10. Internal Control

The Audit Committee is responsible to ensure that the Company’s audit
policies and regulations are in accordance to the laws, regulations, as
well as international standards. In addition, the committee is
responsible for reviewing the Company’s internal control system,
internal audit system and the risk management system that they are
appropriate, up-to-date, and efficient. This committee is independent
and has an Audit Office reporting direct to it. The Committee is also
responsible for the regular liaising with outside auditors, advisors,
and legal and accounting experts.

The Audit Office is responsible to ensure that the Board of Directors’
guidelines for internal control are followed, through applying the
policy of preventive audit. Other responsibility includes ensuring the
accuracy of the financial reports including the sufficient disclosure of
information. The Audit Office also operates with conscientious efforts
under SCG’s Corporate Governance guidelines, and in accordance to the
international standards.

(Details of Internal Control are on page 101-103)

The Audit Committee’s Report

The Audit Committee carried out its obligations and commitments to the
Company’s Board of Directors according to the Charter of the Audit
Committee, including monitoring the practices of SCG’s Corporate
Governance and Code of Ethics, overseeing financial statements, risk
management, reviewing internal controls system, internal audit, as well
as IT auditing systems. During the fiscal year of 2005, the Audit
Committee convened six meetings, of which details can be summarized as
follows:

1.  Monitoring corporate governance: The Board of Directors had given
    the Governance and Nomination Committee the mandate to ensure good
    corporate governance practices are consistent with the international
    standards and frequently reviewed and continuously modified to suit
    the Group’s business situations. These practices have earned the
    company both domestic and foreign recognition for many successive
    years as stating in the Company’s annual report. In addition, both
    the Board of Directors and the Audit Committee take part in
    assessing their own performance to comply fully with the guidelines
    of the Securities Exchange Commission (SEC), the Stock Exchange of
    Thailand (SET), and other relevant international practices endorsed
    by the Committee including the preparedness of the director,
    performance as per duties and responsibilities of the Remuneration
    Committee, as well as the meetings and its decision. The result was
    reported with great satisfaction.

2.  Quarterly and annual monitoring of the Company’s financial
    statements and the Group’s consolidated financial statements 2005:
    The auditors were invited to meet with the executives and the
    internal audit office to review the financial statements, discuss
    the accounting records, disclose adequate information in the
    financial statements to ensure consistent conformity to the
    accounting standards stipulated in the Accounting Act of 2000 and to
    rules of the SEC and SET. Corrections and suggestions of the
    auditors from at each meeting were accepted and implemented properly
    to ensure that the financial statements were prepared in accordance
    with generally accepted accounting standards. Since 1998, this has
    enabled the company to submit its financial statements ahead of the
    SET’s quarterly and annual financial statements submission deadline.
    When the auditors reviewed the financial statements, they had no
    significant adjustments.

3.  Monitoring risk management: The Committee administered and assessed
    risk management on a quarterly basis in accordance to the
    established polices and principles, and reported risks factors of
    each business group as shown elsewhere in the annual report of 2005.
    Apart from this, for the careful and thorough implementation of risk
    management, the concept of Knowledge Management was complied and
    disseminated to the staff via internal website for further practice
    in all units.

4.  Assessing and developing internal control: The internal control
    system was regularly reviewed and assessed by the internal audit
    office and the auditors. The assessment revealed that the system was
    functioning satisfactorily and no significant weakness was found.
    However, there had been improvements on the effectiveness of the
    internal controls system through the application of computers.
    Computers enabled the company to reduce formalities, time, expenses,
    and at the same time, eliminate duplications of data entries,
    contributing to the modern internal controls system suitable for the
    requirements of all units.

5.  Monitoring internal audit: The Audit Committee reviewed the internal
    audit system to maintain professional standards, received the
    internal audit report on a monthly basis, and regularly gave their
    suggestions directly to the internal audit office. In addition, the
    Committee reviewed the internal audit results on a quarterly basis
    according as planned. At mid-year, the Committee examined policies,
    action plans, manpower, and budgetary policy of the internal audit
    office to reflect the changing circumstances. Apart from this, the
    Committee established auditing procedures and auditing performance
    indicators for the auditing office, in addition to the assessment
    processes of the operation units. Relevant suggestions and plans
    were adjusted and incorporated into the internal audit system. In
    2005, all cases were assessed and significant findings were
    summarized for using as guidelines on problem-solving strategies
    which was distributed at the supervisory management level. Moreover,
    a consultancy center was established to offer consultation, advice
    and recommendations to all operation units. Besides, the Committee
    prescribed a development of IT auditing system to improve the
    efficiency of auditing to ensure quality performance of the
    operation units.

6.  Reviewing financial auditors for the year 2006: Based on the scope
    and scale of auditing services submitted by three leading companies,
    The Audit Committee reviewed the Company’s financial auditors for
    the year 2006. The decision was made on the basis of unanimity,
    scope of services and scale of fees, relevant regulations and
    qualifications of auditors promulgated by the SEC. As a result, the
    Audit Committee passed its resolution and recommended that the Board
    of Directors seek for approval, at the ordinary general
    shareholders’ meeting, the appointment of Mr. Winid Silamongkol
    and/or Mr. Pisit Chiwaruangroch of KPMG Phoomchai Audit Ltd., as the
    Company’s financial auditors for 2006.

  On behalf of the Audit Committee

  []

  Air Vice Marshal Kamthon Sindhvananda

  Chairman of the Audit Committee