SEGMENT KEY INTERNAL CONTROL ELEMENTS STRATEGIC PLANS AND PERFORMANCE MANAGEMENT The Group undertakes a comprehensive annual budgeting and forecasting exercise on all business and operating units to ensure that strategic initiatives are developed in line with the Group’s moving forward business objectives. Each operating unit is accountable to prepare a comprehensive analysis of strategic priorities and undergoes a detailed budgeting and brainstorming process prior to the finalisation of the five (5) year strategic plan and the detailed annual operating plan for the forthcoming financial year. The Board constructively challenges and contributes to the development of the Group’s strategic directions. The Board probes the Management to ensure that the Management has taken into consideration the varying opportunities and risks whilst developing the strategic plan. The Group’s strategic plan and annual operating plan is reviewed, deliberated and approved by the Board. Subsequently, the approved strategic plan and annual operating plan are cascaded to the Corporate and Business Leaders across DNeX Group for execution. The Group’s strategic business directions in terms of financial and major initiatives are then further reflected in the respective corporate, subsidiaries and support unit KPIs with a detailed balanced scorecard target. Each division is assessed against the approved budgets and corporate objectives and justification is provided for significant variances. MONITORING The Management Committee meets on a monthly basis to deliberate on business and financial performance, operating risk and issues and to provide direction and support to business units in performing their assigned duties in an effective manner. The Management Committee discusses pertinent issues, strategy and corrective or improvement measures to be implemented, where required. The Management reports on the performance of the Group against the committed plans to the Audit Committee, the Risk, Governance and Sustainability Committee and the Board on a quarterly basis or as and when deemed necessary. Through this mechanism, the Board is informed of all major control issues pertaining to internal control, risk taking and regulatory compliance. This will ensure that business objectives stay on course and that the Management undertakes the required remedial action within the committed timeline. AUDIT Internal Audit The scope of works of the internal audit function are carried out based on the internal audit plan approved annually by the Audit Committee. For the year under review, the internal auditor has checked for compliance with policies and procedures and the effectiveness of the internal control system. Any significant findings of non-compliance or recommendations for process improvement are highlighted during the quarterly Audit Committee meetings. The internal auditor plays a significant role in verifying and validating whether the Management has met its responsibilities and determining the level of compliance to internal controls. This is carried out by evaluating controls, risk management, and governance processes carried out in pursuit of the business objectives. The Audit Committee reviews the audit report that details out the internal audit observations, the internal auditor’s recommendations, Management’s responses and ascertains that appropriate and prompt remedial actions are taken by the Management. DAGANG NeXCHANGE BERHAD 146 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL
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