Change - S P Setia Berhad

60
Annual report 2008
Internal Control
Statement
Board Responsibility
The Board acknowledges that it is responsible for the Group’s system of internal control and for reviewing its adequacy and integrity.
The system is designed to provide reasonable assurance of effective operations and compliance with laws and regulations. The Board
ensures the effectiveness of the system through regular reviews.
The system of internal control is designed to manage rather than eliminate the risk of failure to achieve business objectives, and as
such, can only provide reasonable but not absolute assurance against material misstatement or loss.
Risk Management
The Board is pleased to disclose that there is an ongoing process for identifying, evaluating and managing significant risks faced by
the Group throughout the financial year.
The said process is regularly reviewed by the Board and accords with the Statement of Internal Control – Guidance for Directors of
Public Listed Companies.
Internal Control
The Board summarises below the process applied in reviewing the adequacy and integrity of the system of internal control:
a) The Board has appointed the Audit Committee to examine the effectiveness of the Group’s system of internal control on
behalf of the Board. This is accomplished through the review of the Group Internal Audit Department’s work, which focused
on areas of priority as identified by risk analysis and in accordance with the annual audit plan approved by the Audit
Committee.
b) The Group’s Risk Management Framework is outlined in the Risk Management Policy. The Group has a Risk Management
Committee who reports to the Board on quarterly basis on all major risk areas. The Risk Management Committee coordinates
the overall risk management activities within the Group.
c) The framework of the Group’s system of internal control and key procedure include:
• There is in place an organisation structure, which formally defines lines of responsibility and delegation of authority.
• Key functions such as finance, tax, treasury, corporate, legal matters and contract awarding are controlled centrally.
• There is a strategic planning, annual budgeting and target-setting process, which includes forecasts for each area of
business with detailed reviews at all levels of operations. The Board reviews and approves the annual budget.
• Actual performance compared with budget is reviewed with detailed explanation of any major variances.
• The Executive Directors meet on a monthly basis with all Divisional Heads and Business Unit Heads to consider the
Group’s financial performance, business development, management and corporate issues.
• Standard Operating Procedures which include policies and procedures within the Group are in place.
• The Divisional Heads and Business Unit Heads determines the applicability of the risk monitoring and reporting
procedures and is responsible for the identification and evaluation of significant risks applicable to their areas of
business together with the design and operation of suitable internal controls.
• Corporate values, which emphasise on ethical behaviour, quality products and services are set out in the Group’s
Employee Handbook.
The Group’s system of internal control does not apply to Associate Companies where the Group does not have full management and
control over them.