Frontken Berhad Annual Report 2018

33 Frontken Corporation Berhad (651020-T) ANNUAL REPORT 2018 Statement On Risk Management And Internal Control (cont’d) INTERNAL CONTROL SYSTEM – THE SALIENT FEATURES (CONT’D) ۽ JW JWW^JU K^MPN]J[b NaN[LR\N ]QJ] [NZ^R[N\ JUU K^\RWN\\ ^WR]\ JWM LXVYJWRN\ RW ]QN 0[X^Y ]X OX[V^UJ]N ࠰WJWLRJU K^MPN]\ which are then consolidated into a Group budget, presented to the Board for comments and approval. Quarterly [N_RN` XO ]QN 0[X^Y۴\ YN[OX[VJWLN JPJRW\] K^MPN] R\ LJ[[RNM X^] J] +XJ[M VNN]RWP\ `QN[N NaYUJWJ]RXW\ XW \RPWR࠰LJW] _J[RJWLN\ J[N O^[WR\QNM Kb 6JWJPNVNW] 6JWJPNVNW] VNN]RWP\ J] XYN[J]RXWJU UN_NU J[N LXWM^L]NM ]X [N_RN` ࠰WJWLRJU performance against business plans and monitor the respective business unit’s performance against budget; ۽ \RPWR࠰LJW] LQJWPN\ RW K^\RWN\\ MN_NUXYVNW] J[N [NYX[]NM Kb 6JWJPNVNW] ]X ]QN +XJ[M J] \LQNM^UNM VNN]RWP\ =QR\ oversight review enables the Board to evaluate and monitor the Group’s business performance vis-à-vis its strategic objectives; ۽ ]QN *^MR] ,XVVR]]NN `QRLQ R\ NW][^\]NM Kb ]QN +XJ[M ]X X_N[\NN JVXWP\] X]QN[\ ]QN ,XVYJWb۴\ ࠰WJWLRJU [NYX[]RWP Y[XLN\\ RW YJ[]RL^UJ[ ]QN Z^J[]N[Ub JWM JWW^JU JWWX^WLNVNW]\ XO ]QN 0[X^Y۴\ ࠰WJWLRJU YN[OX[VJWLN VNN]\ J] UNJ\] Z^J[]N[Ub ]X [N_RN` ]QN JWWX^WLNVNW]\ \NNT\ LUJ[R࠰LJ]RXW JWM NaYUJWJ]RXW\ O[XV 6JWJPNVNW] KNOX[N [NLXVVNWMRWP the announcements to the Board for approval; ۽ internal policies and procedures on key business processes are formalised in writing for adherence by personnel across the Group. These policies and procedures essentially guide personnel on complying with internal control requirements and applicable laws and regulations; ۽ structured whistle-blower policies and procedures are formalised in writing to enable employees of the Group to [JR\N PNW^RWN LXWLN[W\ JKX^] \^\YNL]NM RVY[XY[RN]RN\ XW VJ]]N[\ XO ࠰WJWLRJU [NYX[]RWP WXW LXVYURJWLN `R]Q UJ`\ and regulations, malpractices or unethical business conduct within the Group at the earliest opportunity and in an appropriate way without fear of reprisal; and ۽ `QN[N R\\^N\ J[R\N ]QJ] JOONL] ]QN [NURJKRUR]b JWM RW]NP[R]b XO ࠰WJWLRJU RWOX[VJ]RXW XO JWb K^\RWN\\ ^WR] \YNLRJU J^MR]\ J[N LXVVR\\RXWNM Kb ]QN *^MR] ,XVVR]]NN X[ <NWRX[ 6JWJPNVNW] J\ ]QN LJ\N VJb KN ]X J\\R\] ]QN +XJ[M RW O^U࠰UURWP R]\ oversight responsibilities. INTERNAL AUDIT FUNCTION – ITS STRUCTURE AND SCOPE OF COVERAGE The Group has two (2) groups of internal auditors – one covering the operations of the Group (except for Taiwan operations), and the other covering solely the Taiwan operations. The internal audit function of the Group (excluding Taiwan operations) R\ X^]\X^[LNM ]X JW RWMNYNWMNW] Y[XON\\RXWJU ࠰[V WJVNUb +-8 0X_N[WJWLN *M_R\X[b <MW +QM `QRU\] ]QN RW]N[WJU J^MR] function covering Taiwan operations is an in-house function, i.e. the internal audit personnel are employees of the subsidiary in Taiwan, namely Ares Green Technology Corporation (“AGTC”). The appointment of the outsourced internal audit service provider followed an assessment of its suitability and capability by the Audit Committee of the Company whilst the performance of the in-house internal audit function is under the oversight of AGTC’s Board. Outsourced internal audit coverage – Group (excluding Taiwan operations) =QN X^]\X^[LNM RW]N[WJU J^MR] ]NJV `QRLQ R\ QNUVNM Kb JW J_N[JPN XO OX^[ Y[XON\\RXWJU\ O[XV ]QN ࠰[V RWLU^MRWP ]QN QNJM of the team, Mr Karthigayan Supramaniam, who is a member of the Malaysian Institute of Accountants and the Institute XO 2W]N[WJU *^MR]X[\ 6JUJb\RJ LXWM^L]NM JW J\\N\\VNW] XO ]QN 0[X^Y۴\ \b\]NV XO RW]N[WJU LXW][XU M^[RWP ]QN ࠰WJWLRJU bNJ[ ^WMN[ [N_RN` OXL^\RWP XW \NUNL]NM \RPWR࠰LJW] K^\RWN\\ ^WR]\ JWM [NYX[]NM R]\ XK\N[_J]RXW\ RWLU^MRWP 6JWJPNVNW]۴\ response and action plans thereto, directly to the Audit Committee. The internal audit function was also tasked to conduct a follow-up on the status of implementation of action plans by Management on the recommendations highlighted, as deemed relevant. The Audit Committee took note of the issues raised and questions were posed to Management on the timeliness of measures to address the concerns as reported.