GOVERNANCE INTERNAL AUDIT FUNCTION The Group has engaged Vaersa, an outsourced internal audit service provider, to carry out the internal audit function in addition to our in-house internal audit team. Vaersa provides an independent assessment of the effectiveness and adequacy of the Group’s system of internal control. This provides the AC and Board with reasonable assurance of the adequacy of the scope, functions and resources of the internal audit function and internal control. Regular assessment of the adequacy and effectiveness of the internal controls established by Management to mitigate risks are conducted through interviews and discussions with key management staff, review of the relevant established policies, procedures and authority limits, and observation and testing of the internal controls on a sample basis. The results of the internal audit reviews, including action plans to be taken by Management to address identified weaknesses and recommendations for enhancement opportunities are reported to the AC, which in turn reports to the Board. During the FY2022, internal audit work was carried out in accordance with the risk assessment based on internal audit plan that was reviewed and approved by the AC. The business processes audit reviews were conducted on Operation Management (ESC), Project Department, Operations Department (HQ and Logistic), Customer Complaint Management, and Management of Information System. The results of the audit reviews were discussed with Senior Management, and subsequently, the audit findings, including the recommendations for improvement were reported to the AC at the quarterly meetings. Based on the internal audit reviews conducted, no noted weaknesses resulted in any material losses, contingencies or uncertainties that would require separate disclosure in this report. The total costs incurred for the internal audit function for FY2022 was approximately RM40,000. Vaersa met with AC on 30 May 2022, 29 August 2022, and 28 November 2022 both with and without the presence of executive board members and Management to discuss audit related matters. OTHER KEY ELEMENTS OF INTERNAL CONTROLS The other key elements of the Group’s internal control systems are: i. Quarterly review of the financial performance of the Group by the AC and the Board. ii. Clearly defined and structured lines of reporting and responsibility. iii. Operations review meetings are held to monitor the progress of business operations, deliberate significant issues and formulate corrective measures. iv. Documented internal policies as set out in a series of memorandums to various departments within the Group. v. Whistle Blowing Policy which provides an avenue for employees to report suspected malpractices, misconduct or violations of the Company’s policies and regulations in a secured and confidential manner. ASSURANCE Based on the assurance provided by the Group Managing Director and Chief Financial Officer, and other relevant assurance providers, the Board is confident that the risk management and internal control practices and processes are functioning effectively and efficiently in all materials aspects. This provides reasonable assurance that the Group’s assets are safeguarded, and the interests of the shareholders and customers are protected. However, it should be noted that there are inherent limitations in any risk management and internal control system, and such a system cannot provide absolute assurance against any material misstatements, losses, contingencies, fraud, or irregularities. The Board acknowledges the importance of continually assessing and enhancing the Group’s risk management and internal control practices and processes. To this end, the Board will continue to oversee the Group’s risk management and internal control framework as well as regularly review and assess the adequacy and effectiveness of the Group’s risk management and internal control practices and processes to ensure that they remain relevant and effective in mitigating the risks faced by the Group. RISK MANAGEMENT AND INTERNAL CONTROL STATEMENT (cont’d) 137
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