The Board of Directors of IHH Healthcare Berhad (IHH or the Company), together with that of its subsidiary companies (the Group), is committed to maintaining a sound system of risk management and internal control. In accordance with Paragraph 15.26(b) of the Listing Requirements of Bursa Malaysia Securities Berhad, the Board is pleased to provide the following Statement on Risk Management and Internal Control prepared in accordance with the “Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers”. Board Responsibility The Board, in discharging its responsibilities, is wholly committed to upholding a sound system of risk management and internal control, as well as to regularly review its adequacy, integrity and effectiveness to safeguard shareholders’ investment and the Group’s assets. By nature, the risk management and internal control system is designed to manage key risks that could prevent the Group from achieving its business objectives while maintaining an acceptable risk profile. The systems put in place can only manage risks within tolerable and known levels, rather than completely eliminating the risk of failing to achieve business objectives, due to the limitations inherent in any system of risk management and internal control. Control Structure The Board is assisted by the Audit Committee (AC) which consists of four Independent Non-Executive members of the Board, and the Risk Management Committee (RMC) which consists of three Independent Non-Executive members. The Board, through the AC and RMC, maintains risk oversight within the Group to ensure that the implementation of the approved policies and procedures on risks and controls is as intended. The approved policies and appropriate key internal controls have been put in place to mitigate the key risk areas which have been identified and assessed by the respective departments in-charge for the year under review and up to the date of approval of this statement for inclusion in the annual report. The Board, through the AC, provides constructive focus and an independent view on the financial reporting process and ensuring Management maintains a sound system of internal controls to safeguard and enhance enterprise value. The internal control system covers areas of finance, operations and compliance, and provides reasonable assurance that the following objectives have been achieved: (i) Reliability and integrity of financial reports; (ii) Transparent/appropriate disclosure; (iii) Compliance with relevant regulations, policies, procedures and laws; (iv) Safeguarding of assets; (v) Effective and efficient utilisation of resources; and (vi) Ensuring the Group’s long-term sustainability The Board believes that the current internal control system is adequate and adhered to the best of its ability for the year ended 2023. The opinion is based on the following key internal controls practised: Limits of Authority The Limits of Authority established by the Group serves to govern the operations of all companies within the Group. It encompasses authority limits for each level of management in the Group and business units for transactions covering both operational matters and non-operational matters. The Limits of Authority comprehensively covers approval matrices for Procurement and Payment, Treasury & Financing, Human Capital Management, Corporate Transactions, Legal Obligations and Documentation and Donation. Major capital investment, change of business purpose, acquisition and disposal of assets are approved by the respective business unit’s Board and the Board of IHH. Recommendations by Internal Auditors The Group has an Internal Audit function to review the effectiveness of the material internal controls of the business units, based on the approved annual audit plan. Unannounced visits are sometimes conducted to provide greater assurance. Consequently, Management ensures that the recommendations made by the Internal Auditors to strengthen and improve the internal controls have been implemented. Performance Monitoring and Budgets Annual budgets of the business units are consolidated into the IHH Group Budget for approval by the IHH Board. The IHH Board discusses and monitors the performance of the Group, together with that of the business units, at the quarterly IHH Board Meetings. Procurement and Project Management There is a Centralised Procurement function in each business unit for major purchases, such as hospital equipment, drugs, maintenance expenditures and expansion projects. This ensures adherence to the Group Procurement Guidelines and provides economies of scale during negotiations. Annual Report 2023 111 Statement on Risk Management and Internal Control
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