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 and effectiveness 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 2023 as approved by the Audit Committee, covering the following subsidiaries and functional areas/sections: i. Sasbadi Sdn Bhd, Sasbadi Online Sdn Bhd, Orbit Buku Sdn Bhd and Malaysian Book Promotions Sdn Bhd • Sales and Marketing, in respect of new market identification processes and procedures, distributors / agents appointment processes and procedures, new customer / sales leads generation and monitoring, pricing control processes and procedures, order processing, selling and distribution expenses allocation processes and procedures, credit and accounts receivables management, customer retention management, performance monitoring and reporting and implementation process of business development strategy. ii. United Publishing House (M) Sdn Bhd • Finance and Accounts, in respect of billing and revenue recognition processes and procedures, collection and receivables processes and procedures, payment processes and procedures, debit note and credit note, cash flow management, capital asset management, development costs capitalisation and amortisation and inter-company billing. • Sales and Marketing, in respect of new market identification processes and procedures, distributors / agents appointment processes and procedures, new customer / sales leads generation and monitoring, pricing control processes and procedures, order processing, selling and distribution expenses allocation processes and procedures, credit and accounts receivables management, customer retention management, performance monitoring and reporting and implementation process of business development strategy. 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 2023 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) ANNUAL REPORT 2023 SASBADI HOLDINGS BERHAD 66
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