2020 UEM Edgenta Annual Report

INTERNAL AUDIT FUNCTION The Group has established its own IAD to provide independent and objective assurance to the AC and the Board that the established internal controls, risk management and governance processes are adequate and operating effectively and efficiently as well as complied with the relevant internal rules and regulations. The IAD activities and practices is closely guided by the International Professional Practice Framework (IPPF) on Internal Auditing issued by the Institute of Internal Auditors. 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 AC reviews and approves the IAD’s manpower requirements to ensure the function is adequately resourced with competent and proficient internal auditors. The total cost incurred for the internal audit function for financial year ended 31 December 2020 is approximately RM1,478,000, comprising mainly salaries, training and traveling expenses for audit assignments. ACTIVITIES The IAD implements a risk-based audit methodology in establishing its annual audit plan. The audit plan 2020 which was approved by the AC on 20 February 2020, had considered the Group’s identified risks and focused of auditable areas where the risks would have most impacted the business objectives of the Group. Among the focus areas are on operational risks, financial risks, information technology risks as well as the order book risks. The scope of the planned audit assignments for financial year 2020 covered the following: 1. Governance related – Compliance with the requirements of Section 17A of Malaysian Anti-Corruption Commission Act 2018. 2. Operational audits in Infrastructure Services, Healthcare Support and Property & Facility Solutions. 3. Quarterly review on Related Party Transactions/Recurrent Related Party Transactions. During the year, AC had reviewed and deliberated on a total of thirteen (13) internal audit reports in relation to the audits carried out, together with the audit recommendations made by IAD and the Management Responses to those recommendations. Representatives of IAD attended all the planned AC meetings during the year to brief the AC on audit results and significant matters raised in the detailed IAD reports. The Heads of Divisions, where required, were also invited to the AC Meeting to provide further explanations on the audit observations highlighted. Where appropriate, the AC had directed Management to rectify and improve control and workflow procedures based on Group Internal Audit’s recommendations. The AC, at all its quarterly meetings, also reviewed the implementation status of the corrective actions arising from the audit recommendations to ensure that the key risks and control lapses were addressed in a timely manner. For the purpose of evaluating the performance of the IAD, the AC had at its meeting on 19 March 2020, reviewed, deliberated and approved the IAD’s Performance Scorecard criteria for financial year 2020. In addition to the above, AC had at its meeting on 19 November 2020 reviewed the results of self-assessment on disclosure compliance on Internal Audit Function Effectiveness based on the observations highlighted by Bursa Malaysia Securities Berhad on its thematic review conducted on 40 Public Listed Companies. UEM EDGENTA BERHAD 136 Governance AUDIT COMMITTEE REPORT