Kimlun Corporation Berhad Annual Report 2020

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL Risk area Control measures taken to mitigate the risks Credit, financial and liquidity risks t 5IF (SPVQ GBDFT UIF UISFBU PG EFMBZT JO payment by customers for work done which will eventually affect the Group’s cash flow, and heighten the risks of debts becoming unrecoverable. t #BDLHSPVOE DIFDL PG QSPTQFDUJWF DVTUPNFST QSJPS UP BDDFQUJOH BOZ FOHBHFNFOU GSPN such parties. t $MPTF NPOJUPSJOH PG DPMMFDUJPO CZ UIF GJOBODF EFQBSUNFOU XJUI XFFLMZ VQEBUFT UP UIF senior management as to collection received and incidence of delay. t 5JNFMZ GPMMPX VQ XJUI UIF DVTUPNFST PO PWFSEVF QBZNFOU BOE SFUFOUJPO TVN t "WPJE PWFS DPODFOUSBUJPO PG TBMFT BOE DSFEJU FYQPTVSF UP BOZ DVTUPNFS UP QSFWFOU over-dependence on any customer. t "DUJWFMZ NPOJUPS UIF (SPVQ T CBOLJOH GBDJMJUJFT UP FOTVSF UIF GBDJMJUJFT BSF TVGGJDJFOU UP meet the Group’s working capital and capital expenditures requirement, and negotiate with bankers for credit facilities features which enable greater flexibility in the Group’s financial resources management. Market risks t 5IF (SPVQ PQFSBUFT JO B DPNQFUJUJWF environment and failure to compete effectively against its existing competitors and new market entrants will affect its performance t &TUBCMJTIFE RVBMJUZ DPOUSPM QSPDFEVSFT BOE QSPKFDU UFOEFSJOH HVJEFMJOFT UP FOTVSF quality services and products to customers, and cost efficiency. t /VSUVSF DMPTF SFMBUJPOTIJQ XJUI DVTUPNFST TVC DPOUSBDUPST BOE TVQQMJFST t &TUBCMJTI XJEF SBOHF PG TFSWJDFT BOE QSPEVDUT UP EJWFSTJGZ QSPEVDU SJTLT BOE SFEVDF reliance on any particular services or products for revenue. t 'PDVT JO NPSF UFDIOJDBM EFNBOEJOH QSPEVDUT BOE TFSWJDFT UP DSFBUF B NBSLFU OJDIF or speciality. t #JE GPS QSPKFDUT KPJOUMZ XJUI QBSUJFT XIJDI IBWF DPNQMFNFOUBSZ TUSFOHUI UP UIF (SPVQ t %JWFSTJGZ CBTF PG DVTUPNFST TVC DPOUSBDUPST BOE TVQQMJFST Human resource risks t 5IF (SPVQ CFMJFWFT JUT GVUVSF TVDDFTT largely depends on the Group’s ability to hire, develop, motivate and retain competent employees and key personnel. The Group’s key management team may be difficult to replace as they have been instrumental in the development, growth and success of the Group t 4VDDFTTJPO QMBOOJOH JO IVNBO SFTPVSDFT t $PNQFUJUJWF SFNVOFSBUJPO QBDLBHFT UP BUUSBDU SFXBSE SFUBJO BOE NPUJWBUF UBMFOUT t "QQSPQSJBUF USBJOJOH BOE EFWFMPQNFOU UP OVSUVSF BOE HSPPN FYJTUJOH TUBGG GPSDF t *OUFSOTIJQ QSPHSBN GPS VOJWFSTJUZ TUVEFOUT UP JEFOUJGZ QPUFOUJBM UBMFOUT UIBU UIF (SPVQ can employ. INTERNAL CONTROL t 4UBOEBSE PQFSBUJOH QSPDFEVSF NBOVBMT TFU PVU UIF QPMJDJFT BOE procedures for day to day operations to be carried out. Reviews are performed to ensure that documentation remains current, relevant and aligned with evolving business and operational needs; t 'PSNBUJPO PG DPNNJUUFF UP FWBMVBUF BOE BQQSPWF SFMBUFE QBSUZ project tenders; t "QQPJOUNFOU PG TUBGG JT CBTFE PO UIF SFRVJSFE MFWFM PG RVBMJGJDBUJPO experience and competency to fulfil their responsibilities. Training and development programmes are carried out to ensure that staff are kept up to date with the necessary competencies and knowledge to carry out their responsibilities towards achieving the Group’s objectives; t 5IFSF JT BO BOOVBM CVEHFUJOH QSPDFTT 5IF #PBSE SFWJFXT UIF actual performance against budget; t 3FHVMBS BOE DPNQSFIFOTJWF JOGPSNBUJPO BSF QSPWJEFE UP UIF #PBSE for monitoring and tracking of performance of the Group; The Group has established an organisation structure outlining the lines of responsibilities and authorities for planning, executing, controlling and monitoring the business operations aligned to business and operations requirements which supports the maintenance of a strong control environment. It has extended the responsibilities of the AC and of the Board to include the assessment of internal controls through the internal audit function. Other key elements of the system of internal control of the Group are as follows: - t 5IF #PBSE FTUBCMJTIFE B IJFSBSDIJDBM PSHBOJTBUJPO TUSVDUVSF XJUI proper segregation of duties for key functions of the operations of the Group; t %FMFHBUJPO PG BVUIPSJUZ JODMVEJOH BVUIPSJTBUJPO MJNJUT BU WBSJPVT levels of management and those requiring the Board’s approval are clearly defined to ensure accountability and responsibility; Annual Report 2020 054