Annual Report 2016
51
INTERNAL CONTROL PROCESS
The key elements of the Group’s internal control processes are summarised as follows:
•
The Board, RMC and Audit Committee meet on a quarterly basis and on an ad-hoc basis when there is a need arise
to discuss matters raised by the Management, on strategic and operational matters inclusive of potential risks and
control issues.
•
The Board has delegated the responsibilities to several committees and to the Management of the Company to
implement and monitor designated tasks.
•
Delegation of authority including authorisation limits at various levels of Management. The delegation of authority
distinguishes certain matters that require the Board’s approval, which is designed to ensure accountability and
responsibility. The authorisation limits are documented as part of the Standard Operating Procedures.
•
Standard Operating Procedures are reviewed and revised to meet change of business needs, operational requirements
and statutory reporting needs.
•
Performance reports are provided to the Executive Committee and the Board to facilitate review and monitoring of
financial performance.
•
Business units present their strategies, annual budgets, including financial and operating targets and capital
expenditure proposals to the Executive Committee and Board.
•
A half yearly review of the strategy and annual budget is undertaken by Management to identify and to revise if
necessary.
INTERNAL AUDIT
Internal audit function is carried out by an independent professional services firm. Their scope of work is determined and
discussed with the Audit Committee including the review of the effectiveness and adequacy of the internal control systems
of certain business units during the financial year under review. The internal audit team highlights and discusses, on a
quarterly basis, their findings and recommendations for control improvements to the executive and operational management.
The internal audit reports, summarising the observations of control weaknesses, recommendations for improvement and
Management responses, were presented to the Audit Committee. These were deliberated with Management at the Audit
Committee Meetings. The Audit Committee assesses the overall adequacy and effectiveness of the system of internal
controls of the Group and reports to the Board of Directors, in particular, the matters relating to significant risks and the
necessary recommendations for changes.
For the financial year under review, the internal audit’s scope covered:
•
revenue control management, involving credit and cash sales, and inventory;
•
cost control management, involving procurement, asset and human resource cost, and cash and bank; and
•
operational and compliance control management involving production and industrial compliance, and recurrent related
party transaction.
Statement on Risk Management
and Internal Control
(Cont’d.)
