Sasbadi Annual Report 2020

SASBADI HOLDINGS BERHAD 46 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (continued) • Annual budgeting process whereby the annual budget prepared by management is tabled for the Audit Committee’s review before being approved by the Board; • Outsourced internal audit function which reports to the Audit Committee; • Employment procedures and processes to facilitate the recruitment and evaluation of employees; and • Insurance coverage on the Group’s assets, where necessary. INTERNAL AUDIT FUNCTION The Group has outsourced the internal audit function to a professional services firm, which is independent of the activities and operations of the Group, to review the adequacy of the internal control system of the Group. The outsourced internal auditors, which report directly to the Audit Committee, conducted internal control assessment on the Group in order to identify areas for improvement, besides compliance with internal best practices, guidelines and objectives. During the financial year under review, the outsourced internal auditors have carried out an internal control assessment based on the internal audit plan for the FYE 31 August 2020 as approved by the Audit Committee, covering the following subsidiaries and functional areas/sections: i. Inventory Management functions of United Publishing House (M) Sdn Bhd and its subsidiaries. • Inventory Management, in respect of warehouse/store management, physical stock handling, packing processes and procedures, receiving and delivery monitoring processes and procedures, backorders monitoring processes and procedures, stock return handling, physical stock count procedures, stock variance justification and verification control procedures and inventory system updating and recording. ii. Gap Assessment on the Anti Bribery and Corruption Management System of Sasbadi Holdings Berhad • Assessment of the Anti Bribery and Corruption Management System in accordance with the Corporate Integrity System Malaysia (“CISM”) Framework by reviewing the existing business policies and procedures against the recommended best practices as set out in the CISM Framework. iii. Follow-up review on previously reported audit findings to ensure weaknesses identified have been or are being addressed. Upon completion of the work, the outsourced internal auditors presented their reports to the Audit Committee during the quarterly meetings whereby the outsourced internal auditors’ findings and recommendations as well as the Management’s responses and action plans were deliberated. WEAKNESSES IN INTERNAL CONTROLS WHICH RESULTED IN MATERIAL LOSSES, IF ANY During the FYE 31 August 2020 and up to the date of approval for issuance of this Statement, there were no material losses incurred by the Group arising from weaknesses in its internal control system. CONCLUSION Based on the foregoing, the Board is of the view that the Group’s risk management and internal control system is adequate and effective. The Board has also received assurance from the Group Managing Director and the Group Chief Financial Officer that the Group’s risk management and internal control system is operating adequately and effectively, in all material aspects, based on the existing risk management and internal control system of the Group.