MISC BERHAD 198 INTEGRATED ANNUAL REPORT 2023 199 www.miscgroup.com GOVERNANCE SECTION 12 Statement on Risk Management & Internal Control certification under the relevant international codes. In addition, MISC Group is also subjected to periodic management reviews by its customers’ risk management units. The Group HSSE & Sustainability Council, chaired by the President/Group CEO with the MC and Managing Director/ CEO of all entities as members, reviews the Group’s HSSE & Sustainability performance periodically. HSSE & Sustainability policies and strategies are reviewed to ensure alignment with business objectives. The BSRC will then be updated on the HSSE & Sustainability performance while the BAC oversees the HSSE Risk and Control effectiveness, through review of the assurance findings. MISC Safety Rules was first introduced in 2015 to mitigate risks and reduce injurious incidents throughout our operations. In 2023, MISC Group adopted the International Association of Oil & Gas Producers (IOGP) Life-Saving Rules to enhance safety awareness, prevent accidents and ultimately save lives by promoting strict adherence to these rules throughout the operation. MISC Group has also introduced the new HSSE Rules and Commitments to create a secure and healthy workplace ensuring compliance to relevant laws and regulations. Reflective Learnings are carried out for high-risk incidents to reinforce the learnings from the incidents. The HSSE Incident Management process has been translated into an e-Learning platform where a mandatory module has been developed to be completed by all employees to ensure they understand the implications of any HSSE incidents. The HSSE Lessons Learnt process has been improved via translation into an interactive learning through a series of videos. The HSSE culture of MISC Group encompasses values, attitudes, perceptions, competencies of the entire workforce and patterns of behaviour that determine the commitment of the Group’s HSSE management. In 2021, MISC Group embarked on a journey to institutionalise a Generative HSSE Culture where everyone is doing the right thing at all times even when no one is watching. Various initiatives were implemented during the period to strengthen the HSSE behaviour at all levels, to develop and internalise the right attitude and skills to promote a generative culture and ensure forward accountability across the Group. Group Internal Audit MISC’s GIA supports the BAC by providing independent review on the adequacy of risk management, governance as well as the efficiency and effectiveness of the internal control systems. The authority, responsibilities and scope of work are defined in the approved Internal Audit Charter, which is aligned with the principles outlined in the International Professional Practices Framework (IPPF). In performing its audit engagements, GIA refers to the internal control framework and guideline issued by the Committee of Sponsoring Organisations of the Treadway Commission (COSO). COSO is an internationally recognised organisation providing guidance on internal control, enterprise risk management and governance. Further information on the internal audit functions are set out in the Statement of Internal Audit on pages 177 to 178 in the BAC Report of this Integrated Annual Report. Other Matters With regard to the associate companies and jointly controlled entities, the Board does not regularly review their internal control systems as the Board has no direct control over their operations. Nevertheless, MISC’s interests in the associate companies and jointly controlled entities are served via representations on the boards as well as review of management accounts and enquiries thereof. Affirmation by the Board The Board has received assurance from the President/Group CEO and VP Finance that the internal control and risk management systems of the Company and its subsidiaries for the year under review up to the date of approval of the statement are, in all material aspects, operating adequately and effectively. During the financial year under review, there was no significant control failure or weakness that would result in material losses, contingencies or uncertainties requiring separate disclosure in this Integrated Annual Report. Review by External Auditor The external auditor, Messrs. Ernst & Young PLT, has reviewed this Statement on Risk Management and Internal Control for inclusion in the Integrated Annual Report for the financial year ended 31 December 2023, in compliance with paragraph 15.23 of the Listing Requirements in accordance with guidelines issued by the Malaysian Institute of Accountants and reported to the Board that nothing has come to their attention to cause them to believe that the statement intended to be included in the Integrated Annual Report is not prepared, in all material respects, in accordance with disclosures required by Paragraph 41 and 42 of the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuer, or that the statement is factually inaccurate. Conclusion For the financial year under review, based on enquiry, information and assurance provided, the Board is satisfied that the internal control and risk management systems were generally satisfactory. Measures would continuously be taken to ensure ongoing adequacy and effectiveness of the internal control and risk management systems and to safeguard the Group’s assets and shareholders’ investment. This statement is made in accordance with the resolution of the Board of Directors dated 26 February 2024. Statement of Directors’ Responsibility The directors are responsible in ensuring that the annual audited financial statements of the Group and of the Corporation are drawn up in accordance with the provisions of the Companies Act 2016 and the requirements of the applicable approved Financial Reporting Standards issued by the Malaysian Accounting Standards Board. The directors are also responsible to ensure that the annual audited financial statements of the Group and of the Corporation present a true and fair view of the financial position of the Group and of the Corporation as at the financial year end and of their financial performance and cash flows for the financial year then ended. In preparing the annual audited financial statements of the Group and of the Corporation for the financial year ended 31 December 2023, the directors have ensured that: • the financial statements comply with the Companies Act 2016 and the requirements of the applicable approved Financial Reporting Standards issued by the Malaysian Accounting Standards Board; • appropriate and relevant accounting policies were adopted and consistently applied; • reasonable and prudent estimates and judgements were made; and • going concern basis was adopted. The directors are responsible to ensure that the Group and the Corporation keep accounting records which disclose, with reasonable accuracy, the financial position of the Group and the Corporation. The directors have the overall responsibility for taking such steps that are reasonably available to them to safeguard the assets of the Group and the Corporation to prevent and detect fraud and other irregularities. Additional Compliance Information A. STATUS OF UTILISATION OF PROCEEDS During the financial year ended 31 December 2023, the Company did not raise any proceeds from corporate proposals. B. AUDIT AND NON-AUDIT FEES i) The amount of audit fees paid or payable to the external auditors, Ernst & Young PLT (EY PLT), for services rendered to the Group and the Company for the financial year ended 31 December 2023 amounted to RM6.9 million and RM1.2 million respectively. ii) The amount of non-audit fees paid or payable to the external auditors, EY PLT and their affiliated companies for services rendered to the Group and the Company for the financial year ended 31 December 2023 amounted to RM1.2 million and RM0.6 million respectively. The non-audit services rendered to the Group and the Company includes limited review of semi-annual financial results and tax advisory. C. MATERIAL CONTRACTS There were no material contracts entered into by the Company and its subsidiaries which were not in the ordinary course of business, involving the Directors’ and/or major shareholders’ interests, still subsisting at the end of the financial year ended 31 December 2023 or, if not then subsisting, entered into since the end of the previous financial year.
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