The primary objective of the Audit Committee (“AC”) is to establish a documented, formal and transparent procedure to assist the Board of Directors (“Board”) in fulfilling its fiduciary responsibilities relating to corporate accounting, financial reporting practices, system of internal control, the audit process and the process of monitoring compliance with laws and regulations.
The members of AC shall be appointed by the Board from amongst the Directors of the Company and shall comprise of at least three (3) members, all of whom shall be Non-Executive Directors, with a majority of them being independent. The Board shall at all the times ensure that at least one (1) member of the AC:
must be a member of the Malaysian Institute of Accountants (“MIA”); or
if he/she is not a member of the MIA, he/she must have at least three (3) years’ working experience and:
He/she has passed the examinations specified in Part I of the First Schedule of the Accountants Act 1967; or
fulfils such other requirements as prescribed or approved by Bursa Malaysia Securities Berhad (“Bursa Securities”).
The AC must comprise of Directors who have skills, knowledge and experience relevant to the responsibilities of the AC.
The members of the AC shall elect a Chairman from among them, who shall not be the Chairman of the Board and must be an Independent Director.
A former partner of the Company’s External Audit firm shall observe a cooling-off period of at least three (3) years before being appointed as a member of the AC.
No alternate director shall be appointed as a member of the AC.
In the event of any vacancy in Committee resulting in the non compliance of the above stated conditions, the Board shall upon the recommendation of the Nomination Committee, appoint such number of Directors to fill up such vacancy within three (3) months of the event.
All members of the AC, including the Chairman, will hold office only so long as they serve as Directors of the Company. The Board, via Nomination Committee review the term of office and performance of the AC, and each of its members annually to determine whether the AC have carried out their duties in accordance with their terms of reference.
3. AUTHORITY
The AC is empowered and authorised by the Board at the cost of the Company:
to investigate any matter within the AC’s terms of reference and shall have unrestricted access to both the internal and external auditors and to all employees of the Company and/ or its subsidiaries (“Group”);
to have full, free and unrestricted access to any information, records, properties and personnel of the Group;
to have access to the resources which are required to perform its duties;
to obtain external legal or independent professional advice and secure the attendance of outsiders with relevant experience and expertise where necessary, the expenses of which will be borne by the Company;
to have direct communication channels with the external and internal auditors;
to convene meetings with the external auditors, internal auditors or both, whenever deemed necessary, excluding the attendance of other Directors and employees of the Company; and
promptly report to Bursa Securities where a matter reported by the AC to the Board had not been satisfactorily resolved resulting in a breach of the ACE Market Listing Requirements.
In fulfilling its primary objectives, the AC shall undertake, amongst others, the following duties and responsibilities:
Prior to the approval of the Board, review the quarterly and annual financial statements of the Group prepared by the management, where necessary, together with the external auditor and report the same to the Board, focusing particularly on:
Any significant changes or implementation of accounting policies and practices;
Significant matters highlighted including financial reporting issues, significant judgments made by management, significant and unusual events or transactions, and how these matters are addressed;
Significant adjustments arising from the audit;
Compliance with accounting standards and other legal requirements; and
Going concern assumption.
To review the effectiveness of the internal control system and risk management framework adopted within the Group and to be satisfied that the methodology employed allows identification, analysis, assessment, monitoring and communication of risks in a regular and timely manner that will allow the Group to mitigate losses and maximize opportunities;
To assess processes and procedures to ensure compliance with all laws, rules and regulations, directives and guidelines established by the relevant regulatory bodies;
To ensure that the system of internal control is soundly conceived and in place, effectively administered and regularly monitored;
To cause reviews to be made of the extent of compliance with established internal policies, standards, plans and procedures;
To obtain assurance that proper plans for control have been developed prior to the commencement of major areas of change within the Group;
To recommend to the Board steps to improve the system of internal control derived from the findings of the internal and external auditors and from the consultations of the AC itself; and
To report to the Board any suspected frauds or irregularities, serious internal control deficiencies or suspected infringement of laws, rules and regulations which come to its attention and are of sufficient importance to warrant the attention of the Board.
To review the adequacy of the scope, functions, competency and resources of the internal audit function, and whether it has the necessary authority to carry out its work;
To review and report the same to the Board on the internal audit plan and the internal audit report and, where necessary, ensure that appropriate actions are taken on the recommendations made by the internal audit function;
To ensure the internal audit team and/or outsourced internal auditors has full, free and unrestricted access to all activities, records, property and personnel necessary to perform its duties;
To review any matters concerning the employment or appointment (and re-appointment) of the in-house and/or the outsourced internal auditors (as the case may be) and the reasons for resignation or termination of either party;
To have explicit authority over the resources such as professional advice and full access to information to investigate certain matters; and
To review any appraisal or assessment of the performance of the internal auditor.
To review the external auditors’ audit plan, nature and scope of the audit plan, audit report, evaluation of internal controls and co-ordination of the external auditors, thereafter report the same to the Board;
To review the annual performance assessment, including the suitability, independence and objectivity of the external auditors and make recommendations to the Board, in considering the appointment or re-appointment of the external auditors;
To assess or determine the suitability and independence of the external auditors, the AC shall take into consideration of the following:
the adequacy of the experience and resources of the external auditors;
the external auditor’s ability to meet deadlines in providing services and responding to issues in a timely manner as contemplated in the external audit plan;
the nature of the non-audit services provided by the external auditor and fees paid for such services relative to the audit fee; and
To review any matters arising concerning the appointment and re-appointment, audit fee and any questions of resignation or dismissal of the external auditors;
To review the external auditor’s audit report, management letter and management’s response;
The scope of the non-audit services:
To discuss problems and reservation, if any, arising from the interim and final audits, and any matter which the external auditors wish to discuss in the absence of the Management, where necessary; and
To review with the external auditors for the Statement on Risk Management and Internal Control of the Group for inclusion in the Annual Report.
To review any related party transactions and conflict of interest situations that arose, persist or may arise within the Group including any transaction, procedure or course of conduct that raises questions of management integrity and the measures taken to resolve, eliminate or mitigate such conflicts.
In reviewing the conflict of interest, the AC should consider the following factors:
To prepare the annual AC report to the Board which includes the composition of the AC, its terms of reference, number of meetings held, a summary of its activities and the existence of internal audit services and summary of the activities for inclusion in the Annual Report and to review the Board’s statements on compliance with the Malaysian Code of Corporate Governance for inclusion in the Annual Report.
To verify the allocation of options pursuant to the Share Issuance Scheme or the allocation of shares pursuant to any incentive plan for employees of the Group at the end of each financial year as being in compliance with the criteria which is disclosed to the employees and make a statement in the Annual Report that such allocation has been verified;
To exercise its powers and carry out its responsibilities as may be required from time to time under the Whistleblowing Policy of the Group; and
The AC shall meet at least four (4) times in a financial year and additional meetings may be called at any time at the AC Chairman’s discretion. The Executive Directors, senior management, representatives of the internal and external auditors may be invited to attend the AC meeting. The Internal Auditors have the right to appear and be heard at any meeting of the AC and are recommended to attend each AC meeting. Upon the request of the External and / or Internal Auditors, the Chairman shall also convene a meeting of the AC to consider any matter the External and / or Internal Auditors believe should be brought to the attention of the Board or the shareholders. The AC shall meet at least twice a year with the External Auditros without the presence of executive Board members and the Management.
In the event the elected Chairman is not able to attend a meeting, a member of the AC shall be nominated as Chairman for the meeting. The nominated Chairman shall be an Independent Non-Executive Director.
Subject to the notice and quorum requirements as provided in the Terms of Reference, AC meeting may be held and conducted through the telephone or any communication equipment which allows all persons participating in the meeting to hear each other. A person so participating shall be deemed to be present in person at the meeting and shall be entitled to vote and be counted in a quorum accordingly.
The quorum for an AC meeting shall consist of not less than two (2) members, who are both Independent Director.
Unless otherwise agreed, notice of each meeting confirming the venue, time and date, together with an agenda of items to be discussed, shall be forwarded to each member of the committee, any other person required to attend and all other non-executive directors, no later than seven (7) days before the date of the meeting. Supporting papers shall be sent to committee members and to other attendees as appropriate, at the same time.
The Company Secretary or such other person authorised by the Board shall act as the Secretary of the AC. The Company Secretary shall record, prepare and circulate the minutes of the meetings of the AC and ensure that the minutes are properly kept and produced for inspection if required. The AC shall report to the Board and the minutes of each meeting shall be tabled to the Board for notation. The expressions “in writing” and “signed” include approval by letter, telegram, telex, telefax or electronic means by any such member of the Committee.
A resolution in writing, signed by a majority of the AC members present in Malaysia for the time being entitled to receive notice of a meeting of the AC, shall be as valid and effectual as if it had been passed at a meeting of the AC duly convened and held. Any such resolution may be accepted as sufficiently signed by an AC member if transmitted to the Company by any technology purporting to include a signature and/or an electronic or digital signature by the AC and may consist of several documents in like form, each signed by one or more of the members of the AC.
A Director may participate in a Committee meeting by means of a conference telephone or any communication equipment or device which allow all persons participating at the meeting to hear and speak with each other and shall be deemed as present at such meeting.
This Terms of Reference will be reviewed and updated at least once a year to ensure it remains consistent with the AC objectives and responsibilities.
Any revision or amendment to this Terms of Reference, as proposed by the AC or any third party, shall be presented to the Board for approval. Upon the Board’s approval, the said revision or amendment shall form part of this Terms of Reference and this Terms of Reference shall be considered duly revised or amended.
