FGV Annual Report 2018

REINFORCED OUR STANDARDS OF GOVERNANCE 01 02 05 03 07 06 04 08 09 83 ANNUAL INTEGRATED REPORT 2018 GOVERNANCE AT FGV: ACCOUNTABILITY AUDIT COMMITTEE REPORT 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. Internal Audit Reporting All Group Internal Audit Reports are issued directly to the Audit Committee with copies to the relevant management for their action. On a quarterly basis, the Audit Committee is presented with the progress reporting of the audit findings, recommendations and management’s corrective action implementation. Any concerns raised by the Audit Committee are to be addressed by Group Internal Audit. The Audit Committee follows through any unresolved matters as part of the agenda in the next meeting. Objectivity and Independence of Group Internal Audit The Chief Internal Auditor states 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 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 GROUP INTERNAL AUDIT IN 2018 Assurance The assurance work during the year 2018 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 riskmanagement practices and culture. • Finance and treasury management processes, particularly cash flow management, money market investments, budgeting and reporting. • The human resources processes, particularly on succession and manpower planning. • Sustainability 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, CPO trading, bulking and transport operation, travel and tour management, security operation and Information Technology (IT). For our main Business Cluster, i.e. palm upstream, the key audit scope was on harvesting and transportation of Fresh Fruit Bunches (FFB), purchasing of FFB from third parties, fertiliser management and workforce management. Consulting Group Internal Audit plays an active role in advising the Group on various matters. In 2018, this was through the following platform: • IT Project Steering Committee and Working Committee meetings to provide guidance on IT project management and system development or implementation processes. • Participation in policy development in working groups and reviewed draft documents. The focus of Group Internal Audit’s feedback on the documents was from the aspect of compliance with any regulatory requirements, incorporating practical best practices, enhancing governance and risk management. Investigation Group Internal Audit 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 fromthe investigation reports tabled have been communicated to Management for the necessary implementation. During the year, Group Internal Audit has undertaken several investigations and special review work. The special reviews identified improvements in the following areas: • Credit Control Policy and receivables management. • Procurement management. • Investments processes. • IT data management. PERFORMANCE REVIEW During the financial year, the Board evaluated the Audit Committee’s performance andextent towhich theAudit Committee has met the requirements of its Terms 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 27 March 2019.