CORPORATE GOVERNANCE STATEMENT
YEAR ENDED 31 DECEMBER 2015
(x)
monitoring the independence of risk management functions throughout the organisation;
(y)
reviewing promptly all relevant risk reports on the Company; and
(z)
reviewing and monitoring Management’s responsiveness to the findings.
To enable the Audit and Risk Management Committee to discharge its functions more effectively, the Company outsourced its internal
audit function to Deloitte & Touche Enterprise Risk Services Pte Ltd, a reputable international accounting firm which is not the external
auditor. The internal audit function reported to the Audit and Risk Management Committee. The Audit and Risk Management Committee
reviewed and approved the internal audit plan for execution. During FY2015, the Audit and Risk Management Committee met with the
internal auditors and external auditors, in each case without the presence of management.
The Board acknowledges that it is responsible for the overall internal control framework, but recognises that no cost effective internal
control system will preclude all errors and irregularities, as the system is designed to manage rather than eliminate the risk of failure to
achieve business objectives, and can provide only reasonable and not absolute assurance against material misstatement or loss. The
Directors regularly review the effectiveness of all internal controls, including operational controls.
The Board recognises the importance of maintaining a sound system of internal controls to safeguard the shareholders’ investments
and assets of the Company and the Group. The Audit and Risk Management Committee has been assigned to oversee and review the
effectiveness of these controls at least annually.
In FY2015, the Group with the assistance of its internal auditors carried out an exercise to review the Group’s risk register which identified
the key risks facing the Group and the internal controls in place to manage or mitigate those risks. Internal auditors conducted audits
that involve testing the effectiveness of the material internal control systems in the Group. Any material non-compliance or lapses in
internal controls together with corrective measures recommended by internal auditors were reported to the Audit and Risk Management
Committee. The Audit and Risk Management Committee also reviewed the effectiveness of the measures taken by management in
response to the recommendations made by the internal auditors. The system of internal control and risk management is continually being
refined by management, the Audit and Risk Management Committee and the Board.
The Audit and Risk Management Committee reviewed the volume of non-audit services to the Company and the Group by the Company’s
external auditors and was satisfied that the nature and extent of such services would not prejudice the independence and objectivity
of the external auditors. Hence, the Audit and Risk Management Committee has recommended to the Board that the auditors, KPMG
LLP, be nominated for re-appointment as the Company’s external auditors at the forthcoming annual general meeting of the Company.
The Board and the Audit and Risk Management Committee reviewed the appointment of different auditors for its subsidiaries and
significant associates and were satisfied that the appointment of different auditors would not compromise the standard and effectiveness
of the audit of the Group. Accordingly, the Company has complied with Rule 716 of the Listing Manual of the SGX-ST.
The audit and non-audit fees paid/payable to auditors are stated in Note 23 (Profit Before Tax) to the Financial Statements.
Based on the work carried out by the internal auditors, the external auditors and the existing management controls in place, the Audit
and Risk Management Committee and the Board were satisfied that there were adequate and effective internal controls in place to
mitigate critical and significant risks relating to financial, operational and compliance matters, information technology controls, and risk
management systems. The Board, together with the Audit and Risk Management Committee and management, will continue to enhance
and improve the existing internal control framework to identify and mitigate these risks.
The Board has also received assurance from the Joint Managing Directors and the Vice President (Accounts and Finance) that the
financial records have been properly maintained and the financial statements give a true and fair view of the operations and finances of
the Group and those subsidiary companies or subsidiary corporations whose financial statements are consolidated with the Company’s
financial statements, and regarding the effectiveness of the Group’s risk management and internal control systems.
HONG FOK CORPORATION LIMITED
19
ANNUAL REPORT 2015
