PRG Holdings Berhad Annual Report 2020

Annual Report 2020 Report of The Audit and Risk Management Committee cont’d 55 INTERNAL AUDIT FUNCTION (continued) During the financial year ended 31 December 2020, the Internal Auditors carried out the following activities: (a) Prepared the annual audit plan for the Corporate, Property Development & Construction Divisions and Agriculture Division for review and approval by the ARMC. (b) Performed compliance and risk-based audits and tabled its findings and recommendations to the ARMC. (c) Reviewed the following processes and/or identified key risk areas of the Group’s operations: (i) Manufacturing Division (Malaysia & Vietnam): • Production & quality control including compliance with Environmental & Safety & Health Regulations • Human resource • Purchasing • Inventory • Finance and Information Technology • Inventory costing (covering raw materials, work-in-progress, semi-finished goods & finished goods) • Sales & credit control • Annual stock check • Related party transaction (including recurrent related party transactions) (ii) Manufacturing Division (China): • risk assessment - the preliminary assessment of risks posed by different areas including Sales and credit, Purchasing Production, Inventory, Finance and IT, and Human resource. • process review - base on the result of the preliminary risk assessment, development of audit plan to focus on the higher risk areas, review the effectiveness of systems and procedures in place throughout the audit period, including the adequacy of internal controls. (iii) Corporate, Property Development & Construction Divisions and Agriculture Division: - Audit on compliance with organisation policies and Standard Operating Procedures (“SOPs”) for the following Divisions/Units: (i) Finance & Accounts (ii) Human Resource & Admin (iii) Strategic or Risk Management in terms of • Compliance to Laws & Regulations: Section 17A, Malaysian Anti-Corruption Commission (Amendment) (“MACC”) Act 2009 • Establishment & compliance to new Standard Operating Procedure (“SOPs”) due to Pandemic Risk - Risk-based audit on the identified key risk areas of the Property Development Division including: (i) Operation cash flow & liquidity risk - U5 Embayu (ii) IT system not well protected (iii) Insufficient manpower & lack of resources (iv) Joint venture partner risk (v) Enforcement of SOPs/ Non-compliance with Corporate Governance or statutory requirements