Frontken Berhad Annual Report 2020

Annual Report 2020 46 FRONTKEN CORPORATION BERHAD 200401012517 (651020-T) (E) SUMMARY OF ACTIVITIES CARRIED OUT DURING THE FINANCIAL YEAR (CONT’D) The principal activities undertaken by the Audit Committee during the financial year under review are summarised as follows: (Cont’d) • 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; • Reviewed and approved the Internal Audit Plan tabled by the outsourced independent Internal Audit Function, reviewed the scope of work coverage by the outsourced Internal Audit Function for the financial year under review, including the results of evaluation of adequacy of the internal control system, as well as Management’s response to recommendations for improvement, on the reports from the outsourced Internal Audit Function; • Noted the outcome of internal audit work and issues raised by the in-house Internal Auditor covering the Taiwan operations, including Management action plans; • Briefed the Board the outcome of the meetings of the Audit Committee, covering largely the work and results of the External Auditors and Internal Audit Function, recurrent related party transactions, quarterly announcements and year-end financial statements as well as the risk management update of the Group; • Reviewed the related party transactions within the Group; • Reviewed the summary reports on risk management of the Group as presented by the Risk Management Units on the status of risks faced by the Group, including emerging risks, and action plans deployed to manage the risks concerned to acceptable levels. During the financial year under review, there were twenty-two (22) risk identified by the business units and they were mostly related to the impact of the COVID-19 pandemic such as health and safety of staff, disruption to supply, disruption to business operations due to travel restrictions and shortened working hours and logistics; and • Evaluated the performance of the External Auditors in meeting the requirements of the Company before recommending to the Board for the tabling of their re-appointment at the Annual General Meeting for approval by shareholders. The dates of Audit Committee meetings are pre-planned and communicated to the auditors in advance for them to prepare the Audit Review Memorandum, Audit Planning Memorandum, Internal Audit Plan and Internal Audit reports for presentation to the Audit Committee to meet the respective deadlines. The Audit Committee also noted the internal control deficiencies and/or areas of improvement identified by the Internal Audit Function and action plan for corrective actions or improvement by Management. The Group has an in-house Internal Auditor who is based at the Company’s subsidiary in Taiwan, namely Ares Green Technology Corporation, who conducts internal audit covering solely the Taiwanese operations. As for the Company and other subsidiaries, the Internal Audit Function is outsourced to an independent internal audit service provider, namely BDOGovernance Advisory Sdn Bhd (“BDO”). The principal function of internal audit is to undertake systematic reviews of the internal control system within the Group in accordance with approved internal audit plan, so as to provide assurance that such a system is adequate and operating effectively as intended. The Internal Audit Function’s 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. Details of internal audit activities, scope of coverage and cost incurred on the combined Internal Audit Function for the financial year under review, are set out in the Statement on Risk Management and Internal Control included in this Annual Report. At the last Audit Committee Meeting held in November 2020, the Audit Committee has approved the change of the outsourced independent internal audit service provider from BDO to Sterling Business Alignment Consulting Sdn Bhd (“SBAC”) for internal audit for years 2021 and 2022 after deliberate consideration as a practice to rotate the outsourced internal auditors after an interval 2 completed cycles for each business units. With the recommendation of the Audit Committee, the Board has approved the change to SBAC. This Report is dated 23 March 2021. Audit Committee Report (cont’d)