104 DATASONIC GROUP BERHAD GOVERNANCE 05 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL KEY ELEMENTS OF THE INTERNAL CONTROL SYSTEMS OF THE GROUP (CONT’D) 11. Financial Budgeting and Project-Level Budgeting Annual budgets and reviewed by respective Executive Directors and Executive Chairman prior to tabling to the Board for approval. Actual performance is reviewed against the approved budget by the Executive Directors and Executive Chairman allowing responses and corrective actions to be taken. A project-level budgeting is implemented as part of the initiatives of cost optimisation efforts to monitor and control the expenditures incurred for each project. The Heads of project are responsible to ensure the project expenses are within the approved budgets and any significant variances against approved budgets will be reported to the Management for attention and formulation of necessary action plans to address the areas of concern, as applicable. 12. Continuous improvement on IT systems The Group had undertaken continuous development and improvement on the information technology systems and platforms to support the operational efficiency in various operational activities as well as to enable effective decision-making by providing the decision makers with timely and accurate information. 13. Reviews by the Audit Committee (“AC”) and Risk Management Committee (“RMC”) Reviews carried out by the AC on the adequacy and effectiveness of the internal control systems concerning operational issues reported by the internal and external auditors and attributable actions taken by Management in respect of the findings to provide assurance that control procedures are in place and are being followed as intended. Reviews carried out by the RMC on the adequacy and effectiveness of the risk management system and the mitigation controls to manage the key risk areas reported by the risk management function to provide assurance that the systems are operating as intended in order to manage the overall risk exposures of the Group. Internal control and key risks related matters which warranted the attention of the Board were conveyed by the AC and RMC to the Board. 14. Independent Reviews by Internal Audit Department (“IAD”) IAD performs regular reviews of the Group’s operations and system of internal controls and evaluates the adequacy and effectiveness of the controls processes implemented by the process owners and the Management. During the financial year ended 31 March 2023, the adequacy and effectiveness of internal controls were reviewed by the AC based on reports from audits conducted by IAD according to the approved audit plan. Audit issues and actions taken by the Management to address the shortcomings raised by the IAD were deliberated and accepted at the AC meetings. There were 14 Internal Audit Reports issued and reviewed by the AC throughout the financial year in which the IAD has provided its recommendations to the Management to improve on the design and/or effectiveness of controls where applicable. Additionally, the AC also reviewed the implementation progress of the corrective action plans committed by the Management for all key findings and recommendations highlighted in previous Internal Audit Reports to ensure that all the corrective actions were implemented appropriately. From the Internal Audit Reports issued, there were weaknesses and gaps in internal controls identified which subsequently the remedial actions and corrective measures including monitoring have been and are being taken to address such weaknesses. A description of IAD’s activities for the financial year ended 31 March 2023 are available in the Audit Committee Report included in this Annual Report.
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