Frontken Corporation Berhad 200401012517 (651020-T) • ANNUAL REPORT 2023 65 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) 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 2023, as per the audit plan for year 2023, a review of internal controls on the following key business processes and related controls was carried out: • Sale and receipt cycle; • Investment cycle; • Purchase and payment cycle; • Liabilities, commitments, and contingencies; • Implementation of authorisation; • Research and development cycle; • Property, plant and equipment cycle; • Sales and receipt cycle; • Management of the use of seals; • Receipt and use of negotiable instruments; • Production cycle; 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 2023, 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 in-house and outsourced) for the financial year under review amounted to approximately RM244,000 (2022: RM246,000). 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 2023. 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.
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