DESTINI AR 2017

Risk Management and Internal Control The Board is entrusted with the overall responsibility of continually maintaining a sound system of internal control, which covers not only financial controls as well as risk management, and the need to review its effectiveness regularly in order to safeguard shareholders’ investments and the Company’s assets. The internal control system is designed to access current and emerging risks, respond appropriate to risks of the Group. As an effort to enhance the system of internal control, the Board together with the assistance of the internal auditors adopted on- going monitoring and review to the existing risk management process in place within the aim of formalising the risk management functions across the Group. This function also acts as a source to assist the Audit Committee and the Board to strengthen and improve current management and operating style in pursuit of best practices. As an ongoing process, significant business risks faced by the Group are identified and evaluated and consideration is given on the potential impact of achieving the business objectives. This includes examining principal business risks in critical areas, assessing the likelihood of material exposures and identifying the measures taken to mitigate, avoid or eliminate these risks. The information on the Group’s risk management and internal control is further elaborated in pages 68 to 70 on the Statement on Risk Management and Internal Control of this Annual Report. Assessment of Suitability and Independence of External Auditors The Company has established a transparent arrangement with the External Auditors to meet their professional requirements. From time to time, the External Auditors highlight to the Audit Committee and Board of Directors on matters that require the Board’s attention. The Audit Committee is responsible for reviewing the audit, recurring audit-related and non-audit services provided by the External Auditors. The Audit Committee has been explicitly accorded the power to communicate directly with both the External Auditors and Internal Auditors. The terms of engagement for services provided by the External Auditors are reviewed by the Audit Committee prior to submission to the Board for approval. The effectiveness and performance of the External Auditors are reviewed annually by the Audit Committee. In assess or determine the suitability and independence of the External Auditors, the Audit Committee has taken into consideration of the following : i) the adequacy of the experience and resources of the External Auditors; ii) the External Auditor’s ability to meet deadlines in providing services and responding to issues in a timely manner as contemplated in the external audit plan; iii) the nature of the non-audit services provided by the External Auditors and fees paid for such services relative to the audit fee; and iv) whether there are safeguards in place to ensure that there is no threat to the objectivity and independence of the audit arising from the provision of non-audit services or tenure of the External Auditors. Annual appointment or re-appointment of the External Auditors is via shareholders’ resolution at the Annual General Meeting on the recommendation of the Board. The External Auditors are being invited to attend the Annual General Meeting of the Company to response and reply to the Shareholders’ enquiries on the conduct of the statutory audit and the preparation and contents of the audited financial statement. Where necessary, the Audit Committee will meet with the External Auditors without the presence of Executive Director and members of management to ensure that the independence and objectivity of the External Auditors are not compromised and matters of concerns expressed by the Audit Committee are duly recorded by the Company Secretaries. 63 DESTINI BERHAD Annual Report 2017