INTERNAL AUDIT FUNCTION The Group has outsourced the internal audit function to a professional service firm, which is independent of the activities and operations of the Group, to review the adequacy of the internal control system of the Group. The outsourced internal auditors, which report directly to the Audit Committee, conducted internal control assessment on the Group in order to identify areas for improvement, besides compliance with internal best practices, guidelines and objectives. During the financial year under review, the outsourced internal auditors have carried out an internal control assessment based on the internal audit plan for the FYE 31 August 2022 as approved by the Audit Committee, covering the following subsidiaries and functional areas/sections: i. Sasbadi Sdn Bhd, Sasbadi Online Sdn Bhd, Sasbadi Learning Solutions Sdn Bhd, United Publishing House (M) Sdn Bhd, The Malaya Press Sdn Bhd and Mindtech Education Sdn Bhd • Human Resources Management, in respect of recruitment processes and procedures, probation and confirmation procedures, termination and resignation, payroll processing, staff training, staff evaluation processes and procedures, compensation and benefit, disciplinary policies and procedures, leave entitlement, application, approval, recording and monitoring processes and procedures, attendance record and monitoring processes and procedures, overtime claim policies and procedures, allowance entitlement processes and procedures and staff advance requisition, approval, and repayment monitoring processes and procedures ii. Sasbadi Sdn Bhd in the managing of Linguaskill by Cambridge Assessment English unit • Sales and Marketing, in respect of implementation process of business development strategy, partner/agent appointment processes and procedures, partner/agent registration processes and procedures, partner/agent contract management, costing control procedures, pricing control processes and procedures, selling and distribution expenses allocation processes and procedures, authorised test centre appointment processes and procedures, test centre management processes and procedures and sales performance monitoring and reporting • Finance and Accounts, in respect of billing and revenue recognition processes and procedures, return and refund control procedures, payment processes and procedures, debit note and credit note and collection and receivables processes and procedures. iii. Follow-up review on previously reported audit findings to ensure weaknesses identified have been or are being addressed. Upon completion of the work, the outsourced internal auditors presented their reports to the Audit Committee during the quarterly meetings whereby the outsourced internal auditors’ findings and recommendations as well as the Management’s responses and action plans were deliberated. WEAKNESSES IN INTERNAL CONTROLS WHICH RESULTED IN MATERIAL LOSSES, IF ANY During FYE 31 August 2022 and up to the date of approval for issuance of this Statement, there were no material losses incurred by the Group arising from weaknesses in its internal control system. STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (continued) 54 SASBADI HOLDINGS BERHAD
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