Fraud Reporting Policy Manual

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1. INTRODUCTION                                                                                                 

This Policy Manual is designed to assist the Board of Directors and top management of Engtex Group Berhad in handling fraud within the organization.


2. OBJECTIVES                                                                                                      

2.1 This Policy Manual seeks to enable Group wide consistency in handling and the reporting of fraud.
2.2 This Policy Manual shall provide a reporting framework in order for detected fraud cases to be efficiently and effectively communicated to the top management, the Risk Management Committee, the Audit Committee, the Board of Directors and the External Auditors. This shall also serve as an assurance to the Board of Directors that it will be duly notified of all detected fraud cases.

 
3. SCOPE                                                                                                                 

3.1 This Policy Manual shall apply to all level of personnel of Engtex Group Berhad and its subsidiaries.
3.2 Actions constituting fraud include but not limited to:
  Misappropriation of financial and non financial assets;
 
  • Forgery or unauthorized alteration to cheques and other paying instruments;
  • Disclosing confidential information to outsiders;
  • Undisclosed receipts of benefits from vendors of the Group or its subsidiaries.
  • Other inappropriate conducts resulting in gaining benefits at the expense of the Group or its subsidiaries.


 4. POLICIES

4.1 Fraud Committee 
  4.1.1 A Fraud Committee shall be formed to monitor the development and progress of the handling of reported fraud cases affecting the Group.
  4.1.2 The members of the Fraud Committee principally include the Personal Assistant to Group Managing Director, Heads of Group Finance, Head of Group Human Resource and Head of Internal Audit. Other personnel may be considered where necessary and appropriate. The Group Managing Director shall be the Chairman of the Fraud Committee.
  4.1.3 The Fraud Committee reports directly to the Group Managing Director.
     
4.2 Reporting Procedures
  4.2.1 An employee who discovers or suspects that a fraud has occurred, he/she must report/notify their respective unit Finance Manager and General Manager (or Unit Management) immediately, and followed up within 24 hours with a written report by the Finance Manager addressed to the Fraud Committee in Head Office.
  4.2.2 The written report should cover the following:-
  • The amount/ value, if established;
  • The period over which irregularity occurred, if known;
  • The date of discovery and how the suspected fraud was discovered;
  • The type of irregularity and what led to it, i.e., was there a breakdown in the system of internal control, or is there any inherent weakness in the system of internal control which allowed it to occur;
  • Whether the person responsible has been identified;
  • Whether any collusion with others is suspected and;
  • Any other information or comments which might be useful.
  4.2.3 The Fraud Committee may instruct the Unit Management to carry out their own investigation or notify the Internal Audit Department to coordinates all investigation with other affected areas both internal and external.
  4.2.4 In the event that investigation reveals that fraud had been committed and parties involved are identified, investigation team shall report its finding and action plan to the Fraud Committee. Group Human Resources Department shall advise on disciplinary actions against parties involved and whether to make a Police Report. Unit Management then executes the decisions.
  4.2.5 The Fraud Committee shall report to the Board of Directors on the fraud occurrence within 24 hours from receiving the investigation report.
  4.2.6 The Fraud Committee shall report to the External Auditors within 14 days from the date of informing the Board of Directors.
  4.2.7 The Internal Audit Department shall review the internal control weaknesses and advise the Unit Management and the Audit Committee on the corrective actions.
     
4.3 Termination
  4.3.1 In order to protect the company from further loss and destruction of evidence, it may be necessary to suspend or terminate the employee concerned immediately after the allegation has been made or; if an investigation results in a recommendation to termination.
  4.3.2 Specific advice should be sought from Group Human Resources Department and the Corporate & Legal Department and, if necessary, by external professional legal advice before proceed to suspension or termination of the employee concerned.
     
4.4 Fraud Register
  4.4.1

The Internal Auditor shall ensure that the Group Fraud Register, which is maintained by the Group Managing Director Office, will be used as a basis for reporting incidents of suspected or actual fraud and outcomes of investigation undertaken into suspected fraud, including the value of any loss to the Company

     
5. AMINISTRATION
The Internal Audit Department is responsible for the administration, revision, interpretation, and application of this policy. The policy will be reviewed and revised as needed.