Corrective Actions In the process of investigating the revenue and profit misstatements, the Board has gained valuable experience about the areas of weaknesses and the causes of the failure in the system of internal control. The Board has learned and benefited from this experience and is committed in its efforts to reform and re-organized the system of internal control. The Audit Committee and the Board has reviewed the inhouse internal audit function and is satisfied with the level of independence and the competency of its staff. In order to improve the effectiveness of the internal audit function, the Board has empowered the internal auditors to exercise more influence in determination of their scope of work and the implementation of their audit strategy which includes the following: a) Clearly defined terms of reference, authorities and responsibilities of the various committees, which include Audit Committee and Nomination and Remuneration Committee; b) R egular and comprehensive information provided to management and the Board, covering financial performance and key business indicators; c) A detailed budgeting process where operating units prepare budgets for the coming year which are approved both at the operating unit level and by the Board; d) Q uarterly monitoring of results by the management and appropriate action taken, when necessary; and e) R egular visits to reporting units by the management team and, where deem appropriate, the Board. Board Responsibility The Board is responsible to ensure that the Group maintains a sound system of internal controls and for reviewing its adequacy and integrity. It includes not only financial controls but also operational and compliance controls. Due to the limitations inherent in an internal control system, the management has affected an internal control system designed to manage rather than eliminate the risk that may impede the achievement of the Group's business objectives. Management's Responsibility The management is responsible for implementing the Group's strategies and day-to-day businesses. The organization structure sets out clear segregation of roles and responsibilities, lines of accountability and levels of authority to ensure effective and independent stewardship. The management assists the Board in implementing the policies approved by the Board, implementing risk control procedures and developing, operating and monitoring internal controls to mitigate and control identified risks. Internal Audit's Responsibility The Group Internal Audit Department ("GIAD") function was set up by the Board to provide independent assurance of the adequacy of risk management, internal control and governance systems. GIAD activities are guided by an Internal Audit Charter which is approved by the Audit Committee ("AC"). The Group's internal audit function undertakes regular reviews of the Group's operations and its system of internal control. The audit plan is developed based on the risk profiles of the Group's business. Internal audit findings are discussed at management level and actions are agreed in response to the internal audit recommendations. The progress of implementation of the agreed actions is being monitored by GIAD through follow up reviews. GIAD's scope of coverage encompasses all business and support units, including subsidiaries that do not have their own audit units. The selection of the units to be audited from the audit universe is based on an annual audit plan that is approved by the AC. The annual audit plan is developed based on assessment of risks, exposures and strategies of the company. Units that are assessed to be high risk are subject to an annual audit, while those that are assessed to be medium or low risk are subject to a cycle audit. GIAD also undertakes investigations into alleged fraud by staff, customers or third parties and recommends appropriate improvements to prevent recurrence and actions against persons responsible. Risk Management and Internal Control GOVERNANCE 72 DESTINI BERHAD ANNUAL REPORT 2022
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