CORPORATE

BOARD CHARTER

Appendix I

TERMS OF REFERENCE FOR AUDIT COMMITTEE


1. Objectives

The primary function of the Audit Committee (the “Committee”), formed by the Board, is to assist the Board of Directors in fulfilling its fiduciary duties as well as the following oversight objectives on the activities of the Group comprising the Company and its subsidiaries:

  • Oversee and appraise the quality of the audits conducted both by the Company’s internal and external auditors;
  • Maintain open lines of communication between the Board of Directors, the internal auditors and the external auditors for the exchange of views and information, as well as to confirm their respective authority and responsibilities; and
  • Evaluate the internal and external audit processes, including issues pertaining to the system of internal control within the Group.
2. Composition

The Board shall elect the Committee members from amongst themselves, comprising no fewer than three (3) Directors (none of whom shall be Executive) and the majority shall be Independent Non-Executive Directors. In this respect, the Board adopts the definition of “independent directors” under the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”). All the members shall be financially literate and at least one (1) member of the Committee shall be:

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

    • he must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act 1967; or
    • he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act 1967; or
  • fulfils such other requirements as prescribed or approved by Bursa Securities.

In the event of any vacancy in the Committee (including Chairman) resulting the non-compliance of the above, the Board shall upon the recommendation of the Nomination Committee fill the vacancy within three (3) months of that event.

The Chairman of the Committee shall be an Independent Non-Executive Director elected among the members of the Committee. No alternate Director of the Board shall be appointed as a member of the Committee.

The term of office and performance of the Committee and each of its members shall be reviewed by the Board (via Nomination Committee) annually to determine whether the Committee and its members have carried out their duties in accordance with their terms of reference.

3. Quorum and Meeting Procedures

Meetings shall be conducted at least four (4) times annually, or more frequently as circumstances dictate. The Chairman may call for a meeting of the Committee if a request is made by any Committee member, the Directors or the internal or external auditors.

In order to form a quorum 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 Secretary or his/her representative/other appropriate senior officer shall act as Secretary of the Committee (the “Secretary”). The Secretary, in conjunction with the Chairman, shall draw up an agenda, which shall be circulated together with the relevant support papers, at least one (1) week prior to each meeting to the members of the Committee.

The Secretary shall also be in attendance at each Committee meeting and responsible for keeping the minutes of meetings of the Committee and circulating them to Committee members and to the other members of the Board.

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

The Committee shall meet at least twice annually with the external and internal auditors without the presence of any executive Board members, Management or employees. In addition, Management, the internal auditor and external auditors may request for a private session with the Committee to discuss any matter of concern.

The Committee members may participate in a meeting by means of conference telephone, conference videophone or any similar or other communications equipment by means of which all persons participating in the meeting can hear each other. Such participation in a meeting shall constitute presence in person at such meeting.

A resolution in writing, signed by all the members of the Committee, shall be as effectual as if it has been passed at a meeting of the Committee duly convened and held. Any such resolution may consist of several documents in like form, each signed by one or more committee members.

4. Authority

The Committee is authorised by the Board to investigate any activity within its terms of reference. It is also authorised to seek any information it requires from any employee and employees are directed to co-operate with any request made by the Committee. The Committee can obtain, at the expense of the Company, outside legal or other independent professional advice it considers necessary in the discharge of its responsibilities.

The Committee shall have full and unlimited access to any information pertaining to the Group. The Committee shall have direct communication channels with the internal and external auditors and with Senior Management of the Group and shall be able to convene meetings with the external auditors, the person(s) carrying out the internal audit function or both excluding the attendance of other directors and employees of the Group, whenever deemed necessary. The Committee shall have the resources that are required to perform its duties.

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

5. Responsibilities and duties

In fulfilling its primary objectives, the Committee shall undertake the following responsibilities and duties:

Financial Reporting and Compliance

5.1review the Committee’s terms of reference as conditions dictate;

5.2review major audit findings and Management’s response during the year with Management, external auditors and internal auditors, including the status of previous audit recommendations.

5.3review the assistance given by the Group’s officers to the auditors, and any difficulties encountered in the course of the audit work, including any restrictions on the scope of activities or access to required information.

5.4review the Company's quarterly results and year-end financial statements before submission to the Board, focusing particularly on:

5.4.1changes in or implementation of major accounting policy changes;

5.4.2significant matters highlighted including financial reporting issues, significant judgments made by management, significant and unusual events or transactions, and how these matters are addressed;

5.4.3the going concern assumption; and

5.4.4compliance with accounting standards and other legal requirements.

5.5review with the external auditors the following and report the same to the Board:

5.5.1audit plan;

5.5.2audit report; and

5.5.3evaluation of internal controls system.

5.6review the following and report the same to the Board:

5.6.1the assistance given by the employees to the external auditors;

5.6.2the adequacy of the scope, functions, competency and resources of the internal audit functions and that it has the necessary authority to carry out its work; and

5.6.3the internal audit programme, processes, the results of the internal audit programme, processes of investigation undertaken and whether or not appropriate action is taken on the recommendations of the internal audit function.

5.7review and report to the Board 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 questions of management integrity.

5.8prepare reports, at least once (1) a year, to the Board summarising the activities/work performed in fulfilling the Committee’s primary responsibilities, including details of relevant training attended by each Committee member.

5.9review procedures in place to ensure that the Group is in compliance with the Listing Requirements of Bursa Securities and other legislative and reporting requirements.

5.10verify allocation of employee share plan or Employees Share Option Scheme in compliance with criteria as stipulated in the by-laws of the Company, if any.

5.11carry out any other function that may be mutually agreed upon by the Committee and the Board.

External Audit

5.12recommend to the Board the appointment or re-appointment of the external auditors and any issues regarding resignation and dismissal of the external auditors and if applicable, to review and report to the Board any letter of resignation from the external auditors.

5.13In considering the appointment or re-appointment of the external auditors, to consider among others:

  1. the adequacy of the experience and resources of the accounting firm;
  2. the persons assigned to the audit;
  3. the accounting firm’s audit engagements;
  4. the size and complexity of the Group being audited;
  5. the number and experience of supervisory and professional staff assigned to the particular audit; and
  6. the performance of the external auditors and its independence inter-alia:

    1. the external auditors’ ability to meet deadlines in providing services and responding to issues in a timely manner as contemplated in the external audit plan;
    2. the nature of the non-audit services provided by the external auditors and fees paid for such services relative to the audit fee; and
    3. whether there are safeguards in place to ensure that there is no threat to the objectivity and independence of the audit arising from the provision of non-audit services or tenure of the external auditors.

5.14review with the external auditors, the nature, scope and plan of the audit, including any changes to the scope of the audit plan before the audit commences and report the same to the Board.

5.15review the contracts and nature of the non-audit services which can be entered into by the Group with the external auditors and its affiliates and procedures that must be followed.

In the event that the non-audit fees paid to the external auditors, or a firm or corporation affiliated to the external auditors’ firm are significant which constitute 50% of the total amount of audit fees paid to the external auditors, the Company is required to state the details on the nature of non-audit services-rendered in the Committee report.

5.16review the external auditors’ management letter and management’s response.

5.17ensure co-ordination if more than one (1) audit firm is involved in the audit.

Internal Audit

5.18review the adequacy of the internal audit scope, competency, functions and plan, including the internal audit programme; functions, competency and resources of the internal audit function and that it has the necessary authority to carry out its work.

5.19review the internal audit programme, processes the results of the internal audit programme, processes and investigation undertaken, and whether or not appropriate action is taken on the recommendations of the internal audit function.

5.20ensure the appropriate action is taken on the recommendations of the internal auditors, where necessary.

5.21ensure the internal audit function is independent of the activities it audits and the head of internal audit reports functionally to the Committee directly and review their performance on an annual basis. The head of internal audit shall be responsible for the regular review and/or appraisal of the effectiveness of the risk management, internal control, and governance processes within the Company.

5.22take cognisance of resignations of internal audit staff members (for in-house internal audit function) or the internal audit service provider (for out-sourced internal audit) and provide the resigning staff member or the internal audit service provider an opportunity to submit his reasons for resigning.

The Chairman of the Committee shall engage on a continuous basis with Senior Management, such as the Chief Executive Officer or 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.

6. Revision of Terms of Reference

Any revision or amendment to this Terms of Reference, as proposed by the Committee or any third party, shall first be presented to the Board for its 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.




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