143 ANNUAL INTEGRATED REPORT 2021 HOW WE ARE GOVERNED REINFORCING SUSTAINABILITY ADDITIONAL INFORMATION ADEQUACY AND EFFECTIVENESS In 2021, Board’s assessment of the adequacy and effectiveness of the risk management and internal control system was based on the quarterly reports and specific Board papers from the BGRMC, AC and other Board Committees. The Board has taken cognisance on the report by an independent consultant engaged to review FGV’s risk management processes and GIA’s reviews on the internal controls in 2021 in accordance with the annual internal audit plan. The Board has also been updated on the remedial actions and their progress. MATERIAL JOINT VENTURE AND ASSOCIATES The disclosures in this statement do not include the risk management and internal control practice of FGV’s material joint ventures and associates. FGV’s interest in these entities are safeguarded through the appointment representatives to the respective board of directors or through nominated representatives. Additionally, where necessary, key financial and other appropriate information on the performance of these entities are obtained and reviewed by the Board. RISK MANAGEMENT APPROACH FOR FGV’S LISTED SUBSIDIARY MSM Malaysia Holdings Berhad (MSM), as a listed subsidiary of FGV, undertakes its risk management and internal control responsibilities through its Investment Committee and Board Audit, Governance and Risk Committee for subsequent deliberation by MSM’s Board. Any risks identified as having significant impact on FGV Group are reported to FGV’s BGRMC and where they have a direct impact on the financial performance of the Group, are reported directly to the FGV’s AC, and subsequently to FGV’s Board. REVIEW OF THIS STATEMENT BY EXTERNAL AUDITORS As required by Paragraph 15.23 of the Bursa Malaysia Securities Berhad Main Market Listing Requirements, the external auditors have reviewed this Statement on Risk Management and Internal Control. Their limited assurance review was performed in accordance with Audit and Assurance Practice Guide No. 3 (AAPG3) issued by the Malaysian Institute of Accountants. AAPG3 does not require the external auditors to form an opinion on the adequacy and effectiveness of the risk management and internal control systems of the Group. THE BOARD’S CONCLUSION The Board is pleased to report that the state of the Group’s risk management and internal control framework enables the Group to manage its risks against achieving its strategic plans and business objectives. The Board has also received assurance from the Group Chief Executive Officer (GCEO) and Group Chief Financial Officer (GCFO) that the Group’s risk management and internal control framework is operating adequately and effectively in all material aspects. Continuous focus on measures to protect and enhance shareholder value and business sustainability will remain a core focus for the Group. This statement was made in accordance with a resolution of the Board approved on 30 March 2022. POLICIES & PROCEDURES Documented policies and procedures form an integral part of the Group’s internal control systems to safeguard shareholders’ investment and the Group’s assets against material losses. They also ensure complete and accurate information. These documents consist of policy documents, SOPs, circulars, manuals and handbooks that are continuously revised and updated to meet the current business and operational needs. CONTROL SELF-ASSESSMENT A Control Self-Assessment mechanism was implemented in FY2020 as an initiative to inculcate better risk management and compliance culture. In FY2021, all Group’s estates had conducted Control Self-Assessment through a questionnaire mechanism for selected processes. The questionnaires completed by the estates were validated by GIA and feedback on the level of compliance was provided to the Audit Committee. PERFORMANCE MONITORING Management reports are deliberated monthly at the GMC level to review the financial and operational performance of the various Group’s businesses. The reviews encompass financial and non-financial key performance indicators, variances between budget and operational results. The financial and operational performance is reviewed quarterly by the Board to monitor FGV’s business progress against strategies established and the Management’s performance against budgets and targets set annually. Through these platforms, actions and initiatives are taken to close any gaps from the achievement of strategies and budgets. CAPABILITY BUILDING FGV places emphasis on the identification and development of high potential candidates for succession planning and to support the Group’s growth strategies. This exercise is a necessity to build a strong succession pipeline and healthy talent bench strength by investing in competency development programmes to build the skills required for business operations.
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