RISK MANAGEMENT AND INTERNAL CONTROL The Group has a comprehensive system of internal controls in place, designed to ensure that risks are mitigated and the Group’s objectives are achieved. The Bank acknowledges its responsibility to present a fair and balanced assessment of the Group’s position and prospects. It is accountable for reviewing and approving the effectiveness of internal controls operated by the Group including financial, operational and compliance controls and risk management. The Board acknowledges its responsibility in respect of the Group’s risk management processes and system of internal controls and has oversight of the Group’s external auditors and the Group’s risk management function which have been delegated to the Board Risk Committee (BRC). The Group’s risk management and internal control systems are consistent with Bursa Securities’ guidance on Risk Management & Internal Control, and Related Financial and Business Reporting issued by the Malaysian Financial Reporting Council and compliant with the requirements of BNM. Apart from having oversight of the Group’s risk management, internal control and financial reporting, the BRC also ensures the required in-depth review into specific financial operational and regulatory areas of the Group’s Business. The Group’s system of internal financial control is primarily aimed at safeguarding the Group’s assets, ensuring proper accounting records are kept, identifying and managing business risks and maintaining compliance with appropriate legislation and regulations. Further details of the Bank’s Risk Management Framework and Internal Control System are explained in the Statement on Risk Management and Internal Control on pages 244 to 262 of this Integrated Annual Report. FINANCIAL REPORTING For the financial year under review, no accounting irregularities were recorded by either the internal or external auditors. BOARD AUDIT & EXAMINATION COMMITTEE The BAEC comprises three (3) members all of whom are Independent NEDs. The BAEC is chaired by Datuk Bazlan Osman who is a Senior Independent NED. Members of the BAEC are Independent NEDs and have the relevant accounting or related financial management experience or expertise. None of the BAEC members is a former key audit partner. The BAEC supports the Board in ensuring that there is a reliable and transparent financial reporting process and reviews the corporate governance practices and internal control system in ensuring checks and balances within the Group. The BAEC has included as its function, pursuant to the amendment to Paragraph 15.12 of the MMLR of Bursa Securities, review of any related party transaction and conflict of interest situation that arose or persist and measures taken to resolve or eliminate such acts. The process for the appointment/re-appointment of External Auditors is in line with BNM’s Policy on External Auditors. It requires the BAEC to assess the External Auditors’ compliance with the qualification criteria set out by BNM, which includes evaluating the independence, objectivity and performance of the External Auditors. As part of its remit, the BAEC must ensure that the objectivity, independence and effectiveness of the External Auditors are maintained. The key activities and focus areas during the financial year under review are set out in the BAEC Report on pages 237 to 243 of this Integrated Annual Report. EFFECTIVE AUDIT AND RISK MANAGEMENT Principle B 231 www . b a n k i s l am. c om 01 02 03 04 05 06 07 ACCOUNTABILITY 08 09
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