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Kumpulan Fima Berhad



5.2 Risk Management and Internal Controls

The Board takes responsibility for the governance of risks and to this end, has established and maintains a sound

system of risk management and internal controls to safeguard shareholders’ interest and the Group’s assets. The Audit

Committee provides advice and assistance to the Board in meeting that responsibility and the role of the former in

relation thereto is described in the Statement on Risk Management and Internal Control of this Annual Report.

The system of internal controls is designed to manage and provide reasonable and not absolute assurance against the

risk of material errors, frauds or losses occurring. The Board however, recognizes that the system must continually evolve

to support the type of business and size of operations of the Group. As such, the Board will, when necessary, put in place

appropriate action plans to further enhance the Group’s system of internal control.

5.3 Related Party Transactions

The Company has an internal compliance framework to ensure it meets its obligations under the MMLR including

obligations relating to related party transactions. Processes and procedures are in place, to ensure that Recurrent

Related Party Transactions (“RRPT”) are undertaken on an arm’s length basis, are on terms are not more favourable to

related parties than to the public and not to the detriment of minority shareholders.

The annual internal audit plan incorporates a review of RRPT entered into or to be entered into under the shareholders’

mandate procured at the AGM, to ensure that all the relevant approvals for RRPT has been obtained. RRPT transactions

are recorded and the same presented to the Audit Committee for their review and endorsement, on a quarterly basis.

Details of the proposed renewal of shareholders’ mandate for recurrent related party transaction is set out in the Circular

to Shareholders dated 28 July 2017.

5.4 Relationship with Auditors

Through the Audit Committee, the Board has established transparent and appropriate relationship with the auditors, both

internal and external. The role of the Audit Committee in relation to the auditors, including a summary of activities of the

Audit Committee is included in the Audit Committee Report stated herein.

Internal Auditors

The Group’s internal audit function is independent of the activities they audit and is performed with impartiality,

proficiency and due professional care.

The function of the Group’s internal auditors is complementary to, but different from that of external auditors.

It undertakes regular monitoring of the Group’s key controls and procedures – an integral part of the Group’s

system of internal control. An internal audit review highlights major weaknesses in control procedures and makes

recommendations for improvements. Internal Audit also undertakes investigations on the Audit Committee’s behalf,

and follows up on complaints on matters affecting the Group’s operations.

The Audit Committee conducts a review on the adequacy and effectiveness of the internal audit function annually, to

ensure that the Company maintains an effective internal audit function that is adequately staffed and independent

of the activities it audits.

statement on

corporate governance