FRONTKEN CORPORATION BERHAD 200401012517 (651020-T) ANNUAL REPORT 2025 61 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (CONT’D) INTERNAL AUDIT FUNCTION – ITS COMPOSITION AND SCOPE OF COVERAGE (CONT’D) Outsourced internal audit coverage – Group (save for Taiwan operations) For the financial year ended 31 December 2025, Sterling has carried out internal audit reviews of two (2) business units, namely, Frontken (Singapore) Pte Ltd (“Frontken Singapore”) and Frontken Philippines Inc. (“Frontken Philippines”) covering the following areas: • Human Resource Management; • Finance and Accounts; • Tools and Consumable Stock Management; and • Sales and Marketing. Sterling also carried out follow-up status reviews for the financial year to update the Audit Committee on the status of management actions for previously reported audit findings. In-house internal audit coverage (only Taiwan operations) The in-house internal audit plan for the financial year under review was prepared based largely on AGTC’s financial information and the relative risks to the achievement of AGTC’s business objectives. The in-house internal auditor adopted a process life cycle approach in identifying the auditable areas in AGTC. For the financial year ended 31 December 2025, as per the audit plan for year 2025 approved by the Audit Committee in February 2025, a review of internal controls on the following key business processes and related controls was carried out: • Sale and receipt cycle; • Investment cycle; • Purchase and payment cycle; • Finance cycle; • Labour and wage cycle; • Management of assets; • Functionary substitute system; • Property, plant and equipment cycle; • Production cycle; and • Computerised information processing system. The internal audit plan and a summary of the findings of the in-house internal auditor were shared with the Audit Committee of the Company for information and comments, if any. The Audit Committee also noted the summary of the internal audit report presented during the year. For the financial year ended 31 December 2025, the Audit Committee of the Company as well as Board of AGTC reviewed the work of the internal audit functions, outsourced and in-house, as the case may be, their observations and recommendations in order to obtain assurance on the adequacy and operating effectiveness of the Group’s risk management and internal control system. The total cost incurred by the Group for the internal audit functions for the financial year under review amounted to approximately RM235,000 (2024: RM233,000). External Auditors The external auditors, in the course of their statutory audit of the Group’s financial statements, reviewed the Group’s system of internal control to the extent of their planned reliance as laid out in their audit planning memorandum. There were no significant deficiencies in internal controls identified during the audit, together with the improvement to strengthen internal controls, were reported in writing to the Audit Committee by the external auditors vide their presentation deck.
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