Terms of Reference-Audit Committee

OBJECTIVES

The primary function of the Audit Committee is to assist the Board of Directors in fulfilling the following oversight objectives on the Group activities:

  • assess the Group’s processes relating to its risks and control environment;
  • oversee financial reporting;
  • evaluate the internal and external audit processes, including issues relating to the system of internal control, risk management and governance within the Group; and
  • investigate any concerns received on possible improprieties within the Group.

COMPOSITION

The Board shall elect and appoint Committee members from amongst its numbers, comprising no fewer than three (3) Directors, all of whom shall be Non-Executive Directors, with a majority of them being Independent Directors of the Company. No alternate director shall be appointed a member of the Audit Committee. The Chairman of the Committee shall be an Independent Non-Executive Director.

The Board shall at all times ensure that at least one (1) member of the Committee shall be:

  • A member of the Malaysian Institute of Accountants (“MIA”); or
  • If he/she is not a member of MIA, he/she must have at least three (3) years of working experience and:

    - he or she must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act 1967; or

    - he or she must be a member of the associations of accountants specified in Part II of the Accountants Act 1967; and
  • Fulfils such other requirements as prescribed or approved by the Bursa Malaysia.

If a member of the Committee resigns, passes away or for any reason ceases to be a member with the result that a vacancy resulting in non-compliance with the Listing Requirement on composition of audit committee and the election of an independence chairman of the audit committee, the Board shall within three (3) months of the event appoint such number of new members as may be required to fill the vacancy.

The Nominating Committee and the Board shall review the terms of reference and performance of the Committee and each of its members annually to determine whether the Committee and members have carried out their duties in accordance with their terms of reference.

QUORUM AND MEETING PROCEDURES

Meetings shall be conducted at least four (4) times annually, or more frequently as circumstances dictate. In addition to the regular scheduled meeting, the Chairman shall call a meeting of the Committee if so requested by any member of the Committee or by the Chairman of the Board.

The Chairman of the Committee shall engage with Senior Management, such as the Executive Directors, Chief Financial Officer, the Head of Internal Audit and the External Auditors in order to be kept informed of matters affecting the Group in a timely manner.

In order to form a quorum (subject to a minimum number of two (2) members) for the meeting, the majority of the members present must be Independent Non-Executive Directors. In the absence of the Chairman, the members present shall elect a Chairman for the meeting from amongst the members present.

The Company Secretaries shall be appointed Secretaries of the Committee (the “Secretaries”). The Company Secretaries, in co-operation with the Chairman, shall draw up an agenda, which shall be circulated together with the relevant support papers, at least seven (7) days prior to each meeting to the members of the Committee. The minutes shall be circulated to members of the Board. The Committee shall regulate the manner of proceeding of its meetings, having regard to normal conventions on such matter.

AUTHORITY

The Committee is authorised to investigate any matter within its terms of reference and all employees are directed to cooperate with any request made by the Committee.

The Committee shall have full and unlimited access to any information pertaining to the Group.

The Committee shall have the necessary resources, including the procurement of independent professional or other advice which are required to perform its duties.

The Committee shall have direct communication channels, and shall be able to convene meetings during the financial year with the External Auditors, the Internal Auditors or both, excluding the attendance of other directors and employees of the Group, whenever deemed necessary.

Where the Committee is of the view that a matter reported by it to the Board has not been satisfactorily resolved resulting in breach of the Bursa Securities Listing Requirements, the Committee shall promptly report such matter to Bursa Securities.

ATTENDANCE

The Committee may, as and when deemed necessary, invite other Board members and Management to attend the meetings.

DUTIES AND RESPONSIBILITIES

In fulfilling its primary objectives in accordance with Paragraph 15.12 of the Listing Requirements, the Committee shall undertake the following responsibilities and duties:

A.         Internal Audit

  • Review the adequacy of the Internal Audit scope and plan, functions, competency and resources of the Internal Audit function and that it has the necessary authority to carry out its work;
  • Ensure Internal Auditors carry out their work according to the standards set by recognised professional bodies (e.g. Malaysian Institute of Accountants, Institute of Internal Auditors);
  • Review the Internal Audit programmes, processes, and reports to evaluate the findings of Internal Audit and to ensure that appropriate and prompt remedial action is taken by Management on the recommendations of the Internal Audit function;                                                                   
  • Review the performance of Internal Auditors, who will report functionally to the Committee, on an annual basis. Approve any appointment or termination of senior members of the Internal Audit function and take cognisance of resignations and providing the resigning members an opportunity to submit reasons for resigning;
  • Review the Internal Audit Charter, budget and staffing of the Internal Audit department;
  • Review the adequacy and effectiveness of internal control system, including management information system and the Internal Auditors’ and/or External Auditors’ evaluation of the said systems.

B.         External Audit

  • Recommend the nomination of a person or persons as External Auditors;
  • Review the appointment and performance of External Auditors, the audit fee and any question of resignation or dismissal before making recommendations to the Board;
  • Review with the External Auditors, the audit scope and plan, including any changes to the planned scope of the audit plan;
  • Review the independence, suitability and objectivity of the External Auditors and their services, including professional fees, so as to ensure a proper balance between objectivity and value for money;
  • Review the non-audit services provided to the Company for the financial year, including the nature of the non-audit services, fee levels of the non-audit services

    - individually and in aggregate relative to the external audit fees and safeguards deployed to eliminate or reduce the threat to objectivity and independence in the conduct of the external audit resulting from the non-audit services provided;
  • Develop and review for recommendation to the Board, the Company’s policy in relation to the provision of non-audit services by the External Auditors, which amongst others, takes into consideration:

    - whether the skills and experience of the audit firm makes it a suitable service provider for non-audit services;

    - whether there are safeguards in place to eliminate or reduce to an acceptable level any threat to objectivity or independence in the conduct of the audit resulting from non-audit services provided by the External Auditors; and

    - the nature of the non-audit services, the related fee levels and the fee levels individually and in aggregate relative to the external audit fees of the Company.

C.         Audit Reports

  • Review the External and Internal Audit reports to ensure that appropriate and prompt remedial action is taken by Management on major deficiencies in controls or procedures that have been identified;
  • Review major audit findings and Management’s response during the financial year with Management, External Auditors and Internal Auditors, including the status of previous audit recommendations.

D.         Financial Reporting

  • Review the quarterly results and the year-end financial statements, prior to the approval by the Board focusing particularly on:

    - Changes in implementation of major accounting policy;

    - Significant matters highlighted including financial reporting issues, significant judgments made by management, significant and unusual events or transactions, and how these matters are addressed; and

    - Compliance with applicable financial reporting and accounting standards as well as other legal requirements. 

E.         Related Party Transactions

Review any related party transaction and conflict of interest situation that may arise within the Company or the Group, including any transaction, procedure or course of conduct that raises question on management integrity.

F.         Other Matters Delegated by the Board

  • Review the assistance given by the Group’s officers to the auditors, and any difficulties encountered in the course of audit work, including any restrictions on the scope of activities or access to required information;
  • Direct and, where appropriate, supervise any special projects or investigations considered necessary, and review investigation reports on any major defalcations, frauds and thefts;
  • Review procedures in place to ensure that the Group is in compliance with the Companies Act 2016, Bursa Securities Listing Requirements and other legislative and reporting requirements;
  • Prepare reports, if the circumstances arise or at least once (1) a year, to the Board summarising the work performed in fulfilling the Committee’s primary responsibilities; and
  • Any other activities, as authorised by the Board.

REPORTING

Upon the conclusion of each meeting, the Chairman shall report to the Board of Directors the activities that it had undertaken and the key recommendations for the Board’s consideration and decision. Thereafter, the implementation status or progress of key recommendations from previous Internal Audits shall also be reported to the Board.

COMMITTEE ETHICS AND PROCEDURES

All members shall safeguard internal committee communications and treat them as strictly private and confidential, and for the use of Committee members only, except for meeting minutes which shall be circulated to members of the Board.

The Committee may be required to check references and consult selected third party sources on a confidential basis before making its final recommendations. The Committee shall work diligently in performing its duties and responsibilities while adhering to the Directors’ and Company’s Code of Ethics.

REVIEW OF THE TERMS OF REFERENCE

The terms of reference shall be reviewed by the Committee, Nominating Committee and the Board on annual basis.

 

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