2003 - KNM Steel Sdn Bhd

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KNM GROUP BERHAD (521348-H)AUDIT COMMITTEE REPORT5.3.2 review the recurrent related party transactions of a revenue or trading nature entered into by theCompany, to prescribe guidelines and review procedures in respect of such transactions and toascertain that such transactions are in compliance with the prescribed guidelines and reviewprocedures;5.3.3 review any related party transaction and conflict of interest situation that may arise within theCompany, including any transactions, procedures or course of conduct affecting the Company’smanagement;5.3.4 prepare the Audit Committee Report in accordance with the Listing Requirements and/or PracticeNotes of the Bursa Malaysia Securities Berhad and the Malaysian Code on Corporate Governancefor publication in the Company’s Annual Report.5.3.5 To report promptly to the Bursa Malaysia Securities Berhad any matter reported by the Committee tothe Board which has not been satisfactorily resolved and may result in a breach of the ListingRequirements and/or Practice Notes of the Bursa Malaysia Securities Berhad.5.4 Such other responsibilities, functions or assignments assigned by the Board.6. MeetingsIt is the commitment of the Board to ensure that the Committee meets at least 4 times a year, including additionalmeetings as the Chairman decides in order to fulfill its duties. The Chairman shall also convene a meeting of theCommittee if requested to do so by any Member, the management or the internal or external auditors to considerany matter within the scope of responsibilities of the Committee.The Head of Finance, the Head of Internal Audit and representatives of the external auditor are invited to attendmeetings of the Committee. The Committee may invite other Directors and employees to attend any of itsmeetings to assist in resolving and clarifying matters raised.7. Secretary to Audit Committee and MinutesThe Company Secretary shall be the secretary of the Committee and the minutes shall be circulated to allmembers of the Board as a reporting procedure.8. Activities during the YearDuring the financial year under review, the Committee:1. reviewed with the external auditor the results of the audit, audit reports and recommendations;2. reviewed and adopted the annual internal audit plan for 2004, including its scope and areas of audit;3. reviewed and deliberated on activities of audits conducted by the Internal Audit Department for the yearunder review;4. reviewed financial statements including quarterly financial announcements to the Bursa Malaysia SecuritiesBerhad and recommended the same for approval by the Board, upon being satisfied that, inter alia, thefinancial reporting and disclosure requirements of the relevant authorities had been complied with, includingdeliberation of any significant issues resulting from the audit of the financial statements by the externalauditors;5. reviewed significant accounting policies that were affected by the introduction of new Malaysian AccountingStandards;6. reviewed with the external auditors on audit strategy and scope for the statutory audit of the Company’saccounts for the financial year ended 31 December 20039. Details of AttendanceThe Committee had 2 meetings during the financial year under review. Details of each Committee member’sattendance are given below:MembershipNo. of Meetings AttendedYBhg. Dato’ Ab. Halim bin Mohyiddin 2Lim Yu Tey 2Ir. Lee Swee Eng 2162003 ANNUAL REPORT
KNM GROUP BERHAD (521348-H)STATEMENT OF INTERNAL CONTROLThe Board of Directors is committed to maintaining a sound system of internal control in the Groupand is pleased to provide the following statement of internal control that outlines the nature andscope of internal control of the Group during the year pursuant to Paragraph 15.27 (b) of theListing Requirements of the Bursa Malaysia Securities Berhad.INTERNAL CONTROL AND RISK MANAGEMENTThe Board is ultimately responsible for the Group’s system of internal controls and reviewing its effectiveness. Such asystem is designed to manage and reduce, rather than eliminate, the risk of failure to achieve business objectives andcan provide only a reasonable and not an absolute assurance against risk. The system of internal controls covers riskmanagement, financial, operational and compliance controls. On-going reviews are and will continuously be carriedout to ensure the effectiveness, adequacy and integrity of the system of internal controls in safeguarding the Group’sassets and shareholders’ investment in the Company. The Board also believes that the Group’s system of internalcontrol and risk management practices are vital to good corporate governance.The Board, through the Audit Committee and with the assistance of the Internal Audit Department continuously reviewsthe adequacy and integrity of the Group’s system of internal controls and management information systems to strengthenthe control environment, taking into account changes in the external and internal environment of the Group to complywith applicable laws, rules, regulations, guidelines and requirements.The Company initiated the development of a risk management framework internally in August 2003 and thereafterengaged a consultancy firm in March 2004 to put in place a structured risk management framework to reinforce thetone of risk awareness and control consciousness.The creation of a structured risk management framework is to identify the key risks facing the Group, the potentialimpact and likelihood of those risks occurring, the control effectiveness and the action plans being taken to managethose risks to desired levels.The key elements of the Group’s system of internal controls are set out below:• An organisational structure specifying lines of responsibility and delegation of authority.• Regular management meetings are conducted for performance review at certain operations level.• The Group Quality Assurance (QA) department conducts routine internal quality audits and ongoing monitoringto ensure operational processes are in accordance with the ISO9001 Quality Systems.• The Group Health, Safety and Environment (HSE) department carries out ongoing safety activities at all businessstages and fabrication shops.• Internal audit reviews of the systems of internal control.• The Audit Committee and Board review the operational and financial performance of the Group at quarterlyAudit Committee and Board meetings.The system of internal controls will continue to be reviewed, added to or updated in line with the changes in operatingenvironment.INTERNAL AUDIT FUNCTIONThe Group has an Internal Audit Department which is independent of the activities or operations of the subsidiaries anddepartments. The duties of the Internal Audit Department are to provide reasonable assurance in the effective executionof responsibilities of Audit Committee members by providing verifications, examinations and evaluations of the Group’ssystem of internal controls.The Internal Audit Department reports, from August 2003, directly to the Audit Committee on a quarterly basis,highlighting major weaknesses in control procedures of all auditable areas as set out in the Internal Audit Plan. Whereappropriate, relevant corrective and / or preventive actions will also be recommended for implementation in order tofurther strengthen the existing system of internal controls of the Company.ASSOCIATED COMPANIESThe Group’s system of internal controls incorporates its associated companies.WEAKNESSES IN INTERNAL CONTROLS THAT RESULT IN MATERIAL LOSSESThere were no material losses or contingencies requiring disclosure in the annual report under review as a result fromweaknesses in internal control.2003 ANNUAL REPORT17
Page 1 and 2: KNM GROUP BERHAD (521348-H)CONTENTS
Page 3 and 4: KNM GROUP BERHAD (521348-H)NOTICE O
Page 5 and 6: KNM GROUP BERHAD (521348-H)STATEMEN
Page 7 and 8: KNM GROUP BERHAD (521348-H)CORPORAT
Page 9 and 10: KNM GROUP BERHAD (521348-H)BOARD OF
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Page 13 and 14: KNM GROUP BERHAD (521348-H)EXECUTIV
Page 15: KNM GROUP BERHAD (521348-H)AUDIT CO
Page 25 and 26: KNM GROUP BERHAD (521348-H)DIRECTOR
Page 31 and 32: KNM GROUP BERHAD (521348-H)REPORT O
Page 33 and 34: KNM GROUP BERHAD (521348-H)INCOME S
Page 35 and 36: KNM GROUP BERHAD (521348-H)CASH FLO
Page 37 and 38: KNM GROUP BERHAD (521348-H)NOTES TO
Page 59 and 60: KNM GROUP BERHAD (521348-H)INVESTOR
Page 61 and 62: KNM GROUP BERHAD (521348-H)LIST OF
Page 63 and 64: KNM GROUP BERHAD(Incorporated in Ma

2003 - KNM Steel Sdn Bhd

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