ANNUAL REPORT 2015 |
77
STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL
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Review of the quarterly and annual financial reports by the Audit & Risk Management Committee (ARC) and the Board.
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The Critical Success Factors (CSF) Committee is established as part of the stewardship team to conduct study on various
business processes and functions to identify key elements that are vital to achieve company’s mission and goals.
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Given the strategic and expansion plan of the Group, the risk profiles, risk appetite and tolerance level would be adjusted
where necessary to add value to the risk management and control system and for mitigative actions.
THE INTERNAL AUDIT FUNCTION
The Group has outsourced its internal audit function to RMS Corporate Management Sdn Bhd (RMS), an independent professional
firm that reports directly to the ARC and the Board. RMS is entrusted by the Board to provide independent, objective assurance and
consulting activity designed to add value and improve the operations of the Group.
RMS adopts a risk-based methodology in its work and undertakes regular risk and vulnerability assessment on the business units
(operational and non-operational) within the Group, highlights significant weaknesses and makes appropriate recommendations
for improvement to ensure proper, economic and effective use of resources of the Group. The fee incurred for the FY2015 in
relation to the internal audit function is RM161,672.00.
THE REVIEW MECHANISM
The Board adopts a two-tier review mechanism to evaluate the adequacy and integrity of the risk management system and
internal control processes of the Group. The first aspect of the review is undertaken by the management while the second aspect
constitutes the independent review by the ARC with the assistance of the Internal Auditors. Risk profiles and tolerance levels,
significant audit findings, audit issues highlighted in the preceding internal audit reports together with the follow up works are
being considered at length by all parties concerned.
The Board solicits feedback on the effectiveness of risk management system and internal control processes from the ARC and seeks
continuous improvement in its risk management and internal control model to close gaps and/or mitigate deficiencies.
REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS
Pursuant to Paragraph 15.23 of the MMLR, the External Auditors have reviewed this Statement on Risk Management & Internal
Control. As set out in their terms of engagement, the procedures were performed in accordance with Recommended Practice 5
(Revised): Guidance for Auditors on Engagements To Report On The Statement on Risk Management and Internal Control Included
In the Annual Report (RPG 5), issued by Malaysian Institute of Accountants. RPG 5 does not require the External Auditors to consider
whether the Statement on Risk Management & Internal Control covers all risks and controls, or to form an opinion on the adequacy
and effectiveness of the risk management system and internal control processes of the Group. RPG 5 also does not require the
External Auditors to consider whether the processes described to deal with material internal control aspects of any significant
problems disclosed in the Annual Report FY2015 would, in fact, remedy the problems.
Based on their procedures performed, the External Auditors have reported to the Board that nothing has come to their attention
that causes them to believe that this Statement on Risk Management & Internal Control is not prepared, in all material respects, in
accordance with the disclosures required by Paragraphs 41 and 42 of the SRMIC Guidelines, nor is it factually inaccurate.
CONCLUSION
The Board is of the view that the Group’s system of risk management and internal controls is generally satisfactory and has not
resulted in any material loss, contingency or uncertainty. The Board and Management will continue to take necessary measures to
strengthen the control environment and monitor the health of the risk management and internal controls processes of the Group.
