The Finance Committee, in its Report on Corporate Governance issued in February 1999, had recommended that public listed companies report on the state of their internal controls. This recommendation is also in line with the principle of corporate governance contained in the Malaysian Code on Corporate Governance which states that a company should "maintain a sound system of internal controls to safeguard shareholders' investment and the company's assets".
In giving effect to this recommendation, KLSE has proposed amendments to the Listing Requirements requiring the board of directors of public listed companies to report on the state of internal controls through the companies' annual reports. In announcing the establishment of the taskforce, the Executive Chairman of the KLSE, Dato' Mohd Azlan Hashim said, "This is the latest measure implemented by KLSE in its ongoing commitment to enhance corporate disclosure and corporate governance by public listed companies.
The proposed requirement is aimed at encouraging public listed companies to address the issue of risks, both operational and financial, as well as the control of such risks". Mohd Azlan added that this new requirement for greater transparency by public listed companies will lead to enhanced corporate governance and create a more attractive and secure environment for investors.
The primary role of the taskforce will be to clarify for public listed companies, their obligations when reporting on their state of internal controls. This is to ensure that the statements made are meaningful and provide adequate information to investors for informed investments, an increasingly important consideration in the present era of greater shareholder activism.
The Taskforce on Internal Controls will be chaired by En Abdul Samad Haji Alias who is the President of the Malaysian Association of Certified Public Accountants. Other members of the taskforce are:
Dato' Johan Raslan, Executive Director, PricewaterhouseCoopers; Ms Gloria Goh, Partner, Messrs Arthur Andersen & Co; Dr R Thillainathan, Director of Finance, Genting Berhad; Mr Geoffrey Wong Joon Hian, Managing Director, United Merchant Group Berhad; Mr Foo Marn Hing, Finance Director, DMIB Berhad;Pn Fatimah bt Abu Bakar, General Manager, Internal Audit, Pengurusan Danaharta Nasional Bhd; Tn Hj Azhari b Hj Mohamed, Internal Audit Consultant and North Pacific District Director of the IIA Inc.; Mr Sreesanthan Eliathamby, Partner, Messrs Zain & Co.
The Institute of Internal Auditors Malaysia will act as the secretariat for the taskforce. The terms of reference of the taskforce includes: defining the requirements for the maintenance of a sound system of internal controls to safeguard shareholders' investment and the company's assets, clarifying the manner of reporting on the state of internal controls, and clarifying the role of external auditors in reviewing the statements made by the public listed companies.
The taskforce is expected to issue the guidance within six (6) months from the date of its first meeting.
