kian joo can factory berhad

STATEMENT OF INTERNAL CONTROL
Pursuant to paragraph 15.27(b) of the Kuala Lumpur Stock Exchange (“KLSE”) Listing
Requirements, the Board of Directors (‘the Board”) of Kian Joo Can Factory Bhd (“the Company”)
is pleased to provide the following statement on the state of internal control of the Group which
has been prepared in accordance with the “Statement of Internal Control: Guidance for Directors
of Public Listed Companies issued by the Institute of Internal Auditors Malaysia and as adopted
by the KLSE.
Responsibilities for Internal Control
The Board acknowledges its responsibility for maintaining an effective and sound system of
internal control throughout the Group, and for reviewing its adequacy and integrity in order to
safeguard the Group’s assets and shareholders’ investments. The review of the effectiveness of the
system of internal control is a continuous process designed to monitor and mitigate the effects
rather than to eliminate risks of failure to achieve business objectives. In pursuing these objectives,
internal controls can only provide reasonable and not absolute assurance against material
misstatement, fraud or losses. It should also be recognized that the cost of control procedures
should not outweigh or exceed the benefits to be expected to arise from such control procedures.
Key Elements of Internal Control
Key elements of internal control that the Board has established in reviewing the adequacy and
integrity of the system of internal control are as follows:
Organization structure and responsibility levels
The Group has placed competent and responsible personnel to oversee the Group’s operating
functions. The Group has defined clear lines of accountability and delegation of authority that sets
out decisions that need to be taken including matters that require Board approval. Key personnel
including executive directors are actively involved in the daily operations.
Audit Committee and Internal Audit
The Audit Committee was established with a view to assist and to provide the Board with added
focus in discharging the Board’s duties. The key processes undertaken by the Audit Committee in
carrying out its review include operations reviews, review external and internal audit reports and
regular review of internal control.
The Audit Committee also ensures there are continuous efforts by management to address and
resolve areas with control weaknesses. Reports on findings of the internal audit visits are
presented to the Audit Committee. These, together with the External Auditors’ reports provide
reasonable assurance that control procedures are in place, and being followed.
Regular internal audits are carried out to review the adequacy and integrity of the internal control
system based on audit plan reviewed and approved by the Audit Committee. The internal audit
department advises on areas for improvement and conduct follow-up reviews to determine the
extent to which its recommendation has been implemented.
ANNUAL REPORT 2002 • KIAN JOO CAN FACTORY BERHAD (3186-P)
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