INTERNAL AUDIT FUNCTION BIMB has an in-house internal audit function which is performed by the Group Internal Audit Division (GIAD). The GIAD undertakes the audit on entities within BIMB, its subsidiaries and related parties of BIMB. During the financial year under review, the audited entities include BIMB Investment Management Berhad, BIMB Securities Sdn Bhd, Bank Islam Labuan Offshore Branch, BIMB Securities (Holdings) Sdn Bhd, Syarikat Al-Ijarah Sdn Bhd, Bank Islam Trust Company (Labuan) Ltd, BIMBSEC Nominees (Tempatan) Sdn Bhd and BIMBSEC Nominees (Asing) Sdn Bhd. Based on the External Quality Assessment Review (QAR) engagement conducted in November 2021, the GIAD was assessed as “Generally Conforms” to the Institute of Internal Auditors’ International Standard for the Professional Practice of Internal Auditing (IPPF/Standard). The GIAD is primarily responsible to undertake regular and systematic reviews in conformance with the Institute of Internal Auditors’ International Professional Practices Framework and the Internal Audit Charter to provide reasonable assurance that the risk management process, internal controls and governance practices of BIMB and its Group are operating satisfactorily and effectively and are in line with the Group’s goals and objectives. In view of the implementation of the movement control order, some of the audit works were performed offsite. Responsibility, Scope and Methodology The BAEC oversees the performance and effectiveness of the Internal Audit function based on the approved key performance indicators, assesses the competency and experience of the Internal Audit staff as well as the adequacy of resources so that the Internal Audit function can be performed effectively. The BAEC also ensures that the Internal Audit staff have the authority to discharge their role objectively and independently, free from any relationship or conflict of interest. To reflect the independence of Internal Audit, the GCIA reports functionally to the Board through the BAEC and administratively to the GCEO. Zalfitri Abd Mutalip is the GCIA of BIMB. He holds a degree in Bachelor of Science in Business Administration (Finance), a Certificate in Internal Auditing for Financial Institution (CIAFIN) and is a Chartered Professional in Islamic Finance (CPIF). He has extensive experience in auditing in the financial industry and has helmed the GIAD of BIMB since 2017. The GCIA works closely with the BAEC where there were numerous engagement sessions with the BAEC. This has facilitated the GCIA to focus on key issues on internal control within the Group. The annual audit plan is reviewed and approved by the BAEC prior to the beginning of each financial year. The audit plan adopts a risk-based approach in determining the auditable units and frequency of the audits which focussed on the following three (3) components: i. Impact and likelihood of the inherent risk; ii. Known quality of respective controls or risk mitigants in place; and iii. The existence of effective risk transfer and loss impact reduction practices in minimising potential losses from negligence or fraud. The GIAD adopts the standards and principles outlined in the Internal Control Framework of Committee of Sponsoring Organisation of the Treadway Commission (COSO) and the objectives set by the Institute of Internal Auditors’ International Professional Practices Framework which comprises the core principle for the Professional Practice of Internal Auditing, the definition of Internal Auditing and Code of Ethics. The results of the audit conducted, including its risks, rootcause and recommendations are reported to the BAEC on a regular basis. Resolution of the audit findings and recommendations are performed by the Management and closely observed by the Management Audit Committee (MAC) whose members comprised by the Senior Management members. In addition to that, Shariah audit reports including their findings, risks, root-cause and recommendations are notified and deliberated at the Shariah Supervisory Council (SSC) meetings. Resources The overall costs incurred to maintain the internal audit function in the Group for the Financial Year 2022 was approximately RM8.6 million (FY2021: RM7.9 million), consists mainly of salaries and other audit related expenditures. As at 31 December 2022, the GIAD has a staff strength of 43 auditors, all of whom are equipped with the relevant experience and qualifications. 31 out of 39 auditors who joined the GIAD before 2018 had obtained the required certification, namely, Certification for Bank Auditors (CBA)/ Certified Information System Auditor (CISA) and/or CIAFIN. The GIAD is committed to provide an independent, objective assurance and advisory services that will add value and improve the Group’s operations. Integrated Report 2022 206 Board Audit & Examination Committee (BAEC) Report
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