RESPONSIBILITY

The Listing Requirements of the Bursa Malaysia Securities Berhad requires the Board to include a statement on the state of internal control in the Company as a group. The Malaysian Code on Corporate Governance requires the Board to acknowledge its overall responsibilities for the Group’s system of internal control and for reviewing its effectiveness. Such system covers not only financial control but also controls relating to operational, risk management and compliance with applicable laws, regulations, directives and guidelines.

The internal control system involves key operating companies within the Group and their management and is designed to enable the Group to manage rather than to eliminate the risk of failure to achieve business objectives. The Board acknowledges that risks cannot be completely eliminated and the system can only provide reasonable and not absolute assurance against material misstatement, loss and fraud.

KEY PROCESSES

The Board confirms that there is a continuous process for identifying, evaluating and managing the significant risks faced by the Group, which has been in place for the financial year under review and up to the date of approval of the annual report.

The process is regularly reviewed by the Board and is in accordance with the guidance as contained in the Statement on Internal Control - Guidance for Directors of Public Listed Companies.

The key processes that the Board has established in reviewing the adequacy and integrity of the system of internal control take into account the scale, diversity and complexity of the Group’s operations and the nature of the significant risks that the Group faces. They include the followings:

The Group’s internal audit department performs regular reviews of business processes to assess the effectiveness of internal controls and highlight significant risks impacting the Group. The internal audit department reports to the Audit Committee who conducts annual reviews on the adequacy of the department’s scope of work and resources.

The Audit Committee regularly reviews and holds discussions with the internal audit department and management on the findings and recommendations in reports prepared by the internal audit department.

The Group has clearly defined organisation structure with clear lines of responsibilities, approval limits and authority supported by appropriate job description, procedures and operating manuals in selected key areas.

The Board receives and reviews regular reports from management covering the financial performance and key business indicators of various business operating units. The financial performance and pertinent internal and external issues of each operating unit are discussed at length at each board meetings.

The Group’s risk management policies are clearly defined and set out the Board’s attitude to risks. The Group’s management has an ongoing process for regular identification, evaluation and managing of significant risks within their areas of responsibilities.

There is a clearly defined framework for investment appraisal covering the acquisition or disposal of any business or fixed assets, acceptance of projects and approval on borrowings.