100 KIMLUN CORPORATION BERHAD • STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL INTERNAL CONTROL The Group has established an organisation structure outlining the lines of responsibilities and authorities for planning, executing, controlling and monitoring the business operations aligned to business and operations requirements which supports the maintenance of a strong control environment. It has extended the responsibilities of the ARMC and of the Board to include the assessment of internal controls through the internal audit function. Other key elements of the system of internal control of the Group are as follows:- • The Board established a hierarchical organisation structure with proper segregation of duties for key functions of the Group’s operations; • Delegation of authority including authorisation limits at various levels of management and those requiring the Board’s approval are clearly defined to ensure accountability and responsibility; • Standard operating procedure manuals set out the policies and procedures for day- to-day operations. Reviews are performed to ensure that the manuals remain current, relevant and aligned with evolving business and operational needs; • Formation of committee to evaluate and approve related party project tenders; • Appointment of staff based on the required level of qualification, experience and competency of the relevant position. Training and development programmes are carried out to ensure that staff are kept up to date with the necessary competencies and knowledge to carry out their responsibilities towards achieving the Group’s objectives; • Review of actual performance against annual budget by the Board; • Regular provision of comprehensive information to the Board for monitoring and tracking of performance of the Group; • Periodic operational review meetings are held and attended by the Executive Directors, heads of departments and key management staff to consider financial and operational issues of the Group as well as any management proposal; • Active involvement of Directors in the operation and management of branch and subsidiary companies; • Centralised control of financial resources by head office of respective subsidiary companies; • Whistle Blowing Policy and Code are established to ensure high standards of conduct and ethics in the business operations; • Set out policies and procedures for anti-bribery and corruption and develop internal guidelines to ensure that the Group’s business is conducted in an ethical manner with integrity and honesty; • Establish COI Policy for identifying, addressing, managing and reporting actual, potential, and perceived COI, and to provide guidance on how to deal with situations involving COI as and when they arise; • Implement ISO 9001:2015 Quality Management System for certain subsidiaries of the Company. Annual surveillance audits are conducted by a certification body to provide assurance of compliance with ISO 9001:2015; • Adequate insurance coverage and physical safeguarding of major assets are in place to guard against any mishap that may result in material losses to the Group; • The internal audit function provides reasonable assurance on the effectiveness of the system of internal control within the Group. Internal audits are conducted to review the effectiveness of the control procedures and are directed towards areas with significant risks as identified by the ARMC and Management, and the risk management process is also audited to provide assurance on the management of risks; and • Review of internal audit reports and follow-up on audit findings by the ARMC. The internal audit reports are deliberated by the ARMC and are subsequently presented to the Board on a quarterly basis where the ARMC seeks clarifications from the Executive Directors on internal control matters and provides its views and recommendations on areas where improvements can be made. INTERNAL AUDIT FUNCTION The Group has outsourced its internal audit function to an independent professional service firm, Axcelasia Sdn. Bhd. The firm and its assigned personnel are free from any relationships or conflicts of interest, which could impair their objectivity and independence. The internal audit function has been mandated to continually assess and monitor the Group’s system of internal control. The total cost paid or payable by the Group for the internal audit services amounted to RM52,000 for FY2025.
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