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FRONTKEN CORPORATION BERHAD
(651020-T)
ANNUAL REPORT 2014
Principle 5 – Uphold integrity in financial reporting (cont’d)
5.2 The Audit Committee should have policies and procedures to assess the suitability and
independence of external auditors
The Audit Committee assesses the performance of the External Auditors on an annual basis and reports to the
Board its recommendation for the reappointment of the External Auditors at the Annual General Meeting.
In addition, the Audit Committee has in place a policy on the provision of non-audit services by the External Auditors.
During the financial year ended 31 December 2014, the fees for non-audit services rendered by the External Auditors
to the Group amounted to approximately RM5,000.
The External Auditors had provided a written assurance to the Audit Committee that they were independent
throughout the conduct of the audit engagement based on the independence criteria of relevant professional and
regulatory requirements.
Principle 6 – Recognise and manage risks
6.1 The Board should establish a sound framework to manage risks
The Board had established an Enterprise Risk Management framework to identify, evaluate, control, report and
monitor significant risks faced by the Group. Such a framework also includes pertinent risk management policies
and guidelines to provide structured guidance to personnel across the Group in addressing risk management. The
risk appetite of the Group is articulated via the use of risk parameters in the framework, covering financial and
non-financial metrics, to assess the likelihood of risks occurring and the impact thereof should the risks crystallise.
Internal controls deployed by Management are linked to, and mitigate, the business risks identified.
The Audit Committee works with the Internal Auditors to ensure that the Internal Audit Annual Plan encompasses
the audit of areas with higher vulnerability. The Internal Auditors are also required to perform periodic testing of
the internal control system to ensure that the system is robust, including follow-up on the status of Management’s
implementation of action plans to address issues raised by the Internal Auditors.
Further details of the Enterprise Risk Management framework and the system of internal control of the Group are
set out in the Internal Control Statement in this Annual Report.
6.2 The Board should establish an internal audit function which reports directly to Audit Committee
The Group outsources its internal audit function to an independent professional firm, with the objective of conducting
systematic testing and assessment of the Group’s internal control system based on an internal audit plan approved
by the Audit Committee. Its responsibilities include providing independent and objective reports on the state of
internal control of the significant operating units in the Group to the Audit Committee, with recommendations for
improvement to the control procedures, so that remedial actions can be taken in relation to weaknesses noted in
the system. In carrying out its work, the internal audit function deployed standards promulgated by the International
Professional Practices Framework of the Institute of Internal Auditors, a global professional body for internal auditors.
CORPORATE GOVERNANCE
STATEMENT
(cont’d)
