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3.4 There is a budgeting and forecasting system. Each line of business submits a business plan annually for
approval by the Board. The results of the lines of businesses are reported monthly and variances are
analysed against budget and acted on in timely manner. The Group’s strategic directions are also reviewed
annually taking into account changes in market conditions and significant business risks.
3.5 The periodic and streamlining review of limits of authority and other standard operating procedures
within the Group provides a sound framework of authority and accountability within the organisation and
to facilitate quality, well informed and timely corporate decision making at the appropriate level in the
organisation’s hierarchy.
3.6 The compliance function, which includes the Audit Committee and internal audit function carried out
by the Group Internal Audit Department (“GIA”) established by KFima, assists the Board to oversee the
management of risks and review the effectiveness of internal controls. The Committee reviews reports of
the GIA and also conducts annual assessment on the adequacy of the GIA’s scope of work.
3.7 The Audit Committee convenes regular meetings to deliberate on findings and recommendations for
improvement by both the internal and external auditors on the state of the system of internal control.
Minutes of the Audit Committee meetings are tabled to the Board.
3.8 Review and award of major contracts by the project committees and teams, subject always to the
delegated authority limits set by the Board. A minimum of three quotations is called for and tenders are
awarded based on criteria such as quality, track record and speed of delivery.
3.9 The Risk Management Committee (“RMC”) convenes annually to review and recommend the risk
management policies, strategies, key risk profiles and risk mitigation actions for the Group and reports to
the Audit Committee.
3.10 Clearly documented standard operating procedure manuals set out the policies and procedures for day
to day operations to be carried out. Regular reviews are performed to ensure that documentation remains
current, relevant and aligned with evolving business and operational needs.
3.11 The competency of staff is enhanced through rigorous recruitment process and development programmes.
A performance appraisal system of staff is in place, with established targets and accountability and is
reviewed annually.
4.
INTERNAL AUDIT FUNCTIONS
The Group’s internal audit function is undertaken by the GIA established by the penultimate holding company,
KFima which reports directly to the Audit Committee and administratively to the Group MD. The GIA assists
the Audit Committee in the discharge of its duties and responsibilities. Its key role is to provide independent
and objective assurance designed to add value and assist the Group in accomplishing its objectives by bringing
a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, internal
control system and governance processes.
The business processes and conduct of the operating units within the Group are continuously assessed by GIA
in the context of adequacy and effectiveness of the financial, operational controls and risk management. GIA
reports to the Audit Committee and communicates to Management on audit observations noted in the course
of their review and performs monitoring on the status of actions taken by the operating units. It conducts
independent reviews of the key activities within the Group’s operating units based on a detailed annual audit
plan developed using a risk-based methodology including input from Senior Management and the Audit
Committee, which was approved by the Audit Committee. The Terms of Reference of the GIA are clearly spelt
out in the Group Internal Audit Charter.
Fima CORPORATION Berhad
(21185-P)
Annual Report 2019
76