9. Internal Control

The Board of Directors of IVL has assigned Audit Committee of IVL to
supervise the financial reporting process of the Company and its
subsidiaries in accordance with generally accepted and consistently
applied accounting standards and in line with the rules and regulations
of the Stock Exchange of Thailand as well as concerned legislations. The
responsibilities of Audit Committee also includes reviewing the company
performance in compliance with corporate governance principles,
maintaining suitable, effective, and well-recognized internal control
and audit systems, selection and recommendation of external auditors,
and any other tasks as designated by the Board of Directors.

The company has in house Internal Audit reporting directly to the Audit
Committee. The Internal Department is responsible for reviewing the
adequacy of internal control systems for IVL and its all subsidiaries.
Internal Audit department reports its findings and recommendations to
the Management and the Audit Committee. Audit Committee periodically
reviews the audit finding with the Internal Audit Department. The Audit
Committee together with Internal Audit Department ensures that
recommendations for improvement of Internal Controls are implemented by
the respective entities. The Internal Audit Department carries out the
Internal Control reviews various business procedure of IVL and all
subsidiaries including overseas subsidiaries. The objective of internal
control assessment is to ensure that our internal control is sufficient
to improve the effectiveness of our company’s performance.

The Board of Directors of the Company in the Meeting No. 1/2012 held on
21 February 2012 which was attended by all members of the Audit
Committee, after considering the recommendation of the Audit Committee,
has evaluated the opinion for the internal control system of the Company
and its subsidiaries for the year 2011. Below is a summary on the
Sufficiency of Internal Control Systems of the Company and its
subsidiaries:

Control Environment

The Company has set its vision and mission statements and informed all
employees. This forms the basis of employee goals and objectives at all
the operating units. IVL encourages teamwork and firmly believes in team
performance and rewards rather than individual incentives. The company
has a well-structured organization structure in place which indicates
the individual’s responsibility for key businesses and other functions.
There exist financial authority manual approved by the Board of
Directors for IVL and its subsidiaries to ensure that adequate controls
and checks are exercised by the management to operate efficiently & to
mitigate the risk of frauds or misappropriations. The company has
prepared detailed Code of conduct for its Directors, executives and
employees. IVL along with its operating units strongly believes in
carrying out all its dealings with various stakeholders in the most
ethical and honest way so as to forge a long- term relationship.

Risk Assessment

The major subsidiary of IVL, Indorama Polymers and its subsidiaries have
a Risk Management Committee and related sub committees covering all
major functions who regularly identify the internal and external risks
that may adversely affect the business of the company. The Sub
Committees meet periodically and send in their report to the Risk
Management Committee. The ERM activities have also been implemented for
the PTA businesses. Risk Management Committee’s regularly review the
underlying factors that may cause the risk are identified and analysed
periodically so as to adopt adequate preventive measures/ controls. The
Company has developed and put into place an Enterprise Risk Management
(ERM) model which identifies events, evaluates risk assessment, develops
mitigations and control measures and monitors the progress. The Risk
Management Committee and its sub Committees are responsible for this
model. The ERM committee submits its report to the Board every six
months.

Control Activities

IVL and all its subsidiaries have a financial authority manual which
clearly states the authorization limits of the executives. There is an
adequate segregation of duties in respect of authorization, accounting
and asset keeping at all its units. The organization structure of the
company clearly follows the segregation of duties as required by SEC
laws. All subsidiary Companies of IVL have common directors who
regularly monitor the operations of the subsidiaries and ensure that
they are in line with the overall objectives of IVL. The IVL Board is
briefed regularly on the performance of the subsidiaries. There is an
internal policy on connected and related party transactions which very
clearly stipulates what is a connected transaction, who is a
connected/related party and the procedure to be followed in case the
Company enters into a connected transaction. All connected transactions
have to follow the rules and regulations of the SEC/SET. Every new
connected transaction need to be reviewed by the Audit Committee and
then recommended to the Board for their approval. Every quarter a
statement of all connected transaction is submitted to the Audit
Committee and the Board.

It is the policy of the company to strictly abide by all laws and
procedures in force.

Information and Communication

The Company/ management ensure adequate and sufficient information is
provided to the Board for their review and consideration. The accounting
systems consistently followed by all the units is in line with GAAP of
that country and no attempt whatsoever is made to deviate from it. The
same is monitored by the auditors of the company and quarterly updated
to the Audit Committee and Board. All the subsidiaries of IVL have
detailed organisation structure in place. Job profiles explaining
clearly the roles and responsibilities are made available to the
individuals in order to do their jobs more effectively and efficiently.
There is regular communication with the employees for any development
within the Company.

Monitoring

The Company goals are reviewed by Board of Directors periodically in
their quarterly meetings by comparing budgeted and actual performance.
The Company has the Internal Audit Department which has the
responsibility to test and audit the internal control of the various
functional departments as per the annual audit plan and submit their
reports to the Audit Committee and management as per the audit plan. The
Internal Audit Department reports the internal control weaknesses,
recommendations for improvement of controls along with the action plan
from management for implementation to the Audit Committee. Regular
follow up for implementation of recommendations is carried out by the
Internal Audit Department and reported to the Audit Committee in the
quarterly meetings.