ANNUAL REPORT 2008 - KNM Steel Sdn Bhd

CORPORATE GOVERNANCE
STATEMENT (CONT’D)
Directors’ Responsibilities for the Financial Statements
Pursuant to the Act, the Directors are required to prepare and ensure that financial statements are drawn up in
accordance with the applicable approved accounting standards in Malaysia and the provisions of the Act so as to
give a true and fair view of the state of affairs of the Company and the Group for each financial year.
The Directors have the overall responsibility for taking such steps as are reasonably open to them to safeguard the
assets of the Group, to detect and prevent frauds as well as other irregularities. They are responsible for ensuring
that the Company and the Group keep accounting records which disclose with reasonable accuracy the financial
position of the Company and the Group in compliance with the Act.
In preparing the financial statements, the Directors have:-
1. applied appropriate accounting policies and applied them consistently;
2. made judgments and estimates that are reasonable and prudent;
3. ensured that all applicable accounting standards have been followed; and
4. prepared the financial statements on the going concern basis as the Directors have a reasonable expectation,
having assessed and made enquiries on the Company’s financial position and prospects, that the Group and
the Company have adequate resources to continue in operational existence for the foreseeable future.
The annual financial statements are audited by external auditors in accordance with the applicable approved
standards on auditing in Malaysia. In conducting the audit, the external auditors obtain reasonable assurance that
the financial statements are free of material misstatements. The external auditors assess the accounting principles
used and significant estimates made by Directors in addition to evaluating the overall presentation of the financial
statements.
Internal Control and Internal Audit Functions
The Board has overall responsibility for maintaining a sound system of internal controls to safeguard shareholders’
investment and the Group’s assets, which encompass risk management, financial, organizational, operational and
compliance controls necessary for the Group to achieve its objectives within an acceptable risk profile. These controls
can only provide reasonable but not absolute assurances against material misstatements, errors of judgment, losses
or fraud.
The Board has established an Internal Audit function for the Group to review adequacy of operational controls and
in identifying, evaluating, monitoring and managing risks so as to provide reasonable assurance that such system
continues to operate satisfactorily and effectively in the Group. The Internal Audit function will add value and improve
the Group’s operations and to assist the Audit Committee to effectively discharge its duties by providing independent
and objective assurance.
The Internal Audit function is an independent function within the Group and reports directly to the Audit Committee.
The Head of Internal Audit regularly reviews and appraises the effectiveness of the risk management, internal control
and governance processes within the Company. The Internal Audit operates in accordance with the framework set
out by the Internal Audit Charter as approved by the Audit Committee.
The Company’s Internal Audit function is currently managed and performed in-house and the costs attributable to
the discharge of duties and performance of the Internal Audit function of the Company for the financial year under
review is RM493,715.
The Company’s Internal Audit function is competently and adequately resourced to fulfill its purpose and perform its
activities and is independently positioned to assist the Board and the Audit Committee in obtaining the assurance it
requires regarding the effectiveness of the Group’s system of internal controls.
More details of the Company’s internal control systems are set out in the Statement on Internal Control.
KNM GROUP BERHAD
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ANNUAL REPORT 2008