Page 76 - KPJ_2011

The Internal Audit Department within its terms and reference
carried out the following activities for the period:-
• review and appraise the adequacy and integrity of the
internal financial controls so as to ensure that it provides
a reasonable but not absolute assurance that assets are
properly safeguarded;
• ascertain the effectiveness of the Management in identifying
principal risks and to manage such risks through the
Risk Management Framework set-up by the Group;
• ascertain the level of compliance with Group’s plans,
policies, procedures and adherence to laws and
regulations;
• appraise the effectiveness of administrative and financial
controls applied and the reliability and integrity of data
that is produced within the Group;
• perform follow-up reviews of previous audit reports to
ensure appropriate actions are implemented to address
control weaknesses highlighted;
• carry out investigations and special reviews requested by
the Committee and/or Management; and
• prepare the Audit Committee Report for the Company’s
Annual Report 2011.
The internal audit function is performed in-house with thirteen
(13) staff members. A total of 171 audits were carried out
and presented to the Committee with the recommended
corrective actions acted upon.
The total costs incurred for the internal audit function for
the financial year 31 December 2011 was approximately
RM950,000. Training and courses are provided to the staff
members in the areas of auditing and technical skills as well
as personal development.
6. Seminars/Conferences Attended By The Committee
For the year under review, the Committee attended the
following seminars and conferences:
1. 1st KPJ Medical Workshop 2011
2. Khazanah Mega Trends Forum 2011:
Uncertainty as Normality - Navigating
Through Complex Interconnection
3. Institute of Internal Auditors: Black
Hole of Assurance - Is your Board
and Audit Committee aware of the
Red Flags?
4. Johor Corporation Directors’
Conference 2011
– Towards Boardroom Excellence
and Corporate Governance Best
Practices
No Name of Seminars / Conference Date
4 - 5
Oct 2011
27 - 28
Oct 2011
15 - 17
Jul 2011
26 - 27
Sep 2011
b. Risk Management
i. Review the Group’s risk management process in
mitigating the principal business risks identified; and
ii. Review the risk profile of the Group and major
initiatives having significant impact on the business.
c. Internal Audit
i. Review and approve the annual audit plan for the
year 2010/2011 to ensure adequate scope and
comprehensive coverage over the audit activities; and
ii. Deliberate on the Internal Audit Reports that were
tabled and appraised Management’s response to the
key audit observations and recommendations.
d. External Audit
i. Review the audit plan, audit strategy and scope of
work before the audit commences; and
ii. Review the results of the interim and annual audit as
well as the External Auditor’s Management Letter and
evaluated Management’s response.
e. Related Party Transactions
Review the recurrent related party transactions entered
into by the Group.
f. Other Matters
Review the Audit Committee Report, Statement on
Corporate Governance and Statement of Internal Control
prior to their inclusion in the Company’s Annual Report.
5. Internal Audit Function
The Group has an internal audit function which is carried
out by the Internal Audit Services (IAS). The IAS reports
directly to the Audit Committee and is guided by its Internal
Audit Charter. Its principal activity is to assist the Board in
monitoring and managing risk by undertaking regular and
systematic independent reviews of the system of controls in
accordance with the approved Audit Plan. This is to provide
reasonable assurance that such system continues to operate
satisfactorily and effectively in the Group.
The high risk activities are given due attention on a more
regular basis while the others are prioritized accordingly to
an assessment of the potential risk exposure and impact.
During the financial year ended 31 December 2011, the
IAS carried out its duties covering audits on cash and
credit management as well as operational controls on
revenue assurance, procurement and inventory. Reviews on
compliance with the established procedures, guidelines and
statutory obligations are also performed.
The internal audit reports were issued to Management for
their response on corrective and preventive actions as well as
deadlines to complete the actions. The reports were tabled to
the Committee for deliberation on quarterly basis.
Investigations were also performed at the request of the
Committee and Management on specific areas of concern to
follow up in relation to high risk areas identified in the regular
reports. These investigations provided additional assurance
on the integrity and robustness of the internal control systems.
71 ANNUAL REPORT 2011