PRG Holdings Berhad Annual Report 2018

2018 A N N U A L R E P O R T 54 The internal audit reviews have been carried out based on compliance and risk-based audit approach and its findings were presented to the Audit Committee on a quarterly basis. During the financial year ended 31 December 2018, the Internal Auditors carried out the following activities: (a) Prepared the annual audit plan for the Manufacturing, Corporate, Property Development & Construction and Healthcare Divisions for review and approval by the Audit Committee. (b) Performed compliance and risk-based audits and tabled its findings to the Audit Committee. (c) Reviewed the following processes and/or identified key risk areas of the Group’s operations: i) Manufacturing Division - Production & quality control including compliance with Environmental & Safety & Health Regulations - Human resource - Purchasing - Inventory - Sales, credit control & account receivables - Finance and Information Technology - Inventory Costing (covering raw materials, work-in-progress & finished goods) - Annual stock check - Related party transaction including recurrent related party transactions ii) Corporate, Property Development & Construction and Healthcare Divisions - Compliance audit on delegated authority limit (Financial and Non-Financial) - Compliance audit on compliance with organisation policies, contracts, laws and regulations - Risk-based audit on the identified key risk areas of the Property Development Division including: (i) Uncertainty of economy (ii) Liquidity risk (iii) Credit risk (iv) New project funding (v) Sustainability (vi) Filing, documentation and data storage (vii) Project management risk (viii) Operation cash flow & liquidity risk (ix) Limited financial resources for new land banks & project (x) Change in interest rate - Risk-based audit on the identified key risk areas of the Construction Division including: (i) Project management risk (delay risk) (ii) Government policy (iii) ISO certification - Identified key risk areas of the Healthcare Division including: (i) Litigation and reputation (ii) Dependency on key personnel (iii) Alliance risk (iv) Industry risk (v) Competitive market & slowdown in business The internal audit findings arising from the above reviews were reported to Management for their response and subsequently for the Audit Committee deliberations. Where weaknesses were identified, recommended procedures and/or remedial actions would be put in place to improve and strengthen internal controls. In addition, the Internal Auditors also performed follow-up reviews on the status of implementation of recommendations/corrective actions for reporting to the Audit Committee. The costs incurred for the internal audit function in respect of the financial year ended 31 December 2018 amounting to RM308,000. report of the audit committee (continued)