GROUP FINANCE (cont’d) GAN KIM BUAN
II. Conduct of General Meetings
5. Annual Report
• reviewed and endorsed the following statements/reports before submission to the Board for approval and inclusion in the 2020 Annual Report:
➢ Corporate Governance Overview Statement;
➢ AC Report;
➢ Statement on Risk Management and Internal Control;
➢ Sustainability Statement; and
➢ Corporate Governance Report.
• reviewed the applicable amendments to the MMLR and CG Code and the extent of the Group’s compliance with recommendations set out in the CG Code.
A U D I T C O M M I T T E E R E P O R T ( c o n t ' d )
SUMMARY OF ACTIVITIES FOR THE FINANCIAL YEAR (cont’d) 6. Related Party Transactions
• reviewed the Related Party Transactions (“RPT”) and Recurrent Related Party Transactions (“RRPT”) that may arise within the Group to ensure that such transactions are undertaken at arm’s length basis, on normal commercial terms and on terms not favourable to the related party(ies) than those generally available to the public and are not detrimental to the interests of the minority shareholders; and
• reviewed the draft Circular to Shareholders in relation to the proposed Renewal of Shareholders’ Mandate for RRPT of a Revenue or Trading Nature and the Board has approved the recommendation made by the AC, of which was subsequently approved by the shareholders at the AGM held on 27 August 2020.
TRAINING
During the financial year, the AC members have attended on-line seminars, webinars and kept abreast of relevant developments in accounting and auditing standards, practices and rules. The details are available on pages 38 to 40 of this Annual Report.
INTERNAL AUDIT FUNCTION
The AC is supported by an independent and adequately resourced in-house IAD, which is essential in assisting the AC in obtaining the assurance it requires regarding the effectiveness of the system of internal control.
The IAD provides independent and objective assurance and advisory services to add value and improve the operations and internal controls of the Group. The IAD is governed by its Internal Audit Charter, which has been approved by the Board. The IAD adopts a risk- based auditing approach towards planning and conducting their audits. The IAD adopts a professional recognised framework, i.e. Internal Professional Practices Framework (IPPF) in the internal audit function of the Group in order to carry out their internal audit work in a systematic, disciplined and creditable manner.
The IAD consists of five (5) independent associates and is headed by Ms. Suenitha Chupaya. The IAD associates consist of three (3) Qualified Professionals and two (2) Accounting & Finance Degree Holders.
The main functions of the IAD are to:
• undertake regular and systematic reviews of the effectiveness and adequacy of the systems of internal control. The review and assessment process must be carried out impartially, proficiently and with due professional care;
• assess and report on the Management’s progress and effectiveness in addressing weaknesses in internal controls and update on the extent to which recommendations have been implemented within the required time-frame to ensure that all potential weaknesses under review are mitigated or are within acceptable levels; and
• investigate and report on suspected fraud or malpractices (if any).
INTERNAL AUDIT WORK CARRIED OUT FOR THE YEAR
During the financial year ended 31 December 2020, work carried out by the IAD covered:
• operational and financial reviews based on the approved risk-based annual internal audit plan;
• facilitating improved business processes;
• reviewing inter-company/related party transactions of the Group;
• performing follow-up audits to address issues reported in the previous audits;
• conducting impact assessment on the system of internal controls resulting from operational exercises; and
• performing special reviews and investigations based on request by the AC, Management and/or channeled via the Whistleblowing System.
All audit works for the internal audit function during the year were conducted in-house.
The IAD performs routine audit and reviews on all operating business units within the Group. However, the overseas audits scheduled for 2020 have been postponed indefinitely due to travel restrictions imposed by the Government to curb the spread of coronavirus pandemic (“COVID-19”). The IAD was also not able to carry out their on-site audits due to the Movement Control Order (“MCO”), which was imposed from 18 March 2020 to 3 May 2020. Thus, out of the planned twenty-seven (27) internal audit reports, only eighteen (18) internal audit reports were completed and presented to the AC incorporating findings, recommendations for improvement on the weaknesses noted and Management’s comments on the findings:
Segment No. Of Reports
Manufacturing 6
Hotels and Resort 3
Property Development and Investment 6
Plantations 3
Share Investment -
Total 18
The IAD met up with the External Auditors without the presence of the Board or Management on 23 November 2020, to discuss on its audit coverage during the year, issues that arose during the course of their audit, their resolutions and any other areas of audit concern. This meeting was held to ensure that the audit coverage is efficient and effective for both the Internal and External Auditors and to exchange information.
During the financial year ended 31 December 2020, the internal audit function incurred a total cost of RM686,800 (RM685,000 in 2019).
This cost includes depreciation and all other operational cost for the IAD.