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THE BOARD OF KULIM (MALAYSIA) BERHAD IS PLEASED TO PRESENT THE AUDIT COMMITTEE (“AC”) REPORT FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2018 AND UP TO DATE OF THIS AC REPORT


MEMBERS OF THE AUDIT COMMITTEE


The members of the Audit Committee (“AC”) during the financial year and up to the date of this AC report are as follows: 

 

MEMBER

APPOINTMENT DATE

RESIGNED DATE

DESIGNATION/      DIRECTORSHIP

Dr Radzuan A. Rahman

4 August 2016

- Chairman/ Independent
Non-Executive Director
Aziah Ahmad

4 August 2016

- Member
Khairul Badariah Basiron

21 January 2019

- Member
Wong Seng Lee

4 August 2016

21 January 2019 Member


MEETING ATTENDANCE

In year 2018, four (4) AC meetings were held and details of attendance at AC meetings was as follows:

MEMBERS DATE OF MEETINGS
  25/02/2018 21/06/2018 26/08/2018 21/11/2018
Dr Radzuan A. Rahman / / / /
Wong Seng Lee / / / /
Aziah Ahmad / / / /
During the financial year ended 31 December 2018, the Chairman of the AC had engaged on a continuous basis with Senior Management, Internal Auditors and the External Auditors, in order to keep abreast of matters and issues affecting the Group. 

The Company Secretary acts as the secretary to the AC. Notes of each meetings are distributed to each Board members and the Chairman of the AC reports on key issues discussed at each meeting to the Board

ROLES AND RESPONSIBILITIES

During year 2018, our AC continued to play a key role in assisting our Board to fulfill its oversight responsibilities. Our AC activities were focused on ensuring the Group’s financial reporting process, monitoring the management of risk and system of internal control, external and internal process, compliance with legal and regulatory matters with the support of Internal Audit Division.Our AC’s summary of work in year 2018 are summarised below:

SCOPE OF RESPONSIBILITIES ACTIVITIES
Financial Reporting

• Reviewed and recommended to our Board, the quarterly unaudited financial report for each quarter ended December 2017, March 2018, June 2018 and September 2018.

• Assisted our Board in reviewing the audited financial statements of the Group and Company for year 2018 and ensuring that the financial statements have been prepared in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirement of the Companies Act 2016 in Malaysia.

Risk Management & Internal Control

• Assisted our Board in ensuring that a robust process for identifying, evaluating and managing the significant risks faced by the Group is in place and operating effectively.

• On quarterly basis, our AC reviewed our Group’s risk profile with a focus on the keys risks identified.

• Reviewed the adequacy and effectiveness of the internal control system, taking account of the findings from internal and external audit reports. Further details on the Group’s risk management process are included in the Statement on Risk Management and Internal Control on page 166 of this Integrated Annual Report.

Compliance

• Reviewed arrangements established by the Company for compliance with any regulatory requirements, by-laws and regulation related to the Group’s operations.

Internal Audit

• Reviewed and approved the annual audit plan and budget for activities to be undertaken during year 2018.

• Reviewed the adequacy of the scope, functions, competency and resources of the internal audit function.

• Reviewed internal audit report issued by Internal Auditors on the effectiveness and adequacy of governance, risk management, operational and compliance processes.

• Reviewed the adequacy and effectiveness of corrective actions taken by Management on all significant matters raised.

External Audit

• Assessed the effectiveness of the external audit process and appropriateness of the audit scope, including review the audit plans and findings of external audit.


INTERNAL AUDIT FUNCTION

The Head of Internal Audit Division, who is a Certified Internal Auditor (“CIA”), reports functionally to the AC. The AC approved the internal audit charter, which sets out its role, accountability and authority.

The Group’s Internal Audit function provides the AC with independent and objective reports on the state of internal controls of the operating units within the Group and the extent of compliance by such units with the Group’s established policies and procedures and the regulatory requirements of the relevant authorities. The Group’s Internal Audit function is carried out by the Internal Audit Department (“IAD”) in accordance with The International Professional Practices Framework (“IPPF”) set by The Institute of Internal Auditors (“IIA”). 

IAD adopts a risk-based approach towards planning and conduct of audits which is partly guided by an Enterprise Risk Management(“ERM”) framework. The AC reviewed and approved the Internal Audit plan of the Group submitted by the Head of Internal Audit.Audit reports were issued to the AC and the Board during the year incorporating findings, recommendations to improve on the weaknesses noted in the course of the audits and Management’s comments on the findings. The Management is responsible to ensure that corrective actions on reported weaknesses as recommended are taken within the required time frame to ensure that all potential weaknesses in system and risks under reviewed are mitigated or remain within acceptable levels. 

A reliable follow-up system has been put in place to ensure that all remedial actions are carried out based on the agreed action plans as highlighted in the audit report.

Resources

As at 31 December 2018, the total IAD’s manpower was 11 comprised of auditors of different background as follows:


 

DISCIPLINE
NO. OF INTERNAL
AUDITORS
PERCENTAGE (%)
Accountancy 9

82

Agriculture

1

9
Business

1

9
Total 11 100


Coverage

The IAD audit universe which consists of auditable areas or activities that are available to be audited, considers and reflects the overall Kulim’s planned business activities and designs that may affect the organisation. In determining the audit universe, IAD has taken into consideration the current operational structure, functions, systems,processes and business activities of Kulim. 


In year 2018, the audit coverage was focused on high risk areas which were identified by leveraging the organisation’s risk management framework as well as IAD’s own risk assessment. It also covered management request as well as consulting activity which are inline with the Audit Charter. The assurance engagement covered plantation operations in Malaysia and Indonesia, Oil and Gas(“O&G”) sector, Intrapreneur Venture (“IV”) companies. Agrofood division, subsidiaries, business units and support services. Where as consulting activity consisted of control self-assesment programme. 


The Group’s Internal Audit maintains a Quality Assurance and Improvement Programme (“QAIP”) and continuously monitors its overall effectiveness. In year 2018, IAD had undergone a Quality Assurance Review through Self-Assessment with Independence Validation. 


The total cost incurred for the Internal Audit function at the Group’s Corporate Office level for the Financial Year Ended 31 December 2018 was approximately RM1,790,000 (2017: RM1,886,000).