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The Board of Kulim is pleased to present the Board Audit and Risk Committee (“BARC”) report for financial year 2020.

As part of Kulim’s initiatives to strengthen corporate governance and promote effective decision making, the Board had approved on
22 December 2020 that the oversight role of risk management of Kulim is under the purview of the BARC (previously known as the Audit Committee)

MEMBERS OF THE BOARD AUDIT AND RISK COMMITTEE

The members of the BARC during the financial year and up to the date of this BARC report are as follows:

Member Appointment Date Resignation Date Designation/Directorship
Abdullah Abu Samah 1 February 2021 - Chairman/Independent
Non-Executive Director
Dr. Radzuan A. Rahman 4 August 2016 31 December 2020 Chairman/Independent
Non-Executive Director
Dato’ Sr. Hisham Jafrey 1 February 2021 - Member
Fawzi Ahmad 1 February 2021 - Member
Khairul Badariah Basiron 21 February 2019 22 December 2020 Member
Siti Hajar Marhani 1 August 2020 22 December 2020 Member
Aziah Ahmad 4 August 2016 1 April 2020 Member


MEETING ATTENDANCE

During the year 2020, two BARC meetings were held and details of attendance as follows:

Member 10/03/2020 10/03/2020 Total
Dr. Radzuan A. Rahman / / 2/2
Khairul Badariah Basiron / / 2/2
Siti Hajar Marhani - / 1/2
Aziah Ahmad / - 1/2

During the FY2020, the Chairman of the BARC 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 acted as the secretary to the BARC. Notes of each meeting were distributed to each Board member and the Chairman of the BARC reported on key issues discussed at each meeting to the Board.


ROLES AND RESPONSIBILITIES

During the year 2020, BARC continued to play a key role in assisting the Board to fulfil its oversight responsibilities. BARC’s activities were focused on ensuring the Group’s financial reporting process, and monitoring the management of risk and system of internal control, external and internal process, and compliance with legal and regulatory with the support of Internal Audit Department.


The BARC’s responsibilities for the year 2020 were summarised as below:-

Scope of Responsibilities Activities
Financial Reporting
  • Reviewed and recommended to the Board, the quarterly unaudited financial report for the quarter ended December 2019 and June 2020.
  • Assisted the Board in reviewing the audited financial statements of the Group and Company for year 2020 and ensuring that the financial statements have been prepared in accordance with MFRS, International Financial Reporting Standards (“IFRS”) and the requirement of the Companies Act 2016 in Malaysia.
Risk Management & Internal Control
  • Assisted the 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.
  • Reviewed the Group’s risk profile with a focus on the key risks identified.
  • Reviewed the adequacy and effectiveness of the internal control system, taking into 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 029 of this Integrated Report.
Compliance
  • Reviewed arrangements established by the Company for compliance with any regulatory requirements, by-laws and regulations related to the Group’s operations.
Internal Audit
  • Reviewed and approved the annual audit plan and budget for activities to be undertaken during the year 2020.
  • Reviewed the adequacy of the scope, functions, competency and resources of the internal audit function.
  • Reviewed 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.
Integrity
  • Approved the organisation’s Anti-Bribery and Corruption Policy.
  • Ensured that the organisation’s strategy and Anti-Bribery and Corruption Policy are aligned.
  • Received and reviewed information about the content and operation of the organisation’s anti-bribery management system.
  • Assured that adequate and appropriate resources needed for effective operation of anti-Bribery management system are allocated and assigned.
  • Exercised reasonable oversight over the implementation of the organisation’s anti-bribery management system by top management and its effectiveness. Ensured the mechanism of the Whistle-Blowing is effective and efficient which aim to provide protection and confidentiality.


INTERNAL AUDIT FUNCTION



A Senior Manager of the Internal Audit Department (“IAD”) who is a Certified Internal Auditor (“CIA”) leads the internal audit function. He reports functionally to the BARC. The BARC approves the Internal Audit charter, which sets out the role, accountability and authority of the Internal Audit function.

The Internal Audit function provides the BARC 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 Internal Audit function is carried out by IAD in accordance with the International Professional Practices Framework (“IPPF”) set by the Institute of Internal Auditors (“IIA”).

In the year 2020, IAD adopted a risk-based approach towards planning and conduct of audits which was partly guided by an Enterprise Risk Management (“ERM”) framework. The BARC reviewed and approved the Internal Audit plan of the Group. Audit reports were issued 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. Management was responsible to ensure that corrective actions on reported weaknesses as recommended were taken within the required time frame to ensure that all potential weaknesses in system and risks under review 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.