Corporate Governance laundering, counter financing of terrorism and information technology (“IT”) controls. The Board also decides on the risk tolerance limits and other associated risk parameters and determines the nature and extent of the significant risks that the Board is willing to assume in achieving the Group’s strategic objectives and value creation. The Group understands that its business environment presents opportunities that require preparation and planning in order for these opportunities to be seized, as well as uncertainties that need to be actively managed. Management, responsible for implementing day-to-day management of risks in the Group, reports to the Board on the key risks and provides updates on the risk management activities of the business. The Board regularly reviews the key risk indicators and discusses the status of risk exposure and risk management action plans. The Board is satisfied that the Group’s risk management system continues to be adequate and effective. Internal Controls Supporting the risk management strategy is a system of internal controls comprising Group-wide governance and internal control policies, procedures and guidelines which cover financial, operational, antimoney laundering, counter financing of terrorism, IT and regulatory compliance matters. Such internal control mechanisms include segregation of duties, approval authorities and limits, and checks and balances embedded in business processes. The implementation of the Whistleblowing Policy, Code of Conduct and Code of Ethics also helps to establish a clear tone from Management with regard to employees’ business and ethical conduct. This system of internal controls is regularly reviewed for continuous improvement and strengthening. Internal and external auditors conduct audits that involve testing the adequacy and effectiveness of material internal controls. Such audits provide an independent assessment and assurance of the reliability, adequacy and effectiveness of the Group’s system of internal controls, risk management procedures, governance framework and processes. Any material non-compliance or lapses in internal controls, together with corrective measures recommended by internal and external auditors, are reported to the Board. The adequacy, timeliness and effectiveness of the measures taken by Management in response to the recommendations made by the internal and external auditors are also reviewed by the Board. The results of these audits serve to provide the basis for analysis of the adequacy of the Group’s internal controls. Duties of the Board The Board also ensures relevancy and compliance with good corporate governance and best practices. In particular, the Board: • reviews significant financial reporting issues and key areas of management judgment so as to ensure the integrity of the financial statements of the Group; • reviews, at least annually, the adequacy and effectiveness of the Group’s internal controls, including financial and accounting, operational and compliance; • reviews the effectiveness, independence and adequacy of the internal audit function, the scope and results of the audit reviews, the annual internal audit plan (the “IA Plan”) and the internal audit reports, including the adequacy of internal audit resources and its appropriate standing within the Group; • oversees the implementation of the improvements required on internal control weaknesses identified and ensures that Management provides the necessary cooperation to enable the internal auditors to perform their function; • reviews the scope and results of the external audit, the audit reports and the independence and objectivity of the external auditors taking into consideration the requirements under the Accountants Act 2004 of Singapore, including but not limited to, the aggregate and respective fees paid for audit and non-audit services and the cooperation extended by Management to allow effective audits; • considers and approves the appointment, re-appointment and removal of external and internal auditors, and approves the remuneration and terms of engagement of the external and internal auditors; • monitors the Group’s compliance with laws and regulations, particularly those of the Companies Act; • reviews the Whistleblowing Policy and arrangements put in place by which staff and external parties may, in confidence, raise probable improprieties in matters of financial reporting or other matters, with the objective that arrangements are in place for the independent investigation of such matters and for appropriate follow up actions; • oversees the procedures established to regulate interested person transactions; • reviews and approves, where relevant, material matters, findings, and recommendations; and • deliberates on and approves resolutions relating to conflicts of interest situations involving the Group and its vendors. The Board has separate and independent access to the Company Secretary, Management, and reasonable resources to enable it to discharge its functions properly, as well as the explicit authority to investigate any matter within its terms of reference. Management is required to provide the fullest co-operation in furnishing information and resources in carrying out all requests made by the Board. The Board also has separate and independent access to internal and external auditors, as well as the discretion to invite any executive officer to attend its meetings. Both the internal auditors and external auditors are also given unrestricted access to the Board. The Board is also authorised to engage any firm of accountants, lawyers, or other external independent professionals as it sees fit to provide independent advice to assist in the review or investigation of such matters within its terms of reference as it deems appropriate, at the expense of the Group. Changes to accounting standards and issues which have a direct impact on financial statements are updated by Management during Board meetings. Key Audit Matters In the review of the financial statements, the Board will discuss with Management, the accounting policies that are adopted and applied. The Board will also consider the judgments and estimates made by Management that might affect the integrity of the financial statements. Where the external auditors, in their audit of the Group’s year-end financial statements, raise any significant issues (for example, significant adjustments) which have a material impact, Management will bring this to the Board’s attention immediately. 136 PERENNIAL HOLDINGS PRIVATE LIMITED
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