STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL INTERNAL AUDIT The Manager outsources its Internal Audit function, which reports independently to the BARC to provide the Board with adequate assurance it requires regarding the adequacy and effectiveness of risk management, internal control and governance processes. The Internal Audit Team (“IAT”) adopts a risk-based approach in executing the annual audit plan that focuses on major business units and/or operations. The annual audit plan is reviewed and approved by the BARC. The IAT reports directly to the BARC on the outcome of its appraisal of the operational activities. Significant audit findings are presented and deliberated by the BARC on a quarterly basis or as appropriate. The IAT also monitors the implementation of audit recommendations in order to obtain assurance that all major risks and controls measures identified have been reasonably addressed by the management in an effective and timely manner. BOARD ASSURANCE AND LIMITATION The Board acknowledges its overall responsibility for reviewing the adequacy and integrity of the Group’s systems of internal control, identifying principal risks, and establishing appropriate control environment and framework tomanage risks. TheBoard continues to derive its comfort of the state or riskmanagement and internal control of the Fund from the following oversight mechanisms and information compiled for these oversight processes:- - periodic review of financial information covering financial performance and quarterly financial results; - BARC’s oversight of risk management framework, changes in risk magnitudes and status of management implementation of risk mitigation plan; - BARC’s review and consultation with Management on the integrity of the financial results and audited financial statements; - audit findings and reports on the review of systems of internal control provided by the internal auditors and status of Management’s implementation of the audit recommendations; and - Management’s assurance that the Group’s risk management and internal control systems have been operated adequately and effectively, in all material respects. Executive Director and Head of Finance of the Company ensure that the Group’s risk management and internal control system is operating adequately and effectively, in all material aspects, based on the risk management and internal control system of the Company. For the financial year under review, the Board is satisfied that the existing level of systems of risk management and internal control is effective to enable the Group to achieve its business objectives and there were no material losses resulted from in this Annual Report. The Board recognises that the systems of risk management and internal control should be continuously improved in line with the evolving business development. Nonetheless, it should be noted that all risk management systems and systems of internal control could only manage rather than eliminate risks of failure to achieve business objectives. Therefore, these systems of risk management and internal control in the Group can only provide reasonable but not absolute assurance against material misstatements, frauds and losses. The Board will continue to monitor all major risks affecting the Group and take necessary measures to mitigate them and continue to enhance the adequacy and effectiveness of the risk management and internal control systems of the Group. 124 AL-`AQAR HEALTHCARE REIT ANNUAL REPORT 2021
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