137 ANNUAL REPORT 2022 Key Elements of Internal Control The Board acknowledges that the internal control systems are designed to identify, evaluate, monitor, and manage the risks that may hinder the Group from achieving its goals and objectives. The Manager’s Internal Control Policy and Procedures ("ICPP") was designed to provide reasonable assurance regarding the achievement of objectives in the following categories: • Effectiveness and efficiency of operations • Reliability of financial reporting • Compliance with applicable laws and regulations The ICPP is a reference tool for all employees to identify and assess operating controls, financial reporting, and legal/regulatory compliance processes and to take action to strengthen controls where needed. By developing effective systems of internal control, we can contribute to the Manager’s ability to meet its objectives and reduce the potential liability arising from noncompliance to regulatory requirements, fraud, and lack of efficiency and effectiveness in operations. This guide is designed to satisfy the basic objectives of most business systems as they relate to carrying out the responsibilities of the Manager. An effective check and balance control environment is fundamental for ensuring a sound internal control system in the REIT’s operations. The Board and Management are committed to maintaining an effective internal control environment by continuously enhancing the design of internal control systems to ensure that they are relevant and effective to promote operational agility while ensuring corporate governance and compliance with regulatory guidelines. The key elements and/or features of the internal control system established for maintaining strong corporate governance are as follows: 1. The Standard Operating Procedures ("SOPs") with specified roles and responsibilities in the reporting structure to incorporate the elements of checks and balances which are aligned to the business and compliance requirements. 2. Limit of Authority ("LOA") Manual is in place for approving capital expenditure and matters on general/ corporate, audit, legal and secretarial, finance and accounts, human resource management, procurement and contract administration, investment, and assets – aimed at keeping potential risk exposures under control. A revision in the LOA was tabled to the BARC on 16 November 2022 and approved at the Board on 1 December 2022. 3. Documented policies and procedures are also in place subject to review every now and then to ensure that it maintains their effectiveness to support the REIT’s business activities. The Manager has revised the ERM Policy & Framework, Internal Control Policy & Procedures Manual, Procurement Policy and Investment Policy which were approved by the Board on 1 December 2022. 4. The annual testing on data recovery is undertaken annually, and the results are monitored by the IT Unit and reported at the Management Committee Meeting. Any serious issues would be escalated to the Board immediately. 5. Strategic Planning and Annual Plan are prepared by the Manager and tabled to the Board for approval. Analysis and reporting of variances against budget are presented to the Board and the trustee as required by the Trust Deed which acts as a monitoring mechanism and is reviewed half-yearly. 6. Quarterly and annual financial statements containing key financial results as well as operational performance results of the REIT are prepared and reported to the BARC and the Board. 7. Timely company briefings with analysts are conducted to apprise the shareholders, stakeholders, and general public of the REIT’s performance while promoting transparency and open discussion. During the year under review, two (2) company briefings were carried out on the following dates: 13 June 2022 and 30 November 2022. STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL
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