Eng - IOI Group

Statement on Internal ControlINTRODUCTIONThis statement is in line with the Listing Requirements of Bursa Malaysia Securities Berhad on the Group’s compliance with the Principlesand Best Practices provisions relating to internal controls as stipulated in the Malaysian Code on Corporate Governance.The Board is pleased to present hereinafter the annual update on the Group’s state of internal controls plus work done for the periodunder review.ACKNOWLEDGEMENT OF RESPONSIBILITIESThe Board of Directors affirms that it is ultimately responsible for the Group’s systems on internal controls - including the assuranceof its adequacy and integrity, and its alignment with our business objectives. However, it should be noted that these control systemsare designed to manage rather than to totally eliminate associated risks; and as such, can only provide reasonable but not absoluteassurance against material loss or failure.INTERNAL CONTROLS & RISK MANAGEMENT BEST PRACTICESWe have in the past statements provided detailed description of our integrated systems of internal controls, and how these are continuouslyshaped through our Enterprise Risk Management (“ERM”) Framework that interweaves the Group’s Vision and business objectives of ourglobal operation. We have explained the Group’s oversight structure that ensures the integrity of adopted frameworks in engaging everybusiness unit and hierarchical level to proactively embrace uncertainties and manage associated risks. We have also highlighted theGroup’s expanded view on “uncertainties” – that it gives rise to not only risks and controls but also opportunities and strategic response.Hence, the Group’s top-down risk management program drives a continuous cycle of control activities plus timely strategic respond toopportunities and threats.As a Group with global operations and markets, our internal controls and ERM Framework are benchmarked against global standardsand best practices that seek to enhance not only the achievement of business objectives and goals but also to ensure compliance withlaws and regulations in the respective countries of operation. Our widely spread operations’ ability to leverage on each other’s globalexperiences ensures our adopted standards and best practices continue to evolve to meet dynamic global challenges and risks. Thisfinancial period also marks the implementation of standardised “Internal Control Certification and Assessment Disclosure” by all divisionscertified by the respective heads of business units and their respective heads of finance to the Group’s Audit Committee and the Board.79ANNUAL REPORT 2007IOI Corporation Berhad