Chemical Company of Malaysia Berhad Annual Report 2019

Internal Audit The Group Assurance Unit carries out the internal audit assignments that independently reviews the adequacy and integrity of the system of internal controls in managing the key risks, and reports accordingly to the ACC on a quarterly basis. Where weaknesses have been identified as a result of the reviews, improvement measures are recommended to strengthen controls. Follow-up audits are then conducted to assess the status of implementation thereof by Management. In carrying out its work, the Group Assurance Unit focuses on areas of priority as directed and approved by the ACC. The Board remains committed towards maintaining a sound system of internal controls and believe that a balanced achievement of the Group’s business objectives and operational efficiency can be attained. The Group continues to take measures to further strengthen the internal control environment. BOARD’S ASSESSMENT The Board is of the view that the Company’s overall risk management and internal control system is operating adequately and effectively, in all material aspects, and have received the same assurances from the Group Managing Director and the Senior Manager – Group Finance of the Company. The Board confirms that the risk management process in identifying, evaluating and managing significant risks faced by the Group has been in place throughout 2019 up to the date of approval of this statement. For the financial year ended 31 December 2019, the Board is of the view that the system of internal controls was adequate and effective and, has not resulted in any material loss, contingency or uncertainty that would require disclosure in the Annual Report 2019. This statement does not include the state of internal control in the associate, which has not been dealt with as part of the Group. REVIEW OF STATEMENT BY EXTERNAL AUDITORS The external auditors have reviewed this Statement on Risk Management and Internal Control pursuant to the scope set out in Audit and Assurance Practice Guide (“AAPG”) 3, Guidance for Auditors on Engagements to Report on the Statement on Risk Management and Internal Control included in the Annual Report issued by the Malaysian Institute of Accountants (“MIA”) for inclusion in the annual report of the Group for the year ended 31 December 2019, and reported to the Board that nothing has come to their attention that cause them to believe that the statement intended to be included in the annual report of the Group, in all material respects: (a) has not been prepared in accordance with the disclosures required by paragraphs 41 and 42 of the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers, or (b) is factually inaccurate. AAPG 3 does not require the external auditors to consider whether the Directors’ Statement on Risk Management and Internal Control covers all risks and controls, or to form an opinion on the adequacy and effectiveness of the Group’s risk management and internal control system including the assessment and opinion by the Board of Directors and management thereon. The auditors are also not required to consider whether the processes described to deal with material internal control aspects of any significant problems disclosed in the annual report will, in fact, remedy the problems. The statement has been approved by the Board of Directors at its meeting on 12 March 2020. BUSINESS OVERVIEW FINANCIAL STATEMENTS OTHER INFORMATION GOVERNANCE 107 ANNUAL REPORT 2019