MSM Malaysia Holdings Berhad Annual Report 2020

The total number of internal auditors is appropriate and sufficient in terms of the mix of knowledge, skills and other competencies in line with the scope of the audit and size of MSM Group. Composition of the internal auditors and the corresponding professional status are as follows: Professional Status No. of Auditors Professional accounting (ACCA, CA) or Certified Internal Auditor (CIA) or post graduate (MBA or Masters) 2 Graduate 2 TOTAL 4 The above includes two (2) internal auditors who are members of the Institute of Internal Auditors Malaysia. The total cost incurred for the financial year ended 31 December 2020 was RM1,380,064 (2019: RM1,175,579). ROLES AND FUNCTIONS The Internal Audit function provides assurance services for the Group locally and overseas covering all operations where the Group has management control. In addition to the assurance role, the internal audit function also undertakes a consulting role and investigative role. In its consulting role, the internal audit function undertakes advisory on governance, risk and control, policy and procedures review and participates in working groups to provide input on policy development, systems development and several initiatives of the Group. Investigative audits are undertaken upon any allegation of improper, illegal and dishonest acts based on the request of the Management or Board. DEVELOPMENT OF AUDIT PLAN The Audit Plan is developed after considering the following factors and inputs: a. Key risks highlighted in the latest risk register and MSM’s KPI. b. 2019-2021 Business Plan which essentially revolves around increasing yields, cost competitiveness, divestment of non-core investments, rehabilitate and rationalise poor performing investments and rationalise corporate spending. c. GIA’s analysis of the current situation of MSM including feedback from the AGRC and Management (e.g. GCEO, Group COO and CFO). Once the key audit areas are developed, the staff and resource allocation plan, budget estimates and staff development progress are established. The Annual Internal Audit Plan is presented to the AGRC. The AGRC reviews and challenges the adequacy of the audit scope, the resources allocated, the capability skill sets and makes recommendations before approving the Annual Internal Audit Plan. Any recommendation of the AGRC is taken into the Annual Internal Audit Plan. Once the Annual Internal Audit Plan is rolled out, the AGRC ensures that the coverage is responsive and robust to satisfy the changing level of risk and emerging areas of concern. Any deviation to the Annual Internal Audit Plan is discussed and endorsed by the AGRC quarterly. INTERNAL AUDIT REPORTING All Internal Audit reports are issued directly to the AGRC with copies to the relevant Management for their action. Recommendations in the Internal Audit reports are derived through root cause analysis. On a quarterly basis, the AGRC is presented with the summary of the audit results performed during the quarter and the progress reporting of the audit findings, recommendations and implementation of Management’s corrective actions. Any concerns raised by the AGRC were addressed by the internal audit function. The AGRC followed through on any unresolved matters as part of the agenda in the next meeting. OBJECTIVITY AND INDEPENDENCE The Chief Internal Auditor states the internal audit function’s declaration of objectivity and independence to the AGRC in its Annual Internal Audit Plan. A survey of the relationship of the internal auditors is undertaken once a year and any rotation of the internal auditors does not result in any compromise of objectivity and independence. MSM MALAYSIA HOLDINGS BERHAD Annual Repor t 2020 97 SUSTAINABILITY REPORT EFFECTIVE LEADERSHIP CORPORATE GOVERNANCE FINANCIAL STATEMENTS ADDITIONAL INFORMATION DETAILS OF THE ANNUAL GENERAL MEETING