Annual Report 2011 - Food Junction

Corporate Governance (cont’d)
The AC met once with the external auditors without the presence of the Company’s
management for FY2011. The AC reviewed the independence of the external auditors
annually and assessed the scope and results of the external audit versus its costs. After
reviewing the non-audit services provided by the auditors, the AC is satisfied with the
independence of the auditors and recommends to the Board, the nomination of the external
auditors for re-appointment at the forthcoming AGM.
The AC also review and approve all Interested Person Transactions (“IPT”) as defined by the
Listing Manual to ensure that they are on arm’s length basis. The Company has established
internal control policies to ensure that the transactions with IPT are properly reviewed and
approved.
All IPT above $100,000 are to be approved by a director who is not an interested person in
respect of the particular transaction.
Prior to 1 June 2007, all IPT where value is more than $150,000 must be approved by AC
prior to entry. IPT where value is equal or below $150,000 need not be approved by AC
prior to entry but shall be reviewed on a quarterly basis by AC.
With effect from 1 June 2007, new IPT guidelines that supersede the above guidelines,
stipulate that IPT shall be monitored under the following categories:
1. Category 1 for transactions that are in the ordinary course of business, falling into
grouping for (a) Lease of Premises; (b) Stall Licence; and (c) Supplies & Purchases.
Such IPT need not be approved by AC prior to entry but shall be reviewed on a
quarterly basis by AC.
2. Category 2 for transactions that are not in the ordinary course of business. IPT where
value is more than $150,000 must be approved by AC prior to entry. IPT where value
is equal to or below $150,000 need not be approved by AC prior to entry but shall be
reviewed on a quarterly basis by the AC.
Internal Control & Audit (Principles 12 & 13)
The Board acknowledges that it is responsible for the overall internal control framework,
but recognises that no cost effective internal control system will preclude all errors and
irregularities, as a system is designed to manage rather than eliminate the risk of failure to
achieve business objectives, and can provide only reasonable and not absolute assurance
against material misstatement or loss.
The Group currently does not have a Risk Management Committee but the Management
regularly reviews the Group’s business and operational activities to identify areas of
significant business risks as well as appropriate measures to control and mitigate these risks.
The Management reviews all significant control policies and procedures and will highlight all
significant matters to the Directors and the AC.
The Board ensures that the Management maintains a sound system of internal controls to
safeguard the shareholders’ investments and the Company’s assets.
For Internal Audit, the Company has outsourced and appointed Deloitte & Touche Enterprise
Risk Services Pte Ltd as Internal Auditor since 2003. The Internal Auditor reports directly to
the Chairman of the AC. The scope of internal audit is risk-based and the internal audit is
carried out pursuant to the Standards for Professional Practice of Internal Auditing issued by
the Institute of Internal Auditors.
For FY2011, the Board is of the view that based on the reports from the external and
internal auditors, the internal control system of the Group is adequate for its needs. As
adequate system of internal controls has been implemented for all the companies within
the Group, Management has ensured that the shareholders’ investment and the Company’s
assets are safeguarded.
42 Annual Report
Guideline 11.8
Guideline 11.8
Guideline 11.8
Guideline 12.2