KOSMO-AnnuaReport2006 (1.9MB).pdf - Bursa Malaysia

Reporting from the external auditor to the Audit Committee on
audit findings and highlighting of areas to improve (if any).
The Audit Committee holds regular meetings to deliberate on
findings and recommendations for improvement by both the
internal and external auditors on the state of the internal control
system, and reports back to the Board.
The Management meetings were conducted on periodical basis, to
discuss on operational, financial, corporate and key Management
issues. The matters discussed are as follows;
• Financing and cash flow performance.
• Progress on business development, sales, billing and
collections, and loan documentation processes.
• Feedback on the progress of development projects
undertaken by the individual subsidiary and highlights on
the shortcomings and problems, together with proposed
corrective actions.
• Regular updates of internal procedures and policies, or to
resolve operational deficiencies.
• Monitoring of physical security and systems
implementation to minimise operational risks.
INTERNAL AUDIT FUNCTION
The Audit Committe reviewed and approved the internal audit plan
and scope of internal audit covers the audits of all units and
operations, including subsidiaries. The Internal audit team
undertakes internal audit review based on the approved audit plan
that is developed after risk assessment and taken into consideration
the concerns of management. The internal audit reports are
submitted to the Audit Committee, which reviews the findings with
Management at the Audit Committee Meetings.
The Audit Committee has resposibility for the development and
maintenance of the internal control framework and determining
that all major issues reported have been satisfactorily resolved.
RISK MANAGEMENT FRAMEWORK AND INTERNAL AUDIT
FUNCTION
The Board recognises that an important element for a sound system
of internal control is to have in place a risk management framework,
in order to identify principal risks and implement appropriate
controls to manage such risks. The day to day managing of risk lies
with the respective Heads of Department and this task is being
reviewed to further update and identify significant risks and
KOSMO TECHNOLOGY INDUSTRIAL BERHAD 29
STATEMENT ON INTERNAL CONTROL
(CONT’D)
corresponding controls in order to develop an enterprise-wide Risk
Management Framework. Once this framework is formalised,
monthly management meetings will identify these risks and
corresponding internal controls, to be communicated to Senior
Management.
The Heads of Department are responsible for managing key risks,
applicable to their areas of business activities on a continuous basis.Any
operational matters and issues are regularly reviewed and resolved by
the Management team at the monthly management meeting.
REPORTING AND REVIEW
The Group’s Management team conducted monthly monitoring
and review of operational and financial results for all businesses
within the Group, including monitoring and reporting thereon, of
performance against management’s plan and targets.
The Group’s system of internal control is regularly reviewed for its
effectiveness in managing principal risks.The internal audit function
focuses on areas of priority, and when any significant weaknesses
have been identified, improvement measures are recommended to
strengthen its internal control system.The internal audit reports are
tabled at Audit Committee meetings on a quarterly basis, to monitor
the Group’s progress in achieving the Group’s objectives.
The Group’s Management team communicate regularly to monitor
operational and financial performance as well as formulating action
plans to address any areas of concern. Scheduled and ad-hoc
meetings are held at operational and management levels to
identify, discuss and resolve business and operational issues.
CONCLUSION
The Board is of the opinion that the system of internal control that
has been instituted throughout the Group is satisfactory and has
not resulted in any material losses that would require disclosure in
the Group’s Annual Report. Notwithstanding this, the Board will
continue to review the control procedures to ensure the
effectiveness and adequacy of the internal control system of the
Group.