10. Internal Control

The Board of Directors appointed the Audit Committee to firstly oversee
the Group’s financial reports to comply with appropriate accounting
standards, the regulations of the Stock Exchange of Thailand, other
related laws, Good Corporate Governance, and business ethics. Secondly,
the Committee assesses risk management and internal control to ensure
its efficiency. Thirdly, it supervises auditing systems to meet good
auditing standards. Fourthly, it selects and appoints the external
auditors. Fifthly, the Committee engages in any assignments given by the
Board. The Audit Committee assigned the Audit Office, a unit in The Siam
Cement Public Company Limited, to do the audit and directly report the
result quarterly to the Audit Committee for consideration and
evaluation. The Audit Committee then quarterly reports to the Board.

In 2003, The Audit Committee had an opinion that the company had
conformed to account standards of the Institute of Certified Accountants
and Auditors of Thailand and the announcements of the Stock Exchange of
Thailand in quarterly and annual reports for 2003. Material irrelevancy
in good corporate governance implementation did not exist. The internal
control was deemed proper for business nature and no material weakness
was found, aligned with the external auditor’s report (Details in the
Auditor Committee’s report page 93-94).

Audit Committee’s Report for 2003

In 2003, the Audit Committee carried out its commitment to the company’s
Board of Directors, which includes performing review functions in
compliance with the charter of the Audit Committee, as well as according
to principles of corporate governance and the Siam Cement Group (SCG)
codes of ethics. The main duties performed by the Audit Committee can be
summarized as follows:

1. Developing audit system and charter of the Audit Committee

Broadened the scope of the Audit Committee’s responsibilities to boost
efficiency, productivity, and consistency with international standards
by introducing better safeguards, better auditing practices, improved
procedures, and regular reporting of changes to the Stock Exchange of
Thailand (SET).

  2. Monitoring and control SCG operation in compliance with the
  principle of corporate governance

Upgraded Group operating practices to better conform with good
governance principles by publishing a handbook that included three
sections: Structure of the Board of Directors; the Role and
Responsibilities of the Board of Directors; and Duties of the Board of
Directors. In addition, the Committee assessed how well the Group was
applying the 15 best practices established by the SET and determined
significant improvements had been made over prior years, as detailed
elsewhere in the annual report.

3. Quarterly and annual financial statements review

  Reviewed quarterly and annual financial statements of the Company and
  consolidated financial statements of the Company and subsidiaries to
  ensure conformity with accounting laws and the regulations of the
  Office of the Securities and Exchange Commission (SEC) and SET, as
  well as appropriate disclosure and timeliness. Moreover, the Company
  can also propose unaudited financial statements at the end of each
  month after quarterly closing the book of accounts sooner than the
  period specified by SET. There were no significant changes made after
  the auditors’ review.

4. Risk management review

  Reviewed risk management for each business and found all followed
  established procedures systematically, a critical feature in annual
  and medium-term planning. The quarterly assessments identified key
  risk factors, weighed those risks, estimated the impacts, and made
  recommendations for their management. Each business demonstrated an
  ability to manage risks effectively and there was no evidence of risk
  damage.

5. Internal controls review

Improved the efficiency of the internal control system to better
synchronize it with changing economic conditions. The auditor assessed
the performance of the internal control system on a quarterly and annual
basis and found no problems or issues. Each business is responsible for
performing their own assessment of their internal control system by
doing an analysis; developing a plan for enhancing performance; then,
tracking the results.

6. Internal audit review

Reviewed implementation of approved quarterly internal audit plans to
ensure they followed the Group plan and made recommendations for
improvements in effectiveness, such as ensuring conformity with law and
regulations; eliminating corrupt practices; boosting efficiency and
productivity; analyzing and identifying persistent problems to eliminate
them before they become big problems; and auditing their internal audit
information systems. Each section produces an audit report with details
of the problems found; observations by the auditor; and recommendations
on how to fix the problems within what timeline to ensure prompt follow
up and the desired results. To support this process, the internal audit
office organized a seminar for representatives of the various businesses
to ensure they understand what problems can arise and how to handle
them.

Furthermore, the Audit Committee has proposed the Shareholders Meeting
to appoint Mr. Vichien Thamtrakul or Mr. Winid Silamongkol of KPMG
Phoomchai Audit Ltd. as Group auditors.

On behalf of the Audit Committee

Air Vice Marshal Kamthon Sindhvananda

Chairman of the Audit Committee