Board’s Responsibilities (Cont’d) However, due to the limitations inherent in any internal control system, it should be noted that such system is designed to manage rather than to eliminate the risk of failure to achieve the Group’s business objectives. Therefore, the system can only provide a reasonable and not absolute assurance against material misstatement or loss. The internal control system or framework of the Group covers, inter-alia, risk management, financial, operational and compliance controls. This process has been in place for the year under review and up to the date of approval of this statement for inclusion in the Annual Report. Accompanying the maintenance of an appropriate internal control system, is an on-going process to identify, evaluate, monitor and manage principal risks faced by the Group and this process is reviewed quarterly by the Board. The Group identified major risk areas of concern which included demand for properties, fluctuating commodity prices, foreign exchange rates fluctuation and change in regulatory environments. The Board has reviewed the adequacy and effectiveness of the Group’s risk management and internal control system for the year under review. Risk Management and Internal Control Processes The Board has put in place an organisational structure with formally defined lines of responsibility and delegation of authority. A process of hierarchical reporting has been established which provides for a documented and auditable trail of accountability as appended below: • The Executive Committee, comprising Executive Directors and assisted by certain Key Senior Management was established to review the operations of the Group’s operating divisions, the monthly financial information which includes actual results compared against budget as approved by the Board, explanation on significant variances and management actions taken, where necessary. • The Audit Committee with the assistance of the Internal Audit team and Risk Management Committee (RMC), reviews the internal control processes and evaluates the adequacy and effectiveness of the risk management and internal control system. Further details are set out in the Audit Committee Report and Corporate Governance Overview Statement. • The RMC was established to review and monitor Group’s risk management framework and activities. The RMC members are Group Managing Director, Property Director, Chief Financial Officer and Treasury Director/Group Company Secretary. The RMC reports to the Audit Committee on a quarterly basis where key risks and mitigating actions are discussed and implemented. • The head of business unit to follow-up on those potential risks identified and the management action plans to mitigate such risks based on the findings from internal audit reports prepared by our Internal Audit team and approved by the Audit Committee. Any significant findings of non-compliance or implementation by respective business units will be reported to the Audit Committee during quarterly meeting. • Sufficient insurance coverage and physical safeguards on major assets are in place to ensure the Group’s assets are adequately covered against any mishap that could result in material loss. Sustaining Lives, Empowering Communities Governance That Inspires Confidence Financial Insights Through Numbers Empowering Ownership PG. 143
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