Internal Control Statement
Pursuant to Paragraph 15.26(b) of the Listing Requirements, the Board of Directors of Yikon Corporation Bhd is pleased to provide the following statement on the state of internal control of the Group. This statement takes into consideration the recommendations of the “Statement on Internal Control: Guidance for Directors of Public Listed Companies (“Internal Control Guidance”), a publication of the Task Force on internal control.”
RESPONSIBILITY FOR RISK AND INTERNAL CONTROL
The Board recognises the importance of a sound system of internal control and a structured risk management framework on good corporate governance. The Board affirms its ultimate responsibilities for the Group’s system of internal control and for reviewing the adequacy and integrity of these systems. The system of internal control includes risk management, financial, organisational, and operational and compliance control. Because of the limitations that are inherent in any system of internal control, these systems are designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable and not absolute assurance against material misstatement or loss.
The Board continues to maintain a sound system of internal control to ensure reasonable assessment and management of risk through internal operating procedures, company guidelines and policies as well as compliance with applicable laws and regulations. This system has been further improved throughout the financial year under review.
The Board and Management are mindful of measures required to identify risks residing in any major proposed transactions, changes in nature of activities and/or operating environment, or venturing into new operating environment. Management is responsible for the identification and evaluation of significant risks applicable to their areas of business with the design and implementation of suitable internal controls.
Adequate risk management processes are in place to ensure structured and consistent approach and methods are practised in the on-going process of identifying, assessing, managing and monitoring the principal risks across the local and overseas operating units. In view of the business risk may be associated with a variety of changing business environments, the management continues to improve the measures which are deployed on appropriate risk response strategies and controls. This is to ensure risk is properly monitored and managed to an acceptable level.
INTERNAL AUDIT FUNCTION
The Board is fully aware of the importance of the internal audit function and has outsourced this function to an independent professional accounting and consulting firm. The internal auditor reports directly to the audit committee. The presence of internal audit function has provided high level of assurance as to the effectiveness of the operation and validity of the Group’s internal control system.
In accordance with the audit plan approved by the Audit Committee, the internal auditors had conducted periodic reviews on the internal control and the effectiveness of the processes that are in place to identify, manage and report risk. The routine reviews are being conducted on the Group’s local as well as overseas major core business units.
Internal audit findings, with recommendations for improvement and Management’s comments were incorporated in the audit reports and circulated to members of the Audit Committee who considered the implementation of action plans to address control deficiencies noted.
In addition, follow up on the implementation of correction action plan of the preceding audit findings was carried out to update the Audit Committee on status of Management-agreed action plan implementation.
Annual Report 2009