Frontken Berhad Annual Report 2018

35 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) In-house internal audit coverage (Taiwan operations) (cont’d) Business areas covered Transactions/activities covered by internal audit, addressing the key business risks therein Property, plant and equipment management Acquisition, custody, repairs and maintenance, disposal and insurance of assets Production management Inspection, storage and sourcing Sales and receipts management Logistics management, order management, invoicing, discounts, returns, collections, credit control and receivables management Purchases and payments management Requisition, procurement, acceptance and inspection Information technology management <b\]NV MN_NUXYVNW] JWM Y[XP[JV VXMR࠰LJ]RXW JYYURLJ]RXW LXW][XU\ input/output integrity * \^VVJ[b XO ]QN ࠰WMRWP\ XO ]QN RW QX^\N RW]N[WJU J^MR]X[ `J\ JU\X \QJ[NM `R]Q ]QN *^MR] ,XVVR]]NN XO ]QN ,XVYJWb OX[ notation and comments, if any. /X[ ]QN ࠰WJWLRJU bNJ[ NWMNM -NLNVKN[ ! ]QN *^MR] ,XVVR]]NN XO ]QN ,XVYJWb J\ `NUU J\ +XJ[M XO *0=, [N_RN`NM ]QN work of the internal audit functions, outsourced and in-house, as the case may be, their observations and recommendations in order to obtain assurance on the adequacy and operating effectiveness of the Group’s risk management and internal control system. The total cost incurred by the Group for the internal audit functions (both in-house and outsourced) for the ࠰WJWLRJU bNJ[ ^WMN[ [N_RN` JVX^W]NM ]X JYY[XaRVJ]NUb ;6 # ;6 " External Auditors =QN Na]N[WJU J^MR]X[\ RW ]QN LX^[\N XO ]QNR[ \]J]^]X[b J^MR] XO ]QN 0[X^Y۴\ ࠰WJWLRJU \]J]NVNW]\ [N_RN`NM ]QN 0[X^Y۴\ \b\]NV XO RW]N[WJU LXW][XU ]X ]QN Na]NW] XO ]QNR[ YUJWWNM [NURJWLN J\ UJRM X^] RW ]QNR[ J^MR] YUJWWRWP VNVX[JWM^V *Wb \RPWR࠰LJW] MN࠰LRNWLRN\ RW RW]N[WJU LXW][XU\ RMNW]R࠰NM M^[RWP ]QN J^MR] ]XPN]QN[ `R]Q ]QN RVY[X_NVNW] VNJ\^[N\ ]X \][NWP]QNW RW]N[WJU controls, were reported in writing to the Audit Committee by the external auditors vide their presentation deck. In assisting the Board to assess the adequacy and operating effectiveness of the Group’s risk management and internal control system, the Audit Committee reviewed the observations raised by the internal and external auditors, as well as JL]RXW\ ]JTNW Kb 6JWJPNVNW] ]X JMM[N\\ ]QN J[NJ\ XO LXWLN[W OX[ ]QN ࠰WJWLRJU bNJ[ NWMNM -NLNVKN[ ! =QN *^MR] Committee reported to the Board the outcome of its engagement with the internal and external auditors concerning the adequacy and operating effectiveness of the Group’s system of risk management and internal control. BOARD’S COMMENTS ON THE ADEQUACY AND OPERATING EFFECTIVENESS OF THE GROUP’S RISK MANAGEMENT AND INTERNAL CONTROL SYSTEM The Board, through its Audit Committee, has reviewed the adequacy and operating effectiveness of the Group’s risk management and internal control system, and that relevant actions have been or were being taken, as the case may be, to [NVNMb ]QN RW]N[WJU LXW][XU `NJTWN\\N\ RMNW]R࠰NM O[XV ]QN [N_RN` =QN +XJ[M R\ XO ]QN _RN` ]QJ] ]QN \b\]NV XO [R\T VJWJPNVNW] JWM RW]N[WJU LXW][XU RW YUJLN OX[ ]QN ࠰WJWLRJU bNJ[ ^WMN[ [N_RN` JWM ^Y ]X ]QN MJ]N XO JYY[X_JU XO ]QR\ <]J]NVNW] OX[ RWLU^\RXW RW ]QN *WW^JU ;NYX[] XO ]QN ,XVYJWb R\ \X^WM JWM \^O࠰LRNW] to safeguard shareholders’ investment and the Group’s assets. Whilst the Board is of the view that there were no material UX\\N\ RWL^[[NM M^[RWP ]QN ࠰WJWLRJU bNJ[ J\ J [N\^U] XO `NJTWN\\N\ RW ]QN [R\T VJWJPNVNW] JWM RW]N[WJU LXW][XU \b\]NV ]QN Board believes that this system must continuously evolve to meet the changing business landscape and environment the Group operates in. Therefore, the Board continues to put in place action plans, as deemed appropriate, to strengthen the system of risk management and internal control from time to time.