Frontken Berhad Annual Report 2018

34 Frontken Corporation Berhad (651020-T) ANNUAL REPORT 2018 Statement On Risk Management And Internal Control (cont’d) INTERNAL AUDIT FUNCTION – ITS STRUCTURE AND SCOPE OF COVERAGE (CONT’D) Outsourced internal audit coverage – Group (excluding Taiwan operations) (cont’d) =QN RW]N[WJU J^MR] YUJW OX[ ]QN ࠰WJWLRJU bNJ[ `J\ Y[NYJ[NM KJ\NM UJ[PNUb XW ]QN 0[X^Y۴\ ࠰WJWLRJU RWOX[VJ]RXW JWM ]QN [NUJ]R_N risks of the business units to the achievement of the Group’s business objectives. The outsourced internal audit function adopted a risk-based and process life cycle approach in identifying auditable entities within the Group as well as the auditable areas. This approach deployed aligns with the International Professional Practices Framework of the Institute of Internal Auditors Inc. (“IIA”), which encompasses, inter-alia, the Code of Ethics and International Standards for the 9[XON\\RXWJU 9[JL]RLN XO 2W]N[WJU *^MR]RWP JWM ]QN 22* ;R\T +J\NM 2W]N[WJU *^MR]RWP 0^RMJWLN /X[ ]QN ࠰WJWLRJU bNJ[ NWMNM -NLNVKN[ ! ]QN OXUUX`RWP ]`X K^\RWN\\ ^WR]\ RW 6JUJb\RJ JWM ]QN 9QRURYYRWN\ ]XPN]QN[ `R]Q ]QN RMNW]R࠰NM Y[XLN\\N\ were selected for internal audit with the Audit Committee’s concurrence: Name of business unit Processes covered by internal audit, addressing the key business risks therein TTES Frontken Integrated Services Sdn Bhd (Kemaman Operation) ۽ Sales to receipts (including customer credit management) ۽ Procure to pay (including vendor management) ۽ Fixed assets management Frontken Philippines Inc. ۽ Sales to receipt (including debt monitoring) ۽ Procure to pay (including vendor management) ۽ Fixed assets management (including safeguards over spare parts) Detailed internal audit tests were carried out by the internal audit function to assess the adequacy and operating effectiveness of the business units’ system of internal controls in achieving corporate objectives. Transactions and activities were selected for testing on a sample basis. Internal audit observations on systems weakness and areas for improvement, including recommended mitigating measures to address the concerns raised, were included in internal audit reports presented to the *^MR] ,XVVR]]NN M^[RWP ]QN ࠰WJWLRJU bNJ[ In-house internal audit coverage (Taiwan operations) The in-house internal auditor, Miss Kelly Huang, who is an accounting graduate, has a working experience of not less than " bNJ[\ LX_N[RWP RW]N[WJU J^MR] Na]N[WJU J^MR] JWM ࠰WJWLN O^WL]RXW 2WMNYNWMNW] XO ]QN JL]R_R]RN\ \QN J^MR]\ ]QN RW QX^\N internal auditor was tasked to assess the adequacy and operating effectiveness of the system of internal control of AGTC, the Company’s subsidiary helming the Taiwan operation. In conducting her work, she adopted the internal audit guidelines O[XV ]QNh;NP^UJ]RXW\ 0X_N[WRWP .\]JKUR\QVNW] XO 2W]N[WJU ,XW][XU <b\]NV\ Kb 9^KURL ,XVYJWRN\ R\\^NM Kb =JR`JWh/RWJWLRJU Supervisory Commission. The in-house internal auditor conducted an assessment of AGTC’s system of internal control M^[RWP ]QN ࠰WJWLRJU bNJ[ ^WMN[ [N_RN` OXL^\RWP XW \NUNL]NM \RPWR࠰LJW] J[NJ\ J\ JYY[X_NM Kb ]QN +XJ[M XO *0=, JWM reported her observations, including Management’s response and action plans thereto, directly to the Board of AGTC. The in-house internal auditor was also tasked to conduct a follow-up on the status of implementation of action plans by Management on the recommendations highlighted. The Board of AGTC took note of the issues raised and questions were posed to Management on the timeliness of measures to address the concerns as reported. =QN RW QX^\N RW]N[WJU J^MR] YUJW OX[ ]QN ࠰WJWLRJU bNJ[ ^WMN[ [N_RN` `J\ Y[NYJ[NM KJ\NM UJ[PNUb XW *0=,۴\ ࠰WJWLRJU RWOX[VJ]RXW and the relative risks to the achievement of AGTC’s business objectives. The in-house internal auditor adopted a process URON LbLUN JYY[XJLQ RW RMNW]RObRWP ]QN J^MR]JKUN J[NJ\ RW *0=, /X[ ]QN ࠰WJWLRJU bNJ[ NWMNM -NLNVKN[ ! ]QN OXUUX`RWP areas were selected for internal audit with AGTC’s Board’s concurrence: