Terms of Reference-Audit Committee

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; or

• Fulfils such other requirements as prescribed or approved by the Bursa Malaysia.

Former partner of the external audit firm of the Company or its subsidiary* shall observe a cooling-off period of at least three (3) years, (i.e. from the issuance of Oriental Holdings Berhad’s audited financial statements from the departure of the said partner from the external audit firm, whichever is earlier) before being appointed as a member of the Audit Committee.

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 chairman, the Board shall within three (3) months of the event appoint such number of new members as may 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 determine whether the Committee and members have carried out their duties in accordance with the terms of references.

* applies to all former partners of the audit firm and/or the affiliate firm (including those providing advisory services, tax consulting, etc.)

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 plan, programmes, processes and results of the Internal Audit assessments, investigation undertaken 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; and
• 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; and
• 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 judgements 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 arose, persist or may arise within the Company or the Group, including any transaction, procedure or course of conduct that raises question on management integrity and the measures taken to resolve, eliminate, or mitigate such conflicts.

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;
• Maintain and keep under review the whistle-blowing mechanism of the Group which shall be in accordance with Whistle Blowing Policy, as well as an effective and efficient set of investigation procedures, which aims to provide protection and confidentiality;
• Have the resources which are required to perform its duties, including assigning a competent person or function to be responsible for all anti-corruption compliance matters;
• Direct and, where appropriate, supervise any special projects or investigations considered necessary, and review investigation reports on any major defalcations, frauds and thefts (including prompt reporting to the Board and acted upon);
• 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.