FGV Annual Report 2020

214 FGV HOLDINGS BERHAD Annual Integrated Report 2020 Governance at FGV: Accountability Roles and Functions Development of Audit Plan Internal Audit Reporting Objectivity and Independence of Group Internal Audit Group Internal Audit provides assurance services for the Group locally and overseas covering all operations where the Group has management control and where partners consent for jointly controlled entities. In addition to the assurance role, Group Internal Audit also undertakes a consulting role and investigative role. In its consulting role, Group Internal Audit undertakes advisory on governance, risk and control, policy and procedures review and participates in working groups to provide input on policy development, systems development and several initiatives of the Group. Investigative audits are undertaken upon any allegation of improper, illegal and dishonest acts based on the request of the Management or Board. The Annual Group Internal Audit Plan is presented to the Audit Committee. The Audit Committee reviews and challenges the adequacy of the audit scope, the resources allocated, the capability skill sets and makes recommendations before approving the Group Internal Audit Plan. Any recommendation of the Audit Committee is taken into the Group Internal Audit Plan. Once the Group Internal Audit Plan is rolled out, the Audit Committee ensures that the coverage is responsive and robust to satisfy the changing level of risk and emerging areas of concern. Any deviation to the Group Internal Audit Plan is discussed and endorsed by the Audit Committee quarterly. In May 2020, the Audit Committee has approved the change of auditing approach (i.e. implementation of remote auditing as far as practicable with onsite and outstation visits to be strictly on absolute need basis) and the revised Group Internal Audit Plan 2020 in response to COVID-19 impact and the new normal. For year 2020, the Audit Plan was formulated based on the new audit approach approved by the Audit Committee which resulted in a reduction in the number of internal auditors required. The new audit approach is as follows: a) To increase focus on Group-wide and thematic audit reviews; b) Routine audits will be on a selective basis subject to risk assessment; c) To perform follow-up based on risk assessment and audit report rating; d) To utilise more data analytics in the audit work; and e) To introduce Control Self-Assessment as a tool for auditing operations. The Audit Plan is developed after considering the following factors and inputs: a) Group key risks highlighted in the latest risk register (in particular FGV Group top 10 risks) and FGV Group’s KPI. b) 2019-2021 FGV Business Plan which essentially revolves around increasing yields, cost competitiveness, divestment of non- core investments, rehabilitate and rationalise poor performing investments and rationalise corporate spending. c) GIA’s analysis of the current situation of FGV including feedback from the Audit Committee and Management (e.g. Group Chief Executive Officer, Group Chief Financial Officer, and Group Divisional Directors). Once the key audit areas are developed, the staff and resource allocation plan, budget estimates and staff development progress are established. All Group Internal Audit reports are issued directly to the Audit Committee with copies to the relevant Management for their action. Recommendations in the Group Internal Audit reports are derived through root cause analysis. On a quarterly basis, the Audit Committee is presented with the summary of the audit results performed during the quarter and the progress reporting of the audit findings, recommendations and implementation of Management’s corrective actions. In addition, Group Internal Audit presents to the Audit Committee a summary of all the audit results annually. Any concerns raised by the Audit Committee are addressed by Group Internal Audit. The Audit Committee follows through on any unresolved matters as part of the agenda in the next meeting. The Chief Internal Auditor states the Group Internal Audit’s declaration of objectivity and independence to the Audit Committee in its Annual Group Internal Audit Plan. Group Internal Audit undertakes a survey of the relationship of its auditors once a year and ensures that the rotation of internal auditors does not result in any compromise of objectivity and independence.