BIMB Integrated Annual Report 2019

OTHER KEY ELEMENTS OF INTERNAL CONTROL The other key elements of the internal control systems are described below: Board Meetings At a minimum, the Board meets six (6) times a year and has a formal agenda on matters for discussion. The CEO leads the presentation of board papers and provides explanation on pertinent issues. A thorough deliberation and discussion by the Board is a prerequisite before arriving at any decision. In addition, the Board is kept updated on the Group’s activities and operations on a timely and regular basis. Group Organisation Structure The Board has established an organisational structure with clearly defined lines of responsibility, authority limits, and accountability aligned to business and operational requirements which support the maintenance of a strong control environment. Limit of Authority Matrix The Group has clearly defined lines of authorities to facilitate prompt responses in the continuously evolving business environment, effective supervision of day-to-day business conducts and accountability. The establishment of Limit of Authority (“ LoA ”) matrix clearly outlines the Board and Management’s limits and approval authorities across various key processes. The LoA is approved by the Board and is subject to regular review and enhancement to ensure it reflects changes in accountability and risk appetite of the Group. Standard Operating Procedures Documented Standard Operating Procedures (“ SOPs ”) for all departments of BHB and its subsidiaries are approved by the respective Management. The SOPs serves as a day-to-day operational guide to ensure compliance with financial and operational controls as well as the applicable laws and regulations. All SOPs are reviewed and updated regularly to reflect current risks, new regulatory requirements and current operations. Human Resources Policies and Procedures The Human Resources policies and procedures of BHB and its subsidiaries encompasses areas of human resources management such as the recruitment of new employees based on “fit and proper” criteria, performance appraisals, training and development. Annual Business Plan and Budgeting Process The Group’s budget is prepared based on the annual business plans of BHB’s key operating subsidiaries. The budget and business plans are approved by the respective Boards and subsequently endorsed by BHB’s Board. Actual performances of the subsidiaries are reviewed against the targeted results on a quarterly basis to allow for a timely response and for corrective actions to be taken, thus ensuring that business targets are met. The subsidiaries’ performances are assessed against the budget, business plans and relevant key financial indicators. Information Technology (“IT”) System IT is key in supporting the service efficiency and delivery systems of the Group. The IT Risk Framework was developed to ensure that risks are correctly identified and mitigated accordingly. Bank Islam and Takaful Malaysia have developed their IT policies to address issues of security and risk related to IT. The subsidiaries continue to upgrade their IT systems to enhance efficiency of their business operations and services. 158 Integrated Annual Report 2019 Group Overview Sustaining The Group Management Discussion & Analysis Group Governance STATEMENT OF RISK MANAGEMENT AND INTERNAL CONTROL