MKH Annual Report 2017

PRINCIPLE 5: UPHOLD INTEGRITY IN FINANCIAL REPORTING (continued) Relationship With The External Auditor The Company’s independent external auditors fill an essential role for the shareholders by enhancing the reliability of the Company’s financial statements and giving assurance of that reliability to users of these financial statements. The Board through the Audit Committee maintains a transparent and professional relationship with the external auditors. The external auditors will communicate to the Audit Committee and the Board when they become aware of any significant weaknesses in the Company’s system of internal control, including fraud, during the course of their audit that may require the attention of the Audit Committee and the Board. The role of the Audit Committee in relation to the external auditors is set out on pages 61 to 65. For the financial year under review, the external auditors had attended all the Audit Committee meetings and general meeting of the Company and had five (5) meetings with the Audit Committee without the presence of any Executive Director and management, to discuss the audit findings and any other observations they may have during the audit process. The external auditors have also confirmed that they are, and have been, independent throughout the conduct of the audit engagement in accordance with the independence criteria as set out by the Malaysian Institute of Accountants (“MIA”) By-Laws and have provided the declaration in their annual audit plan presented to the Audit Committee of the Company. The Audit Committee together with the Chief Financial Officer had undertaken an annual assessment of the competency and independence of the external auditors pursuant to the External Auditors Assessment Policy, which has outlined the guidelines and procedures for the assessment on the suitability of the external auditors on 28 December 2017. The Board, on the recommendation of the Audit Committee, is of the view that the declaration of independence, integrity and objectivity made by the external auditors in their audit report for each financial year under review is sufficient to serve as a written assurance from the external auditors on their independence and integrity throughout the conduct of the audit engagement in accordance with the independence criteria as set out by MIA By-Laws, has recommended their re-appointment to the Board, upon which the shareholders’ approval will be sought at the AGM. The details of the External Auditors Assessment Policy are available for reference at www.mkhberhad.com . PRINCIPLE 6: RECOGNISE AND MANAGE RISKS The Board should establish a sound risk management framework and internal controls system. Risk Management Committee The Risk Management Committee whose current members comprised of four (4) members from the Senior Management assists the Audit Committee and the Board in discharging its risk management and control responsibilities. In fulfilling the primary objectives, the Risk Management Committee has been tasked to identify and communicate the existing and potential critical risk areas faced by the Group and the management action plans to mitigate such risks by working with the internal auditors in providing periodic reports and updates to the Audit Committee on a quarterly basis. 58 MKH Berhad • Annual Report 2017 Statement on Corporate Governance