UEM EDGENTA BERHAD ANNUAL REPORT 2021 1 2 3 4 5 6 7 GOVERNANCE 149 148 AUDIT COMMITTEE 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 are closely guided by the International Professional Practice Framework (“IPPF”) on Internal Auditing issued by the Institute of Internal Auditors (“IIA”). The information on the resources, objectivity and independence of the internal auditors are provided in the Corporate Governance Report in accordance with Practice 11.2 of the revised Malaysian Code on Corporate Governance issued by the Securities Commission Malaysia on 28 April 2021. 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 2021 is approximately RM1,735,000, comprising mainly salaries, training and traveling expenses for audit assignments. Summary of Activities The IAD implements a risk-based audit methodology in establishing its annual audit plan. The audit plan 2021 which was approved by the AC on 19 November 2020, had considered the Group’s identified risks and focused on auditable areas where the risks would have most impact on the business objectives of the Group. Among the focus areas are operational risks, financial risks, information technology risks, Health, Safety, Security & Environment (HSSE) risks. The scope of the planned audit assignments for financial year 2021 covered the following:- 1. Operational audits in Healthcare Support, Property & Facility Solutions, Infrastructure Services, Asset Consultancy and overseas operation. 2. Audit on Information Technology and Support Services. 3. Quarterly review on Related Party Transactions/ Recurrent Related Party Transactions. During the year, AC had reviewed and deliberated on a total of fourteen (14) 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. 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. In addition to the above, AC had at its meeting in February 2021 reviewed the results of internal audit’s self-assessment on the function’s policies and practices in substance for conformance with the seven (7) assessment criteria used by Bursa Malaysia Securities Berhad (“Bursa Securities”) in its thematic review conducted on 40 Public Listed Companies. The self-assessment was also benchmarked against the Main Market Listing Requirements of Bursa Securities, Malaysian Code on Corporate Governance, IPPF and Guidance for an Effective Internal Audit Function issued by IIA Malaysia. ADDITIONAL COMPLIANCE INFORMATION DIRECTORS’ RESPONSIBILITY STATEMENT IN RESPECT OF FINANCIAL STATEMENTS The Directors are required to prepare the financial statements for each financial year which give a true and fair view of the state of affairs of the Group and of the Company at the end of the financial year and of the financial performance and cash flows of the Group and of the Company for the financial year then ended. The Directors consider that, in preparing the financial statements for the financial year ended 31 December 2021, the Group has used appropriate accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent. The Directors also consider that all applicable Malaysian Financial Reporting Standards (“MFRS”), International Financial Reporting Standards (“IFRS”) and the requirements of the Companies Act 2016 in Malaysia have been followed and confirm that the financial statements have been prepared on a going concern basis. The Directors are responsible for ensuring that the Group and the Company keep accounting records which disclose with reasonable accuracy at any time the financial position of the Group and of the Company and which enable them to ensure that the financial statements comply with the applicable MFRS, IFRS and the requirements of the Companies Act 2016 in Malaysia. The Board is satisfied that it has met its obligation to present a balanced and fair assessment of the Group’s position and prospects in the Directors’ Report on pages 163 to 168 and the Audited Financial Statements from pages 176 to 314 of this Annual Report. NON-AUDIT FEES RM’000 Company Group Statutory audit fees paid/ payable to external auditors 153 1,361 Non-audit fees paid/payable to external auditors 81 85 The Company engaged the external auditors for the following non-audit works: - Review of Statement on Risk Management and Internal Control - Tax compliance and advisory services MATERIAL CONTRACTS Other than those disclosed in the financial statements and the recurrent related party transaction section in this Annual Report, there were no material contracts including contracts to any loans entered into by the Company and its subsidiaries involving Directors’ and major shareholders’ interests. UTILISATION OF PROCEEDS In 2017, the Company had established the Islamic Commercial Papers (“ICPs”) and Islamic Medium Term Notes (“IMTNs”) under an ICP Programme and IMTN Programme respectively, which have a combined aggregate limit up to RM1,000.0 million in nominal value and sub-limit of RM300.0 million in nominal value for ICP Programme under Shariah Principle of Murabahah via a Tawarruq Arrangement. On 23 April 2021, the Company has redeemed its outstanding ICPs amounting to RM50.0 million in nominal value which was issued under the ICP Programme on 24 April 2020 and has matured on 23 April 2021. A summary of the transactions and utilisation of the proceeds is outlined below: Issuance Date Type Maturity Date Nominal Value (RM million) Proceeds Utilisation 24 April 2020 ICPs April 2021 50 For Shariahcompliant general corporate purposes. 26 April 2017 IMTNs April 2022 250 For Shariahcompliant general corporate purposes. REVALUATION POLICY The Company has not adopted a regular revaluation policy on landed properties. RECURRENT RELATED PARTY TRANSACTIONS The Company proposes to seek approval of its shareholders for the renewal of mandate for recurrent related party transactions and the proposed new shareholders’ mandate for additional recurrent related party transactions of a revenue and trading nature which is in the ordinary course of business at the forthcoming Annual General Meeting of the Company to be held in 2022.
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