Fraser & Neave Holdings Bhd Annual Report 2019

WWW . F N . C O M . M Y 112 F R A S E R & N E A V E H O L D I N G S B H D AUDIT COMMITTEE REPORT The Audit Committee had assessed the performance of the Internal Audit function during the financial year 2019 through an internal stakeholders’ satisfaction survey conducted by the Human Capital Department. The ambit of the Group Internal Audit function is defined in the Internal Audit Charter which is reviewed by the Audit Committee annually. During the financial year, the key activities carried out by Group Internal Audit included the following: • Performed periodic audits of key subsidiaries and regional office operations within the Group to test on the appropriateness of control design and implementation as well as compliance with existing policies and procedures. This included the conduct of the following audits: – sales activities covering order processing, cooler and chiller management, distributor management, market returns management, customer master file management, credit management and collections; – marketing activities encompassing marketing plans and sponsorships, appointment and performance evaluation of media/advertising agencies, budget planning and marketing spend, advertising and promotion stock, promotion programmes and brand promoters; – plant operations covering raw, packaging and work-in-progress materials management, production and quality control management, repair and maintenance of plant facilities and plant safety and security; – logistics and distribution, covering finished goods management, transporters as well as warehouse security and safety; – human capital management covering human resources administration, payroll processing, segregation of duties, industrial relations and employee relations management, training and staff development and building facilities and security. – Procurement activities covering pre-qualification, sourcing, appointment, performance appraisal of suppliers, monitoring of purchase orders, contract management, vendor master file management and Capex projects; – information technology, covering access management, change management, IT operations (backup, disaster recovery, incident management), network security, cyber security, IT budget monitoring, project management and vendor management; and – governance practices covering implementation of Group Policies, risk management process and contract management. • Collated the status of implementation of audit recommendations provided by responsible management teams for reporting to the Audit Committee on a quarterly basis. The operational costs incurred by Group Internal Audit for the financial year 2019 amounted to about RM2.4 million. OTHER MATTERS The related party transactions entered into by the Group were reviewed by the Audit Committee to ensure that they were conducted on the Group’s normal commercial terms and adequate internal procedures had been deployed in the Group in relation to such transactions; for monitoring compliance with the Listing Requirements of Bursa Securities and to ascertain that the transactions entered into were not prejudicial to the interest of the non-controlling shareholders. The Audit Committee was also apprised of recurrent related party transactions, particularly towards monitoring that amounts transacted were within the approved shareholders’ mandate obtained. As at the date of this report, the Audit Committee had also reviewed the “agreed-upon procedures” performed by Group Internal Audit in relation to the allocation of share grants under the Restricted Share Grant Plan at the end of the financial year. This was to ensure the actual and target key performance indicators were computed accurately based on the audited and approved budget figures to support the allocation of share grants to employees. The Statement on Corporate Governance, Statement on Risk Management and Internal Control and the Audit Committee Report for inclusion in this Annual Report were reviewed by the Audit Committee prior to Board’s approval. The Audit Committee also reviewed the declaration of interim dividend and recommendation of final dividend, the press release relating to financial results, its revised Terms of Reference and the guidelines on related party transactions prior to the respective Board and/or shareholder approvals. The Audit Committee conducted an evaluation of its own performance for financial year 2019, and the Board had reviewed the evaluation result.