INTEGRATED ANNUAL REPORT 2024 182 183 SECTION 12: GOVERNANCE www.miscgroup.com MISC BERHAD Board Audit Committee Report During the year under review, the BAC carried out the following activities in discharging its functions and duties: Financial Reporting • Reviewed and endorsed the quarterly financial results for announcements to Bursa Securities before recommending the same for the Board’s approval upon being satisfied that it has complied with the Malaysian Financial Reporting Standards (MFRS), International Financial Reporting Standards (IFRS), MMLR and other relevant regulatory requirements. • Reviewed the audited financial statements of the Company and the Group prior to submission to the Board for the Board’s consideration and approval, upon being satisfied that the audited financial statements were drawn up in accordance with the MFRS, IFRS, MMLR and Companies Act 2016. • Received update on Project Lightspeed Finance, in particular, the implementation of new systems (SAP S/4 Hana, Coupa), processes and the new Finance structure. The abovementioned reviews were conducted together with the President & Group CEO and Chief Financial Officer. Internal Audit • Reviewed and endorsed internal audit reports issued by GIA based on the approved Annual Internal Audit Plan (AIAP). • Reviewed and endorsed the adequacy and effectiveness of action plans provided by Management on the deliberated audit reports. • Reviewed to ensure the conformity of MISC Berhad (MISC)’s Anti-Bribery Management System (ABMS) to the requirement of the ISO 37001:2016 ABMS standards. • Reviewed and endorsed GIA’s AIAP for FY2025 as guided by the approved Enhanced Risk Based Internal Audit Framework of MISC, in order to ensure adequacy of coverage on auditable entities. • Reviewed the adequacy of resources and competencies of GIA’s staff to execute the audit plan. • Reviewed GIA’s half-yearly and yearly performance status of the approved audit plan, strategic initiatives and other GIA’s activities. • Conducted the yearly assessments of GIA’s performance. Prior to BAC meetings, the Chairman of the BAC held private meetings and discussions with the Head and Principal Auditors of GIA on internal audit reports and any related matters. External Audit • Reviewed and endorsed the external auditors’ terms of engagement, audit plan, scope and proposed fees for FY2024. • Reviewed the results and issues arising from the external auditors’ audit, including the key audit matters and the resolution of issues highlighted in the external auditors’ report to the BAC and Management’s responses thereto. • The BAC had two (2) private meetings with the external auditors without the presence of Management during the year under review (i.e. on 21 February 2024 and 4 November 2024) to discuss any matters the external auditors may wish to present and to ensure that there were no restrictions in the scope and discharge of their audit activities. • Reviewed and recommended the reappointment of the external auditors to the Board for proposal to shareholders at the Annual General Meeting for approval. To ensure that the external auditors’ independence is not impaired, the Audit Engagement Partner in charge of the Company is changed every seven (7) years and is required to observe a cooling-off period of five (5) years before being reappointed, which is in line with the recommendation by the MIA. Internally, the external auditors conduct an Independent Partner Review in order to preserve their independence. The external auditors had also provided written assurance to the BAC that in accordance with the terms of all relevant professional and regulatory requirements, they had been independent throughout the audit engagement. In line with the Company’s adoption of the Policy on External Auditors, the BAC had carried out an assessment on the performance, suitability and independence of the external auditors based on the following criteria, and will continue to do so on an annual basis: Quality of engagement team (including adequacy of resources). 1 Quality of communication and interaction. 2 Independence, objectivity and professional scepticism. 3 Board Audit Committee Report Corporate Governance and Regulatory Compliance • Reviewed and deliberated the reports on Related Party Transactions (RPTs) and Recurrent Related Party Transactions (RRPTs) on a quarterly basis. • Reviewed and recommended to the Board the Statement on Risk Management and Internal Control (particularly items related to internal controls), BAC Report and Additional Compliance Information for inclusion in the Integrated Annual Report 2023. • Reviewed the minutes of meetings of the Board Audit Committee of Malaysia Marine and Heavy Engineering Holdings Berhad and the Audit, Risk and Sustainability Committee (ARSC) of AET Pte. Ltd. for an overview of the state of internal control systems of those subsidiaries. • Reviewed the Whistleblowing quarterly reports of the Company. • Reviewed the Group Health, Safety, Security & Environment (GHSSE) Audit and Assurance Bi-Annual Reports focusing on the efficiency and effectiveness of the maintenance of the Group’s vessels and floating assets. • Reviewed and endorsed the GHSSE Annual Audit and Assurance Plan for FY2025. • Reviewed the governance aspect of the procurement transformation plan including the adequacy and effectiveness of the internal controls arising from the implementation of a digital platform for procurement activities. • Conducted COI review for the appointment of the Vice President, Maritime, Gas & Maritime Business, PETRONAS and the Non-Independent Non-Executive Director of the Company. • Reviewed the revision to the Guidelines on RPTs and RRPTs for the Group. • Reviewed the Director’s COI Review Procedures for MISC Group. • Reviewed the revision to the TOR of the BAC. STATEMENT ON INTERNAL AUDIT FUNCTION The internal audit function of the Company was carried out in-house by the GIA. GIA undertakes a systematic and disciplined approach to evaluate and improve the effectiveness of governance, risk management and control processes within the Group. The Head of GIA reports functionally to the BAC and administratively to the President & Group CEO of MISC. Izran Kassim is the Head of GIA. He is an Associate Member of the Chartered Institute of Management Accountants, a member of MIA and holds a Bachelor of Economics (Honours) from the University of Manchester, UK. GIA adopts the standards and principles outlined in the Institute of Internal Auditors’ International Professional Practices Framework and the Committee of Sponsoring Organisations of the Treadway Commission (COSO) framework; a comprehensive, structured and widely used auditing approach, in conducting the audit activities. The conduct of internal audit work is also governed by the MISC Internal Audit Charter and GIA’s established procedures and guidelines. The annual audit plan and strategy including the scope of works and resources are approved by the BAC. The audit plan is established primarily using a risk-based approach as well as input gathered from various sources, including feedback from Management and the BAC, trends and findings from past audit engagements. GIA conducts scheduled audits independently to ensure there is effective risk monitoring, internal controls, governance processes and compliance procedures to provide the level of assurance required by the Board. GIA also supports and conducts special reviews (which also includes investigations) upon request by Management, BAC and ARSC of AET Pte. Ltd. GIA has incorporated digital technologies into the audit processes. This includes the deployment of the Continuous Auditing (CA) dashboard and the development of the risk sensing framework. GIA’s first pilot CA dashboard was with the Human Resource (HR) division; the dashboard was developed to monitor staff claims. GIA submits its audit reports to the Management Audit Committee (MAC) for executive review. Subsequently, the reports together with deliberations by the MAC are tabled at the BAC meetings for endorsement. At the Board meetings, the BAC Chairman highlights the key audit issues and overall decisions and resolutions made during the BAC meetings to the Board. The audit reports prepared by GIA provide details of audit findings and corresponding Agreed Corrective Actions (ACAs). The status of implementation of these ACAs are captured through the Quarterly Audit Status Reports, from which, the ACAs are monitored and analysed. The consolidated reports are submitted and presented to the MAC and the BAC for deliberation and endorsement on a quarterly basis. Such regular monitoring is essential to ensure the integrity and effectiveness of the Group’s internal controls.
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