132 AL-SALAM REIT SM TAANTAEGMEEMNETN OT NA RN I DS K INTERNAL CONTROL INTRODUCTION Pursuant to Paragraph 15.26(b) of the MMLR of Bursa Malaysia Securities Berhad ("Bursa Securities"), the Board of Directors of Listed Companies is required to include in their annual report, a statement about the state of risk management and internal control of the listed as a group. Accordingly, the Board of Directors of the Manager is pleased to provide the following statement that has been prepared in accordance with the SORMIC: Guidelines for Directors of Listed Issuers endorsed by Bursa Securities and taking into consideration the recommendations of the MCCG 2021. This Statement outlines the nature and scope of risk management and internal control of the Manager during the financial year under review and up to the date of approval of this statement and covers all of the REIT’s operations. BOARD’S RESPONSIBILITIES The Board is responsible for the establishment as well as overseeing the Group’s risk management framework and internal control systems that are designed to manage the REIT’s risk appetite within the acceptable level of tolerance set by the Board and Management, rather than eliminate totally the risks of failure, to achieve the goals and objectives in generating potential returns to unitholders. The Board periodically reviews the effectiveness and adequacy of the framework and systems by identifying, assessing, monitoring, and communicating key business risks which cover financial, operational, management information systems, organisational, and compliance controls to safeguard the unitholders’ investment and assets. BOARD AUDIT AND RISK COMMITTEE The committee at the Board level that have primary risk management and internal control oversight responsibilities is the BARC. The main responsibilities of the BARC are: • To assist the Board in ensuring a sound and robust Enterprise Risk Management framework and its implementation to enhance the Group’s Corporate Governance practices with focus on risk issues. The Terms of Reference ("ToR") and main duties of the BARC in relation to risk management are detailed out on the website at www.alsalamreit.com.my. • To assist the Board in assessing the effectiveness of the Group’s internal control systems and overseeing the financial reporting. The BARC also reviews the adequacy and integrity of the Group’s internal control systems and management information systems, including compliance with applicable laws, rules, directives and guidelines through internal audit functions. The BARC’s ToR and main duties in assessing the adequacy and effectiveness of internal control systems implementation are detailed out on the website at www.alsalamreit.com.my. Other Board Committees such as BNRC and BIC are also established with clearly defined duties and responsibilities to oversee various key business activities of the REIT. The Board acknowledges the responsibility for all the actions of the committees with regard to the execution of the delegated roles, including the outcome of the review and disclosure of key risks and internal control systems of the Manager and the REIT.
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