INTERNAL AUDIT FUNCTION (continued) During the financial year ended 31 December 2021, the Internal Auditors carried out the following activities: (a) Prepared the annual audit plan for the Corporate, Property Development & Construction Divisions and Agriculture Division for review and approval by the ARMC. (b) Performed compliance and risk-based audits and tabled its findings and recommendations to the ARMC. (c) Reviewed the following processes and/or identified key risk areas of the Group’s operations: (i) Manufacturing Division (Malaysia & Vietnam): • Production & quality control including compliance with:- - Environmental regulations - Occupational safety & health regulations • Human resource • Purchasing & accounts payable • Inventory • Finance and Information Technology • Inventory costing (raw materials, work-in-progress, semi-finished & finished goods) • Sales & credit control • Annual stock check • Related party transactions (ii) Manufacturing Division (China): • Sales • Procurement • Inventory • Fixed assets • Human resource (iii) Corporate, Property Development & Construction Divisions and Agriculture Division: - 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 Report of The Audit and Risk Management Committee 59 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 (cont’d)
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