tabling to ARMC for review and deliberation. Where weaknesses were identified, recommended corrective actions and procedures have been implemented to address and strengthen identified control lapses. P R G H O L D I N G S B E R H A D A N N U A L R E P O R T 2 0 2 1 54 Statement On Risk Management and Internal Control (cont’d)
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