THE BOARD AUDIT AND RISK COMMITTEE REPORT Internal Audit (Cont’d) (f) Reviewed the effectiveness of the internal audit function through evaluation of its performance and competency, and monitoring the sufficiency of resources and costs, to ensure that it has the required expertise and professionalism to discharge its duties. (g) Reviewed the Statement on Risk Management and Internal Control (“SORMIC”) which provided an overview of the state of internal controls prior to the Board’s approval for inclusion in the Annual Report. The BARC was satisfied that the system of risk management and internal control as described in the SORMIC, was sound and effective, providing reasonable assurance that the structure and operation of controls were appropriate for the REIT’s operations. The BARC also acknowledged that implementation measures were continuously taken to strengthen the system of risk management and internal control so as to safeguard the interests of stakeholders including shareholders’ investments, and the REIT’s assets. Risk Management and Internal Control (a) Reviewed quarterly top risk profiles which covers Strategic, Finance, Operational and Compliance Risks and deliberated on the significant threats and opportunities, including status and adequacy of mitigation strategies. (b) Discussed the improvements to the Enterprise Risk Management framework and process to ensure proactive and holistic risk identification, and monitoring of mitigation actions to reduce risk impact to an acceptable level. (c) Reviewed the status of the planned mitigation actions developed from the results of the Compliance risk assessment performed in 2023. (d) Evaluated the overall adequacy and effectiveness of internal controls through review of the work performed by both internal and external auditors, other assurance providers and through discussions with Management. (e) Ensured appropriate controls are in place in management of the Fund, that the Manager has a well defined organisational structure with clear lines of responsibility and a comprehensive reporting system and adequate procedures in financial reporting, risk management, internal control and are in place. Further details in respect of risk management and internal controls are set out on pages 131 to 144 (SORMIC of this Annual Report). Details in respect of the principal risks and uncertainties are set out on pages 24 to 37 under Management Discussion and Analysis. (f) Reviewed and deliberated on four frameworks relating to compliance and internal controls and recommended to the Board the implementation of the frameworks and policies put forward by the Management. SUMMARY OF WORK CARRIED OUT DURING FINANCIAL YEAR (CONT’D) 122 CORPORATE GOVERNANCE 1 2 3 5 6 AL-`AQAR HEALTHCARE REIT ANNUAL REPORT 2023
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