36
FRONTKEN CORPORATION BERHAD
(651020-T)
ANNUAL REPORT 2014
E. SUMMARY OF ACTIVITIES DURING THE FINANCIAL YEAR
The principal activities undertaken by the Committee during the financial year are summarised as follows:
1.
Reviewed the unaudited quarterly and year-end financial statements prior to recommending the same
for the Board’s approval, focusing particularly on significant and unusual events and compliance with
accounting standards and other legal requirements;
2.
Reviewed the appointment of the external and internal auditors, their independence and effectiveness,
and their fees;
3.
Reviewed the external auditors’ audit planning memorandum, comprising their scope of audit, key audit
areas, audit approach and timetable;
4.
Met with the external auditors twice during the year without the presence of the Executive Directors
and Management to review the audit report and discuss relevant issues and obtain feedback;
5.
Reviewed the external auditors’ management letter and recommendations regarding opportunities for
improvement to internal controls based on observations made in the course of the audit;
6.
Reviewed the adequacy of the scope, functions, competency and resources of the internal audit function,
and that it has the necessary authority to carry out its work;
7.
Reviewed the scope and results of the internal audit procedures as well as Management’s response to
recommendations for improvement, and evaluation of adequacy of the internal control system based
on the reports from the internal auditors;
8.
Reviewed the related party transactions within the Group;
9.
Reviewed the Group’s financial and accounting policies and practices; and
10. Evaluated the performance of the external auditors’ function based on timeliness, competency, adequacy
of resources to achieve the agreed scope of audit, and assistance given by the employees of the Group
to the external auditors before recommending the re-appointment of external auditors to the Board.
F. INTERNAL AUDIT FUNCTION
The Group outsourced its internal audit function to an independent internal audit service provider, namely
Messrs KPMGManagement & Risk Consulting Sdn Bhd. The principal function of internal audit is to undertake
systematic reviews of the governance, risk and internal control systems within the Group in accordance
with an internal audit plan, so as to provide assurance that such systems are adequate and functioning as
intended. Its responsibilities are to provide independent and objective reports on the state of internal controls
of the various operating units within the Group to the Audit Committee and provide recommendations for the
improvement of the control procedures, so that remedial actions are taken to mitigate weaknesses noted in
the system and controls of the respective operating units.
During the financial year under review, the internal audit function carried out review of selected key processes
of the Company and certain subsidiaries, covering the control environment, financial management, risk
management, procurement and inventory management. The internal audit was based on the scope of work
which was approved by the Audit Committee. During the financial year, the internal audit also included a
follow-up on the status of Management’s action plans deployed to address weaknesses that were highlighted
in preceding cycles of internal audit. In conducting its work, the internal audit function deployed a methodology
which is in line with professional standards of the Institute of Internal Auditors, Inc.
The total costs incurred for the internal audit function of the Group for the financial year under review amounted
to approximately RM94,000.
AUDIT COMMITTEE
REPORT
(cont’d)
