81 Annual Report 2025 Accountability and Audit Principle 9: Risk Management and Internal Controls The Managers maintain adequate and effective systems of risk management and internal controls (including financial, operational, compliance, information technology (IT) and sanctions-related controls) to safeguard Stapled Securityholders’ interests and CLAS’ assets. The Boards have overall responsibility for the governance of risk and oversee the Managers in the design, implementation and monitoring of the risk management and internal controls systems. The ARC assists the Boards in carrying out the Boards’ responsibility of overseeing the risk management framework and policies for CLAS and ensuring that Management maintains sound systems of risk management and internal controls. Under its terms of reference, the scope of the ARC’s duties and responsibilities includes: (a) making recommendations to the Boards on the Risk Appetite Statement (RAS) for CLAS and CLAS’ risk profile; (b) assessing the adequacy and effectiveness of the risk management and internal controls systems established by the Managers to manage risks; (c) overseeing the formulation, updating and maintenance of an adequate and effective risk management framework, policies and strategies for managing risks that are consistent with CLAS’ risk appetite and reports to the Boards on its decisions on any material matters concerning the aforementioned; (d) making the necessary recommendations to the Boards such that an opinion regarding the adequacy and effectiveness of the risk management and internal controls systems can be made by the Boards in the Annual Report in accordance with the Listing Manual and the Code; and (e) considering and advising on risk matters referred to it by the Boards or Management, including reviewing and reporting to the Boards on any material breaches of CLAS’ RAS, any material non-compliance with the approved framework and policies and the adequacy of any proposed action. The Managers adopt an Enterprise Risk Management (ERM) Framework which sets out the required environmental and organisational components for managing risks in an integrated, systematic and consistent manner. The ERM Framework and related policies are reviewed annually. As part of the ERM Framework, the Managers undertake and perform a Risk and Control Self-Assessment (RCSA) annually to identify material risks along with their mitigating measures. The adequacy and effectiveness of the systems of risk management and internal controls are reviewed at least annually, by Management, the ARC and the Boards, taking into account the best practices and guidance in the Risk Governance Guidance for Listed Boards issued by the Corporate Governance Council and the Listing Manual. CLAS’ RAS, which incorporates CLAS’ limits, addresses the management of material risks faced by CLAS. Alignment of CLAS’ risk profile to CLAS’ RAS is achieved through various communication and monitoring mechanisms (including key risk indicators set for Management) put in place across the various functions within the Managers. More information on the Managers’ ERM Framework including the material risks identified can be found in the Risk Management section on pages 58 to 63 of this Annual Report. The internal and external auditors conduct reviews of the adequacy and effectiveness of the material internal controls (including financial, operational, compliance, IT and sanctions-related controls) and risk management systems. This includes testing, where practicable, material internal controls in areas managed by external service providers. Any material non-compliance or lapses in internal controls together with corrective measures recommended by the internal and external auditors are reported to and reviewed by the ARC. In the course of their statutory audit, the external auditors had considered the risk assessment conducted by the internal auditors. Any material non-compliance and weakness in internal controls, together with the internal auditors’ recommendations to address them, are reported to the ARC. The ARC also reviews the adequacy and effectiveness of the measures taken by the Managers on the recommendations made by the internal and external auditors in this respect. The Boards have received assurance from the CEO and the Chief Financial Officer (CFO) of the Managers that the financial records of CLAS have been properly maintained and the financial statements for FY 2025 give a true and fair view of CLAS’ operations and finances. They have also received assurance from the CEO, the CFO and the relevant KMP who have responsibility regarding various aspects of risk management and internal controls that the systems of risk management and internal controls
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