Page 30 - ar2011

28 kingsmen creatives ltd
Corporate
Governance Report
Internal Controls
Principle 12: The Board should ensure that the Management maintains a sound system of internal controls to safeguard the
shareholders’ investment and the company’s assets.
The Board, with the concurrence of the AC, is of the opinion that the system of internal controls maintained by the Management which was in
place throughout FY2011 and up to the date of this report is adequate to safeguard the shareholders’ investment and the Company’s assets, and
provides reasonable, but not absolute, assurance against material fnancial misstatements and losses, and include the safeguarding of assets, the
maintenance of proper accounting records, the reliability of fnancial information, compliance with appropriate legislation, regulations and best
practices, and identifcation and containment of business risks. The Board notes that no system of internal control could provide absolute assurance
against the occurrence of material errors, poor judgement in decision-making, human error, losses, fraud or other irregularities.
In order to further strengthen the Group’s risk management framework, including internal controls, the Management and the AC are in the process
of working with an independent consulting frm to establish a set of customised procedures providing objective assurance on the effectiveness of
the Group’s risk management (the “Enterprise Risk Management Review”).
The AC has reviewed the Company’s internal fnancial controls, operational and compliance controls, and risk management policies (collectively,
the “Internal Controls ”). Based on the internal auditors’ reports, management controls in place and the Management’s confrmation in this
regard, the AC is satisfed that there are adequate Internal Controls in the Group. The AC will review the effectiveness of the Company’s Internal
Controls at least annually. The Board, with the concurrence of the AC, is satisfed that the Company’s framework of internal controls and risk
management systems are adequate and effective to provide reasonable assurance of achieving its internal control objectives and addressing
fnancial, operational and compliance risks.
Internal Audit
Principle 13: The company should establish an internal audit function that is independent of the activities it audits.
The internal audit function is out-sourced to Nexia TS Public Accounting Corporation, a certifed public accounting frm and an independent
member frm of Nexia International which is associated with Smith & Williamson of the United Kingdom. The internal auditor is a member of the
Institute of Internal Auditors (“IIA”) and the audit performed incorporates the Standards for the Professional Practice of Internal Auditing set by IIA.
The Board recognises that it is responsible for maintaining a system of internal control processes to safeguard shareholders’ investments and the
Group’s business and assets. The effectiveness of the internal control systems and procedures are monitored by the Management. The internal
auditors report primarily to the Chairman of the AC. The internal auditors plan its internal audit schedules in consultation with, but independent
of the Management. The audit plan is submitted to the AC for approval prior to the commencement of the internal audit.
The AC reviews the activities of the internal auditors on a regular basis, including overseeing and monitoring of the implementation of the
improvements required on internal control weaknesses identifed. The AC reviews the adequacy of the internal audit function at least annually.
4. COMMUNICATION WITH SHAREHOLDERS
Principle 14: Companies should engage in regular, effective and fair communication with shareholders.
Principle 15: Companies should encourage greater shareholder participation at AGMs, and allow the shareholders the opportunity
to communicate their views on various matters affecting the company.
The Board is mindful of the obligation to provide regular, effective and fair communication with shareholders. Information is communicated to the
shareholders on a timely basis. The Company does not practise selective disclosure. Price sensitive information is frst publicly released before the
Company meets with any group of investors or analysts. Results and annual reports are announced or issued within the mandatory period and will
also be made available to the public on the Company’s website.
The Board welcomes the views of shareholders on matters affecting the Company, whether at shareholders’ meetings or on an ad-hoc basis.
Shareholders are informed of shareholders’ meetings through notices published in the newspapers and reports or circulars sent to all shareholders.
Each item of special business included in the notices of shareholders’ meetings is accompanied, where appropriate, by an explanation for the
proposed resolution. Separate resolutions are proposed for substantially separate issues at shareholders’ meetings. The Chair persons of the AC,
RC and NC are normally available at the shareholders’ meetings to answer those questions relating to the work of these committees. The external
auditors are also present at the AGM to assist the Directors in addressing any relevant queries by shareholders including queries about the conduct
of audit and the preparation and content of the auditors’ report. The AGM is the principal forum for dialogue with shareholders.
The minutes of general meetings, which include substantial comments or queries from shareholders and responses from the Board, are available
to shareholders upon written request.