Page 143 - Full Book_24.4.2021

In Retrospect

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The Will to Suceed

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areaS OF FOCuS MatterS COnSIDereD
• Reviewed the independence of the Internal Auditors. It was brought to the BAEC’s attention that
there were no conflict of interests arising from the Internal Audit engagements in the financial Achieving a Leading Repute
year 2020 and had conducted its internal audit as stated in the Audit Charter.

• Assessed the effectiveness of Internal Audit Function of BHB Group focusing on seven (7) criteria
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of the Internal Audit function as follows:
(i) Adoption of a recognised Internal Audit Framework;
(ii) Independence and objectivity;
(iii) Planning the audit; Paving the Way for a Sustainable Future
(iv) Effectiveness of Internal Audit Function;
(v) Resources management;
(vi) Communicating audit result; and
(vii) Monitoring progress.

Overall, the disclosures made in BHB’s Annual Report and Corporate Governance Report as well
as the existing practices and processes documented in Internal Audit Manual, Internal Audit 137
Plan and Internal Audit Report of the Internal Auditors have adequately addressed the seven (7)
criteria and key observations made in Bursa Securities’ report on Effectiveness of Internal Audit
Function: Thematic Review Findings and Key Takeaways that was co-published with the IIAM.
external audit • Deliberated and approved on behalf of the Board, the external auditor’s 2020 audit plan
encompassing the audit approach, roles and responsibilities, the nature and scope for the
year’s audit, audit fees, reporting schedule, potential key audit risk matters, risk assessment,
Information Technology (“It”) approach, transition plan, reliance with Internal Auditor and
value-added services. The external auditor informed that focus for the Group will be on areas Adhering to the Best Governance Practices
related to IT security and controls over key financial information systems that are used to record
and process critical financial data. The objective of the IT audit review is to assist the external
auditor to form an opinion on the financial statements.
The BAEC took note on the impact of the COVID-19 pandemic and the external auditor has |
tailored the audit procedures accordingly to address the heightened risks arising from the extended
Movement Control Order (“MCO”) and its equivalent in other regions, as well as the global
economic slowdown and government reliefs made available to the public. The outputs show
both significant risks and other judgmental risks for the FY2020 audit arising from COVID-19
which are outlined below: Laying the Foundation for Financial Growth

Potential heightened risks with significant impact on audit
1. Risk of fraud due to management override of controls;
2. Risk of fraud in revenue recognition; |
3. Expected credit losses (“eCL”) measurement, including staging impact arising from financing
repayment moratorium; and
4. Valuation of Takaful contract liabilities;

Potential risks with moderate impact on audit Additional Information & Disclosure Summary
5. Modification loss arising from financing repayment moratorium and relief measures from
government schemes;
6. Impairment of financial assets at fair value through other comprehensive income (“FvOCI”)
and amortised cost (“aC”);
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7. Classification and measurement of financial assets at fair value through profit and loss
24 th AGM Information
(“FvtpL”), FVOCI and AC; and
8. IT security risk.