Megachem Limited Annual Report 2015 53 9.6 The remunerations of the executive directors are linked directly to the Group’s financial performance through a profit sharing formula. ACCOUNTABILITY AND AUDIT Principle 10 The Board should present a balanced and understandable assessment of the Company’s performance, position and prospects. 10.1 In presenting the annual financial statements and announcements of financial results to shareholders, it is the aim of the Board to provide shareholders with a balanced and understandable assessment of the Company’s and Group’s performance, position and prospects. 10.2 The Board keeps itself abreast and is kept informed by management of legislative and regulatory requirements. It is also guided by the Company’s Catalist sponsor of any regulatory changes in the Listing Manual of the Singapore Exchange Securities Trading Limited Section B: Rules of Catalist (“Catalist Rules”). 10.3 The management currently provides the Board with appropriately detailed management reports of the Group’s performance and position on a quarterly basis. RISK MANAGEMENT AND INTERNAL CONTROLS Principle 11 The Board is responsible for the governance of risk. The Board should ensure that management maintains a sound system of risk management and internal controls to safeguard shareholders’ interests and the Company’s assets, and should determine the nature and extent of the significant risks which the Board is willing to take in achieving its strategic objectives. 11.1 The Board oversees management in the area of risk management and internal control system. The Board regularly reviews and improves the Company’s business and operational activities to identify areas of significant risks as well as take appropriate measures to control and mitigate these risks. 11.2 Management provides reports of risk management to the Board on a quarterly basis. The Company’s risk management framework and internal control system covers financial, operational, compliance and information technology risks and internal controls. Internal audit is outsourced to a third party professional firm. The Audit Committee evaluates the findings of the external and internal auditors on the Group’s internal controls annually. 11.3 The Group’s internal controls are designed to provide reasonable assurance with regard to the keeping of proper accounting records, integrity and reliability of financial information, and physical safeguard of assets. Management takes into consideration the risks which the Group is exposed, the likelihood of occurrence and the cost of prevention while designing internal controls. Based on reports submitted by the external and internal auditors, and the system of internal controls, including financial, operational, compliance and information technology controls, and risk management systems maintained by the management that was in place throughout the financial year and up to the date of this report, the Board, with the concurrence of the Audit Committee and the assurance of the management (including the Managing Director and CFO), is of the opinion that (a) the financial records have been properly maintained and the financial statements give a true and fair view of the Company’s operations and finances and (b) the Group’s system of internal controls, including financial, operational, compliance and information technology controls, and risk management systems are adequate and effective as at the date of this report. However, the Board and management acknowledge that no system can provide absolute assurance against the occurrence of material errors, poor judgement in decision-making, human errors, losses, fraud or other irregularities.
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