Key audit matters How these Issues were addressed by the AC Accounting for construction contracts The AC reviewed the contract revenue recognition using cost-based input method that reflects the over-time transfer of control to its customers. The AC considered Management’s judgements and estimates used in the determination of total construction contract costs and found them to be appropriate. Impairment assessment of investment in associates The AC considered Management’s approach and assumptions in assessing for impairment of its investments in the associates. The AC considered the fair value assessed by independent valuers, the reasonableness of the significant judgements and estimates involved in determining the present value of future cash flows from the associates and the adequacy of the expected credit loss allowance and were satisfied that these were appropriate. Details on the KAMs can be found on pages 54 and 55 of the Annual Report. Internal Audit Function The AC is tasked to oversee the implementation of an effective system of internal controls as well as putting in place a risk management framework to continually identify, evaluate and manage significant business risks of the Group. The AC has the mandate to authorise special reviews or investigations, where appropriate in discharging its responsibilities. The internal audit function of the Group is currently outsourced to RSM SG Risk Advisory Pte Ltd (the “Internal Auditor”), a professional advisory firm providing corporate governance, internal audit, enterprise risk assessment, technology as well as fraud risks and regulatory compliance services. The internal audit team is led by Mr Dennis Lee, a Chartered Accountant of Singapore and Certified Public Accountant of Australia, with extensive internal and risk management experience. All his team members have the relevant qualifications and experience and are members of The Institute of Internal Auditors of Singapore and/or members of relevant professional bodies. Provision 10.4 The Internal Auditor reports directly to the AC and supports the AC in their role to assess the adequacy and effectiveness of the Group’s overall system of operational, financial, technology and compliance related controls and this forms the third line of defense for the AC to discharge its responsibilities. To ensure the adequacy of the internal audit function, the AC reviews and approves the risk based internal audit plan on an annual basis. All IA reports are given to the AC, the key management personnel and the Heads of the relevant business divisions, with a summary report of IA results presented at the AC meeting. The AC was satisfied that recommendations made were dealt with by the Management in a timely and appropriate manner, with outstanding exceptions or recommendations being closely monitored and reported back to the AC. The Internal Audit function is independent of all the areas and activities which are covered under the scope of review and they have unfettered access to all documents and personnel relating to the areas or activities which are covered under the annual internal audit plan. Provision 10.4 The internal audit function operates within the standards consistent with the International Standards for the Professional Practice of Internal Auditing set by the Institute of Internal Auditors (IIA), an international professional association with global headquarters in United States of America. RSM SG Risk Advisory Pte Ltd is a corporate member of the Institute of Internal Auditors Singapore (IIAS), an affiliate of the IIA. Processes are in place to ensure that the professional competence of the IA staff is maintained and upgraded through continuing training and education programmes which comprised technical and non-technical training for the development of the IA staff. During the year, the AC met with the Internal Auditor of the Company, without the presence of Management, to discuss the results of their audit and their evaluation of the Company’s systems of internal controls. Provision 10.5 The AC is satisfied with the quality and effectiveness of the Internal Audit function and that the Internal Audit function is currently adequately resourced and has appropriate independent standing within the Group to perform its functions effectively. 43 ANNUAL REPORT 2024 CORPORATE GOVERNANCE REPORT
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