Frontken Corporation Berhad 200401012517 (651020-T) • ANNUAL REPORT 2022 59 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (CONT’D) INTERNAL AUDIT FUNCTION – ITS COMPOSITION AND SCOPE OF COVERAGE (CONT’D) Outsourced internal audit coverage – Group (save for Taiwan operations) (cont’d) The internal audit plan for the financial year was prepared based largely on the Group’s financial information and the relative risks of the business units to the achievement of the Group’s business objectives. This approach deployed aligns with the International Professional Practices Framework of the Institute of Internal Auditors Inc. (“IIA”), which encompasses, inter-alia, the Definition of Internal Auditing, Code of Ethics, Core Principles and International Standards for the Professional Practice of Internal Auditing, and the IIA Risk Based Internal Auditing Guidance. For the financial year ended 31 December 2022, Sterling has carried out internal audit reviews of two (2) business units, namely, TTES Frontken Integrated Services Sdn. Bhd., covering Asset Acquisitions and Finance and Accounts functions and Frontken (Singapore) Pte Ltd covering Procurement and Sourcing; Engineering Services and Project Management, Tools and Consumable Stock Management and Safety, Health, and Environment functions. Sterling also carried out two (2) followup status reviews for the financial year to update the Audit Committee on the status of management actions for previously reported audit findings. 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. Observations on systems weakness and areas for improvement, including recommended mitigating measures to address the concerns raised, were highlighted in the internal audit reports presented to the Audit Committee during the financial year under review. In-house internal audit coverage (only Taiwan operations) The in-house internal auditor, Miss Kelly Huang, who is an accounting graduate, has a working experience of not less than 20 years covering internal audit, external audit and finance function. Independent of the activities she audits, the in-house internal auditor is 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 carrying out her work, she adopted the internal audit guidelines from the Regulations Governing Establishment of Internal Control Systems by Public Companies issued by Taiwan Financial Supervisory Commission. The in-house internal auditor has conducted an assessment of AGTC’s system of internal control during the financial year under review, focusing on selected significant areas as approved by the Board of AGTC and reported her observations, including Management’s response and action plans thereto, directly to the Board of AGTC. The in-house internal auditor also conducted a follow-up on the status of implementation of action plans by Management on the recommendations highlighted in previous reports. 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. The in-house internal audit plan for the financial year under review was prepared based largely on AGTC’s financial information and the relative risks to the achievement of AGTC’s business objectives. The in-house internal auditor adopted a process life cycle approach in identifying the auditable areas in AGTC. For the financial year ended 31 December 2022, as per the audit plan for year 2022, a review of internal controls on the following key business processes and related controls was carried out: • Sale and receipt cycle; • Labour and wage cycle; • Authorisation systems; • Purchase and payment cycle; • Production cycle; • Finance cycle;
RkJQdWJsaXNoZXIy NDgzMzc=