FY 2011 Annual Report - Sheng Siong

Internal Controls
Sheng Siong Annual Report 2011
Corporate Governance
Principle 12: The Board should ensure that the Management maintains a sound system of internal controls to
safeguard the shareholders’ investment and the company’s assets.
The Board ensures that Management maintains a sound system of internal controls (comprising internal financial
controls, operational and compliance controls, and risk management policies and systems) (collectively,
“internal controls”) to safeguard shareholders’ investment and the Group’s assets.
The Group has engaged PricewaterhouseCoopers LLP (“PwC”) to conduct an internal controls review of our
retail, cash, inventory and procurement management processes, including our cash management controls.
The AC receives progress reports on the Group’s implementation of PwC’s recommendations and reviews the
effectiveness of the Group’s system of internal controls on an annual basis.
Our Board, after making all reasonable enquiries and with the concurrence of the AC, is of the opinion that,
to the best of its knowledge and belief, the Group’s internal controls are adequate to address operational,
financial and compliance risks.
Internal Audit
Principle 13: The company should establish an internal audit function that is independent of the activities it
audits.
The Group has appointed PwC to carry out its internal audit function. PwC reports directly to the Chairman
of the AC on audit matters and to the CEO on administrative matters. The AC reviews PwC’s reports on an
annual basis. The AC also reviews the annual internal audit plans to ensure that PwC is adequately resourced
and has appropriate standing within the Group.
Risk Management
Management is responsible for identifying risks inherent in the Group’s business and devising procedures to
manage such risks. Management seeks the Executive Directors’ approval for changes in risk management
procedures when the Group’s risk profile changes.
The AC has also approved the appointment of an external consultant who will conduct training sessions for
Management and assist the Group to further improve its assessment and documentation of risks. A “Risks
Comfort Matrix”, which will encapsulate all the relevant risks, assurance mechanisms and counter measures,
will be developed and updated periodically. This will further strengthen the Group’s risks assessment framework
and promote a “risks aware” culture within the Group.
Auditors’ Independence
The AC meets with the external and internal auditors, without the presence of Management, annually.
The AC is satisfied that the Group’s external auditor, KPMG LLP (“KPMG”), is independent and objective
and recommends the re-appointment of KPMG. The audit partner of KPMG is rotated every five (5) years, in
accordance with the requirements of the Listing Manual.
The AC conducts an annual review of all non-audit services provided by KPMG and is satisfied that the nature
and extent of such services do not affect the independence of the external auditors.
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