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130 / MRCB laporan tahunan 2011 /
statement on
InternaL controL
The Board strongly believes in the importance of having a
sound system of internal control to safeguard shareholders’
investment and the Group’s assets. The Board is overall
responsible for the system of internal control in MRCB and
subjects the system to a process of regular reviews to ensure its
relevance and effectiveness in the face of its changing business
circumstances.
KeY eLements oF tHe groUp’s sYstem oF InternaL
controL are DescrIBeD BeLoW:
i) Clearly defined lines of authority within a divisionalised
organisation structure have been established to facilitate the
supervision and monitoring of the conduct and operations of
individual business units and support service departments;
ii) Limits of Authority have been established for the Group
and key subsidiaries. These Limits of Authority specify clear
division and delegation of responsibilities from the Board to
Board Committees and to members of management and the
authorisation levels for various aspects of operations;
iii) Clearly documented internal policies and procedures have
been set out in a series of standard operating procedure
manuals which are periodically reviewed and updated to
reflect changes in business structures, processes as well as
changes in external environments;
iv) Joint Project Management Committees, which include
the participation of external business partners, where
relevant, deliberate on and evaluate parties that are invited
to quote and the subsequent award of contracts to ensure
transparency and integrity of the award process;
v) Annual budgets are prepared in advance of the coming
year using a detailed budgeting process. These budgets
are subjected to evaluation and scrutiny by the senior
management team and the EXCO before it is recommended
to the Board for approval. Performance against the budget
is tracked on a monthly basis and on a semi-annual basis, a
comprehensive budget review exercise is undertaken;
vi) On a monthly basis, the performance of the respective
divisions and departments and the status of key projects
are monitored and reviewed by the senior management
team at divisional meetings chaired by the CEO and where
necessary, action plans are put in place to address risks and
issues identified;
vii) Regular and comprehensive information are provided by
the Management to the Board and its Committees, covering
financial performance, key performance indicators, utilisation
of funds and cash flow performance;
viii) Various management information systems are operational to
provide management with timely and accurate information
on the Group’s performance and to assist management in
effective decision-making;
ix) A Risk Management Framework is in place and was revised in
2011 to enhance its effectiveness and to ensure its continued
relevance and applicability to the changes in the Group’s
structure, processes and business environment; and
x) Regular Internal Audit visits and reviews are conducted
on key risk areas to provide independent assurance on the
effectiveness of the Group’s system of internal control as
well as provide Management with constructive advice for
further improvements.
The Board believes that the development of the system of
internal control is an on-going process and has taken steps
throughout the year under review to improve its internal control
system and will continue to do so. During the year under review,
some areas for improvement in the internal control system were
detected. Management has been responsive to the issues raised
and have taken appropriate measures to address the areas for
improvement that have been highlighted.
The monitoring, review and reporting arrangements in place
provide reasonable assurance that the structure of control and
its operations are appropriate to the Group’s operations and
that risks are at an acceptable level throughout the Group’s
businesses. Such arrangements, however, do not eliminate the
possibility of human error, deliberate circumvention of control
procedures by employees and others or the occurrence of
unforeseeable circumstances. The Board is of the view that the
system of internal control in place for the year under review is
sound and sufficient to safeguard shareholders’ investments,
stakeholders’ interests and the Group’s assets.
this statement on Internal control is approved by the Board of
Directors via its resolution on 14 February 2012.
tan sri azlan Zainol
Chairman
malaysian resources corporation Berhad