MISC BERHAD 176 INTEGRATED ANNUAL REPORT 2023 177 www.miscgroup.com GOVERNANCE SECTION 12 SUMMARY OF THE BAC’S WORK IN 2023 (CONT’D) To ensure that the external auditors’ independence is not impaired, the Audit Engagement Partner in charge of the Company is changed every seven (7) years and is required to observe a cooling-off period of five (5) years before being re-appointed, which is in line with the recommendation by the MIA. Internally, the external auditors conduct an Independent Partner Review in order to preserve their independence. The external auditors had also provided written assurance to the BAC that, in accordance with the terms of all relevant professional and regulatory requirements, they had been independent throughout the audit engagement. In line with the Company’s adoption of the Policy on External Auditors, the BAC had carried out an assessment on the performance, suitability and independence of the external auditors based on the following criteria and will continue to do so on an annual basis: • Quality of engagement team (including adequacy of resources); • Quality of communication and interaction; and • Independence, objectivity and professional scepticism. Tax • Deliberated the status updates on the implementation of Global Minimum Tax. • Deliberated tax developments affecting the business and operations of the Group. Corporate Governance and Regulatory Compliance • Reviewed and deliberated the reports on Related Party Transactions (RPTs) and Recurrent Related Party Transactions (RRPTs) on a quarterly basis. • Reviewed and recommended to the Board the Statement on Risk Management and Internal Control (SORMIC) (particularly items relating to internal controls), BAC Report and Additional Compliance Information for inclusion in the Integrated Annual Report 2022. • Reviewed the minutes of meetings of the Board Audit Committee of Malaysia Marine and Heavy Engineering Holdings Berhad and the Audit and Risk Management Committee (ARMC) of AET Pte. Ltd. for an overview of the state of internal control systems of those subsidiaries. • Reviewed the Directors’ Conflict of Interest report for the Group. • Reviewed the Whistleblowing quarterly reports of the Company. • Reviewed the GHSSE Audit and Assurance Bi-Annual Reports focusing on the efficiency and effectiveness of the maintenance of the Group’s vessels and floating assets. • Reviewed and endorsed the GHSSE Annual Audit and Assurance Plan for FY2024. • Reviewed the governance aspect of the procurement transformation plan including the adequacy and effectiveness of the internal controls arising from the implementation of a digital platform for procurement activities. Board Audit Committee Report The internal audit function of the Company was carried out in-house by the GIA. GIA undertakes a systematic and disciplined approach to evaluate and improve the effectiveness of governance, risk management and control processes within its scope. The Head of GIA reports functionally to the BAC and administratively to the President/Group CEO of MISC. There was a change in Head of GIA during the financial year under review. Izran Kassim was appointed as the Head of GIA effective 1 July 2023. He is an Associate Member of the Chartered Institute of Management Accountants (CIMA), a member of MIA and holds a Bachelor of Economics (Honours) from the University of Manchester, UK. GIA adopts the standards and principles outlined in the Institute of Internal Auditors’ International Professional Practices Framework (IPPF) and the Committee of Sponsoring Organisations of the Treadway Commission (COSO) framework; a comprehensive, structured and widely used auditing approach, in conducting the audit activities. The conduct of internal audit work is also governed by the MISC Internal Audit Charter and GIA’s established procedures and guidelines. The annual audit plan and strategy including the scope of works and resources are approved by the BAC. The audit plan is established primarily using a risk-based approach as well as input gathered from various sources, including feedback from Management and the BAC as well as trends and findings from past audit engagements. GIA conducts scheduled audits independently to ensure there is effective risk monitoring, internal controls, governance processes and compliance procedures to provide the level of assurance required by the Board. GIA also supports and conducts special reviews (which also includes investigations) upon request by Management, BAC and ARMC of AET Pte. Ltd. GIA submits its audit reports to the Management Audit Committee (MAC) for executive review. Subsequently, the reports together with deliberations by the MAC are tabled at the BAC Meetings for endorsement. At the Board meetings, the BAC Chairman highlights the key audit issues and overall decisions and resolutions made during the BAC meetings to the Board. The audit reports prepared by GIA provide details of audit findings and corresponding Agreed Corrective Actions (ACAs). The status of implementation of these ACAs are captured through the Quarterly Audit Status Reports, from which, the ACAs are monitored and analysed. The consolidated reports are submitted and presented to the MAC and the BAC for deliberation and endorsement on a quarterly basis. Such regular monitoring is essential to ensure the integrity and effectiveness of the Group's internal controls. During the financial year, GIA reported the results of the following audits conducted in accordance with the approved annual internal audit plan: • Audit on Code of Conduct & Business Ethics (CoBE) for AET • Audit on MISC Offshore Floating Terminals (L) Ltd and MISC Offshore Floating Terminals Dua (L) Ltd • Audit on MISC Cybersecurity and Related IT Controls • Audit on Malaysia Vietnam Offshore Terminal (L) Limited • Audit on Vietnam Offshore Floating Terminal (RUBY) Ltd – (Planned Maintenance and Spare Parts Management) • Audit on AET Sea Shuttle AS and AET Sea Shuttle II AS • Audit on AET Brasil Servicos Maritimos Ltda and AET Brasil Servicos STS Ltda • Audit on Property Services (MISC HR) • Revisit Audit on Malaysian Maritime Academy Sdn Bhd 2021 • Audit on MISC Sustainability Agenda • Audit on Eaglestar Crew Payroll, Compensation & Benefit and Manning Office • Audit on Eaglestar Marine India Pte Ltd • Audit on MISC Risk Management Process (Corporate Planning) Board Audit Committee Report STATEMENT ON INTERNAL AUDIT FUNCTION
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