CAHYA MATA SARAWAK ANNUAL REPORT 2016

A N N U A L R E P O R T 2 0 1 6 Section 06 Governance 71 Cahya Mata Sarawak Berhad The purpose, authority and responsibility of the internal audit function are articulated in an Internal Audit Charter approved by the Committee and the Board. The risk-based audit plan is built on a structured risk assessment framework to allow the plan to be more focused, concentrating limited resources on the areas of higher concerns to ensure the best use of resources. The annual Group internal audit plan is approved by the Committee each year. The role of the Head of Internal Audit for the Group is fulfilled by the Group Internal Auditor who has twenty-six (26) years of working experience. He is an associate member of the Institute of Internal Auditors and has internal audit experience to execute the roles and responsibilities of internal audit function. The Internal Audit function, which is independent of the activities they audit, has carried out twenty-seven (27) planned audits, two (2) ad-hoc reviews and all related audit follow-up activities during the year. Areas reviewed include: • Sales Order Management and Logistics Distribution • Procurement Management • Production, Supervision and Control • Authorisation Policies and Procedures including school management system (“Engage”) optimisation • Sub-contractor Management • Procurement and Management of Raw Materials and Finished Goods • Project Management • Physical stocktakes • Occupational permits tracking • Business Risk & Control Assessment on manufacturing processes • Credit Control and Accounts Payable Management • External Quality Assurance Review of the internal audit function Reports on the adequacy of controls and extent of compliance with internal financial policies and operational procedures in respect of the areas audited and recommendations to improve the existing systems of internal controls and operational efficiency and effectiveness have been provided to both operations Management and the Committee. All significant audit findings and Committee recommendations pertaining to the Company’s subsidiaries are tabled and presented by the Group Internal Auditor to their respective subsidiary companies’ board of directors. In 2016, twelve (12) such reports were tabled by the Group Internal Auditor. The quality of performance, sufficiency and competency of its staff including objectivity is evaluated through a formal assessment of the Internal Audit Function. The Group Internal Audit Department is staffed by a team of nine and the cost of maintaining the function in 2016 amounted to RM1,234,918 (2015: RM1,165,938). The Board is satisfied that the Committee has effectively discharged its roles and responsibilities as set out under its Terms of Reference (“TOR”). The TOR is available on the Company’s website at www.cmsb.com.my . This Statement was approved by the Board on 14 March 2017. Group Audit Committee Report