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FRONTKEN CORPORATION BERHAD
(651020-T)
ANNUAL REPORT
2015
Principle 5 – Uphold integrity in financial reporting
5.1 The Audit Committee should ensure financial statements comply with applicable financial reporting standards
The Board, through the Audit Committee, endeavours to provide and present a balanced and meaningful assessment
of the Group’s financial performance and prospects to shareholders, primarily through the Annual Reports and quarterly
announcements of the Group’s results to the regulators. The Board is assisted by the Audit Committee in overseeing
the Group’s financial reporting process and the accuracy, consistency and appropriateness of the use and application
of accounting policies and standards.
On a yearly basis, the Audit Committee meets with the External Auditors to go through the Audit Planning Memorandum
prior to commencement of the audit. In addition, the Audit Committee also meets with the External Auditors to discuss
their report to the Audit Committee following completion of their audit. The External Auditors share with the Audit
Committee any significant issues on the financial statements and regulatory updates. The Audit Committee obtains
assurance from the External Auditors on the Company’s compliance with the applicable financial reporting standards.
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 re-appointment 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 2015, 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
During the financial year under review, the Company outsourced its internal audit function to an independent professional
firm, namely KPMG Management & Risk Consulting Sdn Bhd, 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 included 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. Further details of the activities carried out by the
internal audit function are set out in the Internal Control Statement included in this Annual Report.
CORPORATE GOVERNANCE
STATEMENT
(cont’d)