FRENCKEN GROUP LIMITED
ANNUAL REPORT 2014
30
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.
The Company regularly reviews and improves its business and operational activities to identify areas of significant business
risks as well as take appropriate measures to control and mitigate these risks. The Company reviews all significant control
policies and procedures and highlights all significant matters to the Audit Committee and Board.
The Board has received assurance from the President and Chief Financial Officer that:
(a) The financial records of the Group have been properly maintained and the financial statements for the year ended
31 December 2014 give true and fair view of the Group’s operations and finances; and
(b) The system of risk management and internal controls in place within the Group is adequate and effective in addressing
the material risks in the group in its current business environment including material financial, operational, compliance
and information technology risks.
The Audit Committee and Board are in the opinion that the Group’s internal controls, maintained by the Company’s
management that was in place throughout the financial year and up to the date of this report provides reasonable, but
not absolute, assurance against material financial misstatements or losses, and includes the safeguarding of assets, the
maintenance of proper accounting records, the reliability of financial information, compliance with appropriate legislation,
regulations and best practices, and the identification and containment of financial, operational and compliance risks.
The Board notes that all internal control systems contain inherent limitations and no system of internal controls could
provide absolute assurance against the occurrence of material errors, poor judgment in decision making, human error
losses, fraud or other irregularities.
Based on the internal controls established and maintained by the Group, work performed by the internal and external
auditors, and reviews performed by Management and the Audit Committee, pursuant to Listing Rule 1207 (10), the
Board, with concurrence of the Audit Committee, is of the opinion that the Group’s internal controls addressing financial,
operational and compliance risks were adequate as at 31 December 2014.
In line with Listing Rule 1207 (19) on Dealings in Securities, the Group issues a quarterly letter to its Directors, officers and
employees prohibiting dealings in listed securities of the Company from two (2) weeks or one (1) month, as the case may
be, before the announcement of the Company’s first three (3) quarters and annual financial results, and at any time they
are in possession of unpublished material price sensitive information. Directors and officers are also directed to refrain from
dealing in securities on short-term considerations.
Directors and officers are expected to observe the insider trading laws at all times even when dealing in securities within
permitted trading period.
AUDIT COMMITTEE
Principle 12 The Board should establish an Audit Committee (“AC”) with written terms of reference which
clearly set out its authority and duties.
The role of the Audit Committee is to assist the Board with regard to the discharge of its responsibility to safeguard the
Group’s assets, maintain adequate accounting records, develop and maintain effective systems of internal controls with
an overall objective to ensure that the management has created and maintained an effective control environment in the
Company.
CORPORATE GOVERNANCE STATEMENT
(CONT’D)
