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Fima CORPORATION Berhad
(197401004110) (21185-P) •
Annual Report 2020
89
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 and Risk Committee (“ARC”) 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 ARC reviews reports of the GIA and also conducts annual assessment on the
adequacy of the GIA’s scope of work.
3.7 The ARC 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, review and recommend the risk management policies,
strategies, key risk profiles and risk mitigation actions for the Group and reports to the Board. Minutes of the ARC meetings are
tabled to the Board.
3.8 Review and award of major contract which exceed the limits delegated to Managing Director or senior management are
undertaken by the Board.
3.9 Clearly documented standard operating procedure manuals set out the policies and procedures for day to day operations to be
carried out. Periodic reviews are performed to ensure that documentation remains current, relevant and aligned with evolving
business and operational needs.
3.10 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
TheGroup’s internal audit function isundertakenby theGIAestablishedby theultimateholdingcompany, KFimawhich reportsdirectly
to the ARC and administratively to the Managing Director. The GIA assists the ARC 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 ARC 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 ARC, which was approved
by the ARC. The Terms of Reference of the GIA are clearly spelt out in the Group Internal Audit Charter.
The GIA evaluates the following:
(a) Adequacy, integrity, effectiveness of the Company and the Group’s internal controls in safeguarding shareholders’ investment
and the Group’s assets. The internal controls cover financial, operational, information technology, compliance controls and
enterprise risk management.
(b) Extent of compliance with established policies, procedures and statutory requirements.
(c) Adequacy of policies, procedures and guidelines on the Company and Group’s accounting, financial and operational activities.
For the year under review, the GIA had undertaken the following activities:
(a) Prepared the annual audit plan for approval by the ARC.
(b) Performed risk-based audits based on the approved annual audit plan, including follow-up of matters from previous internal
audit reports.