STATEMENT OF INTERNAL CONTROL
The Board relies largely on the close involvement of the Executive Directors of the Group in its daily operations. There are periodic reviews of operational and financial performances at the Management, Audit Committee and Board Meetings. The Board and Management ensure that appropriate measures and steps are taken to address any significant issues and risks. There are also procedures for strategic planning and operations. The Board reviews the systems of internal control regularly. To assist the Board in the review of its internal control systems, the Audit Committee set-up by the Board comprises three (3) Independent Non-Executive Directors, one of whom chairs the Audit Committee. Pursuant to the Terms of Reference of the Audit Committee, the members are required to meet regularly to carry out its duties and functions effectively. The Audit Committee reviews the quarterly reports, the statutory financial statements and reporting and the external audit reports as well as ensuring legal updates are being highlighted and followed through. The Group meanwhile is also in the process of reviewing the adequacy and integrity of its current system of internal control on an annual basis.
The key elements of the Group’s internal control system include :-
a. A clear and defined organization structure that is aligned to the business and operational requirements of the core businesses of the Group which limits the respective levels of authority, accountability and responsibility of their job functions and specifications;
b. Documentation of standard operating procedures and ensuring that internal policies, processes and procedures are drawn-up, reviewed and revised as and when required and necessary;
c. Regular operational and financial reporting to the Senior Management and/or the Board, highlighting their progress and variances from budgets. The Audit Committee and the Board review quarterly operational as well as financial results and reports;
d. Regular Group Management meetings are held as and when necessary to raise issues, discuss, review and monitor the business development and resolve operational and management issues and review financial performances against the business plans, the targets and the budgets, if any, for each operating unit and regular visits by the Senior Personnel or Management team to each operating unit as and when necessary;
e. Board and Audit Committee Meetings are scheduled regularly, that is at least four (4) times in a year and the respective meeting papers are distributed on a timely basis to enable members to have access to all relevant information for reviews and queries to be raised;
f. Audit Committee prepares the Audit Committee Report and also reviews the quarterly financial results and yearly Audited Financial Statements prior to the approval of the Board;
g. Management ensures that safety working regulations within the Group are being considered, implemented and adhered to accordingly;
h. As and when necessary, staff training and development programs may be provided to equip staff with the appropriate knowledge and skills to enable staff to carry out their job functions productively and effectively;
i. Adequate insurance of major assets to ensure that assets of the Group are sufficiently covered against mishap that may results material losses to the Group; and
j. Regular visits to the project sites by senior management.
STATEMENT OF INTERNAL CONTROL
Internal Audit Function
The Group’s internal audit function is outsourced to external consultants to assist the Board and Audit Committee in providing an independent assessment on the adequacy, efficiency and effectiveness of the Group’s internal control system. The internal audit function reports directly to the Audit Committee.
During the financial year ended 31 October 2012, the internal audit function carried out an audit in accordance with the risk-based internal audit plan approved by the Audit Committee. The results of the internal audit review and the recommendations for improvement were presented to the Audit Committee at their quarterly meetings. The internal audit function also carried out follow up audits to ensure that the necessary corrective actions have been undertaken to address the control gaps noted. Based on the internal audit reviews conducted, none of the weaknesses noted have resulted in any material losses, contingencies or uncertainties that would require separate disclosure in this Annual Report.
Other Risks and Control Processes
The business processes and internal controls of the Group are continually monitored, to ensure statutory compliance and maintain data integrity. The effectiveness of the internal control system is reviewed regularly. Some weaknesses were identified during the year, some of which had been, and the rest are being addressed. None of the weaknesses has resulted in any material losses, contingencies or uncertainties that would require disclosure in the Annual Report. The Board, together with the Management, is taking relevant and necessary measures and steps for continuous improvement of the Group’s internal control environment.
In assessing the adequacy and effectiveness of the system of internal control and accounting control procedures of the Group, the Audit Committee reports to the Board on significant results, findings and the necessary recommendations.
The Board is satisfied that, during the year under review, there is continuous process in identifying, evaluating and managing significant issues and risks faced by the Group. The Board is of the opinion that the existing system of internal control is adequate to achieve the Group’s objectives.
This statement is made in accordance with a resolution of the Board of Directors passed on 8 March 2013.