FGV Annual Report 2017

FELDA GLOBAL VENTURES HOLDINGS BERHAD HOW WE ARE GOVERNED 90 AUDIT COMMITTEE REPORT GOVERNANCE AT FGV: ACCOUNTABILITY Objectivity and Independence of GIA The Chief Internal Auditor states GIA’s declaration of objectivity and independence to the Audit Committee in its Annual GIA Plan. GIA undertakes a survey of the relationship of its auditors once every two years and ensures that the rotation of internal auditors do not result in any compromise of objectivity and independence. SUMMARY OF WORK DONE BY GIA IN 2017 Assurance The assurance work during the year 2017 was on a balance of governance, risk and control at the corporate centre level and business operational level. At the corporate centre level, the focus was on inculcating best and better practices of the following main areas: • Governance and risk management processes towards enhancing general governance and risk management practices and culture. • Treasury management processes, particularly cash funding, money market, cash management and foreign exchange. • The Human Resources processes, particularly on rewards management, staffing and manpower planning, performance management and succession planning. • The Group procurement processes, particularly alignment to procurement policies and procedures, procurement monitoring mechanism, vendor management, procurement transactions, contract management and procurement system. • Sustainability and environment processes, particularly enterprise risk management, strategic risk management and business continuity management. • Recurrent related party transactions review with a view of advising the Audit Committee on the Group’s compliance to the Related Party Transactions and Recurrent Related Party Transactions Policy. At the business operational level including overseas operation, the key audit scopes were in the areas of sales and receivables management, procurement, asset and inventory management, production or service delivery, crude palm oil trading, bulking and transport operation, travel and tour management, security operation and information technology. For our main business cluster, i.e. palm upstream, the key audit scope was on harvesting and transportation of Fresh Fruit Bunch (FFB), purchasing of FFB from third parties, fertiliser management and workforce management. Consulting GIA plays an active role in advising the Group on various matters. In 2017, this was through the following platform : • Information Technology (IT) Project Steering Committee and Working Committee meetings to provide guidance on IT project management and system development or implementation processes (i.e. HRMS, E-Rangkaian Maklumat Ladang (eRML), Master Data Governance (MDG) and GRC SAP Access Control). • Participation in policy development in working groups and reviewed draft documents. The focus of GIA’s feedback on the documents was from the aspect of compliance with any regulatory requirements, incorporating practical best practices, enhancing governance and risk management. During the financial year 2017, GIA provided feedback on policies developed in the areas of board governance and terms of references, management reporting processes and integrated reporting. • Provided awareness training to participants of FGV’s Senior Leadership Program on governance, risk and control (GRC) standards, concepts and GIA’s role on GRC. Investigation GIA has undertaken investigative audits based on the request and information from management, Board and Audit Committee. The outcome of the investigations have been reported to the Audit Committee and the Board. The recommendations and resolutions arising from the investigation reports tabled have been communicated to management for the necessary implementation. During the year, GIA has undertaken several investigations and special review work. The special reviews identified improvements in the following areas: • Sugar trading. • The Group’s investments processes. • The crude palm oil and subsidiaries business model. • Inventory management. • The Group’s Credit Policy. PERFORMANCE REVIEW During the financial year, the Board evaluated the Audit Committee's performance and extent to which the Audit Committee has met the requirements of its Term of Reference, including the term of office and performance of the Audit Committee and each of its members. This performance assessment constituted part of the annual Board effectiveness assessment, pertaining to the assessment of Board Committees. This Report is made in accordance with a resolution of the Board of Directors and approved at the Board Meeting dated 28 March 2018.