KPJ Healthcare Berhad - Annual Report 2018

OUR BUSINESS & STRATEGY OUR PERFORMANCE AND OUTLOOK OUR RESULTS OUR GOVERNANCE APPENDICES ABOUT THIS REPORT 131 KPJ HEALTHCARE BERHAD www.kpjhealth.com.my AUDIT COMMITTEE REPORT Reporting and Regulatory Environment; - Assessed the performance of the External Auditors and recommended their appointment and remuneration to the Board of Directors; and - Members of AC met with the External Auditors without the presence of Management on 8 February 2018, 3 August 2018 and 14 November 2018 respectively. • Related Party Transactions Reviewed the related party transactions and recurrent related party transactions entered into by the Group as well as any conflict of interest situation that arises within the Group. • Annual Reporting Reviewed and recommended the Audit Committee Report for Integrated Report to ensure compliance with relevant regulatory reporting requirements, prior to Board approval. • Other Matters - Deliberated on the progress and status on IT strategic issues; - Reviewed and deliberated on the subsidiaries performance; and - Deliberated on the status and updates on credit and inventory management of the Group. • Continuous Professional Development For the year under review, the relevant Committee members have attended various conferences, seminars and trainings and the details of the training attended are reported under the Corporate Governance Report, Practice 2.1 published on KPJ’s website. INTERNAL AUDIT FUNCTION The in-house Internal Audit Services carries out KPJ’s internal audit function in assisting the Board to oversee that Management has in place a sound risk management, internal control and governance systems. The Internal Audit Services is headed by Khairol Badariah Basiron, a Certified Internal Auditor and a Professional Member of the Institute of Internal Auditors Malaysia. She holds a Bachelor of Accounting from Universiti Teknologi MARA. Internal Audit Services, as the third line of defense, reviews the effectiveness of the internal control structures over the Group activities focusing on high risk areas as determined using a risk-based approach. All high risk activities in each auditable area are audited annually 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. Internal Audit Services also carries out investigative audits where there are improper, illegal and dishonest acts reported. Internal Audit Services reports functionally to the Audit Committee and administratively to President & Managing Director, and is independent of the activities or operations of other operating units. Internal Audit Services’s authority, scope and responsibilities are governed by its revised Audit Charter which is approved by Audit Committee on 14 November 2018 and aligned with the International Standards for Professional Practice of Internal Auditing issued by the Institute of Internal Auditors (IIA). All Internal Audit personnel signed an Independence Statement as well as a declaration on compliance to the Code of Ethics of the IIA in carrying out their duties. The Internal Audit Services shall maintain a quality assurance and improvement programme to evaluate the conformance of internal audit activities to the International Standards for Professional Practice of Internal Auditing issued by IIA. The said programme includes Internal Audit Services function’s self-assessment and assessment by a qualified independent assessor once in five years. The audit reports which provide the results of the audit conducted are submitted to the Committee for review and deliberation. Key control issues, significant risks and recommendations are highlighted, along with Management’s responses and action plans for improvement and/or rectification, where applicable. This enables the AC to execute its oversight function by reviewing and deliberating the audit issues, audit recommendations as well as Management’s responses to these recommendations. Where appropriate and applicable, the AC directed Management to take cognizance of the issues raised and establish necessary steps to strengthen the system of internal control based on Internal Audit’s recommendations. The total costs incurred for maintaining the internal audit function of 16 staff for the financial year ended 31 December 2018 is approximately RM2.4 million, comprising mainly salaries and incidental costs such as travelling, accommodation and training cost. Various in-house training programmes and external courses were provided to staff members in the areas of auditing skills, technical skills, business acumen, strategic management and personal development to enhance the desired competency level.