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Annual Report 2014 | S P SETIA BERHAD GROUP | 93




IV. Corporate Governance

Board Responsibility

The Board acknowledges that it is responsible for the Group’s system of internal control and for reviewing its adequacy and integrity. The

system is designed to provide reasonable assurance of effective operations and compliance with laws and regulations. The Board ensures the

effectiveness of the system through regular reviews.

The system of internal control is designed to manage rather than eliminate the risk of failure to achieve business objectives, and as such, can

only provide reasonable but not absolute assurance against material misstatement or loss.

Risk Management

The Board is pleased to disclose that there is an ongoing process for identifying, evaluating and managing significant risks faced by the Group

throughout the financial year.

The Group’s Risk Management Framework is outlined in the Risk Management Policy. The Framework adopts a structured and integrated

approach in managing key business risks with the aim of safeguarding the shareholders’ interests and the Group’s assets.

In September 2014 the Board has reorganized the composition of the Risk Management Committee in line with the best practices as outlined

in the Statement on Risk Management and Internal Control. The Committee consists of at least three (3) Board members, two (2) of whom are

independent non-executive directors. The Committee is to be chaired by the independent non-executive director.

The Committee coordinates the overall risk management activities within the Group and reports to the Board on a quarterly basis on significant

risk issues.

Internal Audit Function

The Group has an in-house Internal Audit Department, known as Governance Advisory Department, which provides reasonable assurance on

the efficiency and effectiveness of risk management and internal control systems. A description of the activities of the Internal Audit function

can be found in the Audit Committee report included in this Annual Report.

Internal Control

The Board summarises below the process applied in reviewing the adequacy and integrity of the system of internal control:


The Board has appointed the Audit Committee to review the effectiveness of the Group’s system of internal control on behalf of the

Board. This is accomplished through the review of the Governance Advisory Department’s work, which focused on areas of high priority

as identified by risk assessment and in accordance with the annual audit plan approved by the Audit Committee.


The framework of the Group’s system of internal control and key procedures include the following:

• There is an organisation structure in place, which formally defines lines of responsibility and delegation of authority.

• Key functions such as finance, tax, treasury, corporate, legal matters and contract awarding are controlled centrally.