Financial Reporting
The Board is aware of its responsibilities to shareholders and the requirement to present a balanced and comprehensive assessment of the Group's financial position and prospects. In this regard, the Directors are responsible for the preparation of financial statements that give a true and fair view of the state of affairs of the Group at the end of the financial year. The Statement of Directors' responsibility for preparing the financial statements is set out on page 54 of this Annual Report.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Group to enable them to ensure that the financial statements comply with the Companies Act, 1965 and approved Accounting Standards in Malaysia. The Directors are also responsible for safeguarding the assets of the Group and for taking reasonable steps for prevention and detection of fraud and other irregularities.

Audit and Risk Management Committee
The details are shown in the accompanying report of the Audit and Risk Management Committee on pages 39 to 41.

Internal audit
The Group's internal audit function is performed in-house by the CCM Group Internal Audit Division that reports direct to the Audit and Risk Management Committee.

The Audit and Risk Management Committee reviews and approves the audit plan which identifies the scope of work for the year.

Internal Control
The Statement on Internal Control on page 47 of the Annual report describes the structure and process of risk management in the Group.

Risk management
The Group's risk management function is performed by the Group Risk Management Department which is separate from the Group Internal Audit Division. The Department reports direct to the Audit and Risk Management Committee. The report on Risk Management on pages 44 to 46 of the Annual Report describes the structure and process of risk management in the Group.

Whistle-Blowing Policy
As part of best practices in good corporate governance, the Group has adopted CCM Group's "Whistle-Blowing" policy.

This policy is to encourage employees to report any major concerns over any wrongdoing within the Group relating to unlawful conducts, financial malpractices or dangers to the public or the environment. In this respect, the policy makes it clear that any such concern can be raised without fear of victimisation, recrimination, discrimination or disadvantage to the employee reporting the concern. It provides a formal channel to encourage and enable employees to report serious concerns so that such concerns can be properly addressed.

Statement on Internal Control
The Directors are fully aware of the responsibilities to maintain a sound system of internal control to safeguard shareholders' investment and the Group's assets. The Directors' responsibilities for the Group's system of internal control cover not only financial aspects of the business but also operational and compliance

The function of the Internal Audit Division on the systems of internal control is to assist the Audit and Risk Management

• Perform regular review on compliance of operational procedures using risk based audit approach;
• Conduct investigations on specific areas or issues as directed by Audit and Risk Management Committee and the Management;
• Evaluate the risk management processes.

The Statement on Internal Control which is presented on page 47 of the Annual Report is to provide an overview of the statement of internal control within the Company.

Relationship with the Auditors
The Group has established and maintained a professional and transparent relationship with the Group's external auditors, Messr KPMG in seeking professional advice and ensuring compliance with the accounting standards in Malaysia as well as meeting the auditors professional requirements. The external auditors, Messrs KPMG has continued to report to the shareholders of the Group on its opinion which is included as part of the Group's financial reports with respect to their audit on each year's statutory financial statements. The auditors also highlight to the Audit and Risk Management Committee and the Board on matters that require the Board's attention. Two (2) meetings were held between the External Auditors and the Audit and Risk Management Committee without the presence of the management during the financial year under review.

Directors' Responsibilities in Relation to the Preparation of the Audited Financial Statements
The Directors are required by the Companies Act, 1965 to prepare financial statements which are in accordance with applicable approved accounting standards and give a true and fair view of the state of affairs of the Group at the end of the financial period and of the results and cash flows of the Group for the financial period.

In preparing the financial statements, the Directors have:

• Adopted suitable accounting policies and applied them consistently;
• Made judgements and estimates that are prudent and reasonable;
• Ensured that applicable accounting standards have been followed; and
• Prepared the financial statements on going concern basis.

The Directors have prepared the annual financial statements in compliance with the Companies Act, 1965.