2019 UEM Edgenta Annual Report

112 113 UEM Edgenta Berhad UEM EDGENTA AT A GLANCE MESSAGE FROM OUR LEADERSHIP STRATEGIC FOCUS OPERATIONAL REVIEW SUSTAINABILITY EFFORTS CORPORATE GOVERNANCE INTRODUCTION FINANCIAL REVIEW ADDITIONAL INFORMATION Annual Report 2019 EXTERNAL AUDIT D 1. Reviewed with the External Auditors:- a) The audit plan, audit methodology and scope of work, especially on areas identified for audit focus for the year; b) Their comments and issues arising from their annual audit, their audit report and management letter of comments on the group internal control; c) The key audit matters highlighted for inclusion in the audit report and the audit process in addressing them; and d) The Group’s financial reporting process including consolidation. 2. Assessed the objectivity, suitability and independence of the External Auditors in carrying out their audit during the year and this included their appointment for non-audit services. 3. Evaluated the performance of the External Auditors and recommended their re-appointment to the Board of Directors. 4. Reviewed with the External Auditors on 20 November 2019 and 20 February 2020 without the presence of the Managing Director/Chief Executive Officer and Management, on any concerns / issues affecting their audit, the results of audit, including the level of cooperation rendered by Management in respect of their access to financial information and accounting records. INTERNAL AUDIT B 1. Reviewed the Annual Internal Audit Plan which included the planning methodology, manpower requirement and proposed audit activities planned to ensure scope and coverage are adequate and comprehensive. 2. Reviewed the overall performance of the Internal Audit function to ensure its effectiveness in meeting audit objectives and professional standards. 3. Reviewed and deliberated the internal audit findings and observation arising from planned and ad-hoc audit and considered their recommendation to Management for improvement in internal control process. 4. Discussed with Internal Audit, their follow-up on corrective action taken by Management on audit issues to ensure that all the key risks and control lapses have been addressed. 5. Reviewed and approved the Internal Audit Department Scorecard. RISK MANAGEMENT, INTEGRITY & COMPLIANCE C 1. Reviewed prior to the Board’s approval, the updated Risk Management Framework, Risk Profile and Risk Appetite prepared by Management’s Risk Committee to ensure they are relevant and consistent with the Group’s business strategy and level of operations in safeguarding the Group’s assets and profitability. 2. Reviewed and recommended the quarterly Risk Management Status Reports to the Board. 3. Reviewed the adequacy and effectiveness of the overall risk management process. 4. Reviewed and recommended the Statement on Risk Management and Internal Control to the Board for approval. 5. Reviewed and recommended the following framework, policies and procedures to the Board for approval:- a) Code of Conduct (Directors & Employees) b) Code of Conduct (Business Partners) c) Business Continuity Management Framework (updated) d) Conflict of Interest Procedures e) Anti-Bribery and Anti-Corruption Guide f) Whistleblowing Policy and Procedure 6. Reviewed the business licenses and accreditation updates. 7. Reviewed and recommended the establishment and structure of Integrity and Governance Unit. INTERNAL AUDIT FUNCTION Internal Audit Department (“IAD”) is established as an independent appraisal function to assist both the ARC and the Board of Directors in discharging their duties and to provide assurance to the Management and the Board of Directors that all aspects of the operations of the Company are functioning within the acceptable limits and expectations. The IAD carries out the internal audit function of the Group. The Head of the Internal Audit reports functionally to the ARC and administratively to the Managing Director/ Chief Executive Officer of the Company. The information on the resources, objectivity and independence of the Head of Internal Audit and internal auditors are provided in the Corporate Governance Report in accordance with Practice 10.2 of the Malaysian Code on Corporate Governance 2017. The total cost incurred for the internal audit function for financial year ended 31 December 2019 is approximately RM1,516,000.00, comprising mainly salaries, training and traveling expenses for audit assignments. Activities The activities undertaken by IAD are in conformance with the International Professional Practice Framework (“IPPF”) on Internal Auditing issued by the Institute of Internal Auditors (“IIA”). It is the responsibility of the internal audit function to provide the ARC with independent and objective reports on the state of internal control of the various operating entities within the Group, and the extent of compliance of the divisions with the Group’s established policies and procedures as well as relevant statutory requirements. Whenever there was any significant issue, the IAD has it monitored closely and adequately addressed by the Management. The status and closure of audit issues are presented at each planned ARC meeting. The audit plan had also incorporated the Group’s identified risks and focused on those which would have the most impact on the business objectives of the Group. Among the focus areas are safety, health & environment risks, operational risks, financial risks, as well as the order book risks. During the year, IAD had carried out fifteen (15) audit assignments. The IAD had also worked closely with Group Internal Audit (“GIA”) of UEM Group Berhad in audits that require specific skills and knowledge not available within the IAD. Representatives of IAD were invited to and had attended all the planned ARC meetings during the year. The scope of the planned independent audit assignments cover the following:- 1. HQ Audits over Corporate and Support Services 2. Operational audits in Infrastructure Services, Healthcare Support and Property & Facility Solutions 3. Audit on Asset Consultancy EXTERNAL AUDIT D 5. Reviewed and recommended the appointment of the Company’s External Auditors for the provision of non-audit services, for the projects undertaken by the Company after assessing and considering the following:- a) The nature of the non-audit services provided by the external auditors or its affiliates and fees paid for such services relative to the audit fee; b) The scope of work as required are permitted under the Malaysian Institute of Accountants By-Laws; and c) The services should not impair their independence or there are safeguard in place to ensure that there is no threat to the objectivity and independence of the audit arising from the provision of non-audit services or tenure of the external auditors. Corporate Governance Overview Statement Corporate Governance Overview Statement EFFECTIVE AUDIT & RISK MANAGEMENT (CONT’D)