KUB Malaysia Berhad Annual Report 2021

h) Reviewed the application of corporate governance principles and the Group’s compliance with the best practices set out under the MCCG 2017 for the purpose of preparing the Corporate Governance Statement, Statement on Risk Management and Internal Control and the Board Audit Committee Report pursuant to the Listing Requirements for the Board’s approval. 2. External Audit a) Reviewed the external auditor’s scope of works and audit plans for the period ended 30 June 2021 as per the audit planning memorandum; b) Reviewed with the external auditors the results of audit, audit report and management letter, including the management’s response, evaluation of the system of internal controls, and the assistance given by the employees to the external auditor; c) Reviewed the proposed audit fees for the external auditors for period ended 30 June 2021 and recommended to the Board for approval; d) Met with the external auditors twice during the period without the presence of the Management; and e) Reviewed the nomination of the external auditor before recommending to the Board for approval. 3. Internal Audit a) Reviewed the presented internal audit reports which incorporated the results of the internal audit programmes and processes or investigation undertaken based on findings and recommendations with respect to the adequacy and integrity of the internal control system; b) Reviewed with the Management on agreed actions taken based on findings and recommendations raised in the internal audit reports to improve the system of internal controls; c) Assessed the performance of the internal audit function via the status updates of the internal audit plan as compared to the approved Annual Internal Audit Plan and reviewed the reasonableness of the compensation of the members of the function; and d) Reviewed and approved the internal audit function and the annual internal audit plan to ensure the adequacy of its resources, competencies, scope, functions and coverage. The level of authority under internal audit function in carrying out its functions is spelt out in the BAC approved Internal Audit Charter. SUMMARY OF WORKS OF THE INTERNAL AUDIT FUNCTION The BAC is assisted by GRAD in discharging its duties and responsibilities throughout the financial period. The terms of reference of the internal audit function are clearly spelt out in the Internal Audit Charter. The principal role of internal audit function is to undertake independent, regular and systematic reviews on the internal control systems to provide an independent and reasonable assurance on the adequacy, integrity and effectiveness of the Group’s system of internal control, risk management and governance process. The internal audit function has no operational responsibility and authority over the audited activities. It adopts a risk-based approach in preparing its Annual Internal Audit Plan. The audit plan and its programmes, the budgets, the manpower resources and the key performance indicators are submitted to the BAC for review and approval. For period ended 30 June 2021, a total of sixteen (16) audits were carried out in accordance with the approved Internal Audit Plan. The audits encompassed five (5) scheduled audits, six (6) limited review and five (5) follow-up audits covering divisions including LPG, Agro and ICT. The key assurance processes include carrying out analysis to determine the efficiency of business carried out by the Group, evaluating the internal control systems established to ensure compliance with laws, regulations, policies, plans and procedures which could have significant impact on the Group. The key areas covered in the audit include governance, legal and compliance, financial management, strategic planning, procurement process, inventory management, information security, project management and human resources. The internal audit reports were incorporated with the internal control assessment, areas for improvement, management comments and agreed action plans to be taken by the Management. The reports were forwarded to the Management for necessary corrective actions. The Management is responsible for ensuring that the action plans are pursued within the required time frame. The implementation of the action plan is continuously monitored through periodic follow-up reviews, which are reported and presented to the BAC on periodical basis. KUB is a corporate member of the Institute of Internal Auditors of Malaysia (‘IIAM’) that allows the internal auditors to have access to internal audit information, networking and trainings in ensuring its commitment that its activities meet the standards required by the Institute of Internal Auditors International Professional Practices Framework (‘IPPF’). The internal audit function is supported by three (3) internal auditors, all of which are members of IIAM and Malaysia Institute of Accountants. The total costs incurred for the internal audit function by the Group for period ended 30 June 2021 amounted to RM520,251. 41 ANNUAL REPORT 2021 CORPORATE GOVERNANCE