Statement on Internal Control

Key Processes of Internal Control

Introduction

The key processes of Internal Control are summarised as follows:

This Statement on Internal Control by the Board of

Directors is made pursuant to Bursa Malaysia Listing

An organisational structure that lays down clear lines of

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responsibility and reporting.

Requirement with regard to the Group's compliance with

Real-time budgetary control, where actual performance is regularly

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the principles and best practices for internal control as

monitored against budgets and variances are investigated.

The Group Procedures and Authorities Manual, which sets out the

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provided in the Malaysian Code of Corporate Governance

operating control procedures pertaining to finance, accounting,

("the Code").

credit control, human resources, procurements and inventory. The

control procedures, inter alia, include setting limits for approving

expenditure and procurements.

The Board of Naim believes in good corporate governance and

The Staff Handbook, which sets out general employment terms and

managing the affairs of the Group in accordance with the Code. In

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the Group's corporate code of ethics.

addition, the Board believes that it is very much the voluntary good

A quality management system requiring the management and staff

behaviour and credibility of the Board which will create a good

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of the Group's principal operating subsidiary, Naim Land Sdn. Bhd.

governance culture for the entire organization and its business partners.

(formerly known as Naim Cendera Sdn. Bhd.) (accredited with ISO

Responsibility

9002 Certification since 2000), to adhere to a set of well-established

standard operating procedures covering all major critical processes.

The Board acknowledges its responsibilities for maintaining a sound

Surveillance audits are conducted yearly to ensure compliance with

system of internal control to safeguard shareholders' investment and

the system.

the Group's assets as well as reviewing the adequacy and integrity of

the system. The internal control system is a process that is put in place

Internal Audit

at all levels of the organization to provide reasonable assurance that

The Group has established a formal structure for its internal audit

the Group's business objectives will be achieved. The system covers

function that clearly defines the roles and responsibilities of the persons

financial controls, operational controls and compliance controls, as

involved in the internal audit. As an integral part of the audit process,

well as risk management. Because of the limitations that are inherent

key areas of importance pertaining to internal control, risk assessment,

in any system of internal control, it is designed to manage, rather

risk mitigation and proper governance processes are identified. Focusing

than eliminate, the risk of failure to achieve corporate objectives.

its review and audit on these key areas, the internal audit provides

Accordingly, it can only provide reasonable but not absolute assurance

independent assurance on the efficiency and effectiveness of the internal

against material misstatement or loss.

control system implemented by management. The internal audit reports

Risk Management Framework

to the audit committee on at least a quarterly basis, and more frequently

where appropriate. The chairman of the audit committee in turn presents

Risk management practices and internal control are embedded in

summaries of the internal audit reports (including management's

the daily operations of the Group, which has established a strategic

responses to audit findings and recommendations) at Board meetings.

enterprise-wide risk management framework. This framework involves

identifying the risk exposure of the Group and developing key risk

This statement is made in accordance with a resolution of the Board of

profiles/corporate risk scorecards, as well as implementing a continuous

Directors dated 28 April 2011.

risk monitoring system. The Risk Management Committee (comprising

representatives from the Board, the management and the internal audit

department) is continuously reviewing, upgrading and improving the

Group's risk management practices.

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