Frontken Corporation Berhad 200401012517 (651020-T) • ANNUAL REPORT 2022 60 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (CONT’D) INTERNAL AUDIT FUNCTION – ITS COMPOSITION AND SCOPE OF COVERAGE (CONT’D) In-house internal audit coverage (only Taiwan operations) (cont’d) • Property, plant and equipment cycle; • Management of assets; • Functionary substitute system; and • Computerised information processing system. The internal audit plan and a summary of the findings of the in-house internal auditor were shared with the Audit Committee of the Company for information and comments, if any. For the financial year ended 31 December 2022, the Audit Committee of the Company as well as Board of AGTC reviewed the 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 inhouse and outsourced) for the financial year under review amounted to approximately RM246,000 (2021: RM211,000). External Auditors The external auditors, in the course of their statutory audit of the Group’s financial statements, reviewed the Group’s system of internal control to the extent of their planned reliance as laid out in their audit planning memorandum. Any significant deficiencies in internal controls identified during the audit, together with the improvement measures to strengthen internal 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 actions taken by Management to address the areas of concern for the financial year ended 31 December 2022. The Audit 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, assisted by 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 remedy the internal control weaknesses identified from the review. The Board is of the view that the system of risk management and internal control, in place for the financial year under review and up to the date of approval of this Statement for inclusion in the Annual Report of the Company, is sound and sufficient to safeguard the interest of shareholders, customers, employees and the Group’s assets. Whilst the Board is of the view that there were no material losses incurred during the financial year as a result of weaknesses in the risk management and internal control system, the 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 towards achieving the Group’s corporate objectives.
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