Corporate Governance

 

 

 

AUDIT COMMITTEE
MEMBERS OF AUDIT COMMITTEE
Mr. Chiam Tau Meng (Chairman)
Mr. Leou Thiam Lai
Dr. Christopher Shun Kong Leng

 

TERMS OF REFERENCE

Reasons for Amendments

Pursuant to section 9 of the Capital Markets and Services Act 2007, amendments have been made to the Listing Requirements (“LR”) of Bursa Malaysia Securities Berhad (“Bursa”) in relation to corporate governance (“CG Amendments”) and other areas, which were notified by Bursa in their letter reference SR/TYH(RDA)/LD2/08 dated 28 January 2008. Companies listed on Bursa are required to comply with the CG Amendments. The objectives of the CG Amendments are aimed at raising the corporate governance standards amongst listed issuers and increasing investor confidence. Essentially, the CG Amendments will enhance the CG framework by enhancing the effectiveness and independence of audit committee and mandating the internal audit function by listed issuers.

Objective

    The primary objectives of the Audit Committee are:

  1. to assist in the fiduciary duties of the Board in matters pertaining to business ethics, policies, financial management, internal controls, accounting policies and financial reporting of the Company and its subsidiaries;
  2. to maintain and enhance a line of communication and independence between the Group and the external auditors;
  3. to ensure a system of internal controls which will mitigate the likelihood of fraud or error.
  4. The appointment of a properly constituted Audit Committee is an important step to assist the Board of Directors in raising the standard of Corporate Governance and observance of good Corporate Governance practices.

 

Formation

The Audit Committee of the Company comprising all non-executive directors, a majority of who are independent, has been established since 22 March 1994.

Composition

  1. The Audit Committee shall be appointed by the directors from amongst themselves and this fulfils the following requirements:
    • the Audit Committee shall comprise of no fewer than three (3) members;
    • all the Audit Committee must be non-executive directors, with a majority of them being independent directors;
    • the Chairman of the Audit Committee shall be an independent director; and
    • at least one (1) member of the Audit Committee:
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      • or

      • if he is not a member of the MIA, he must have at least three (3) years’ 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.
      • fulfils such other requirements as prescribed or approved by the Exchange.
  2. No alternate director shall be appointed as a member of the Audit Committee.
  3. In the event of any vacancy in the Audit Committee resulting in the non-compliance of subparagraph 15.09(1) of the Bursa Malaysia Securities Berhad (“Bursa Securities”) Listing Requirements, the Company must fill the vacancy within three (3) months.
  4. The Board of Directors of the Company must review the term of office and performance of an Audit Committee and each of its members at least once every three (3) years to determine whether such audit committee and members have carried out their duties in accordance with their terms of reference.

Secretary to the Audit Committee

The Company Secretary shall be the Secretary to the Audit Committee.

Meetings

  1. The Audit Committee shall be appointed by the directors from amongst themselves and this fulfils the following requirements:
  2. The majority of members present must be independent directors to form a quorum.
  3. The Group Accountant or the Finance Director and representative of external auditors shall normally attend the meeting.
  4. The Committee may ask members of management or others to attend the meetings and provide pertinent information as necessary.
  5. The Company must ensure that other directors and employees attend any particular Audit Committee meeting only at the audit committee’s invitation, specific to the relevant meeting.
  6. The Committee shall meet with the external auditors without the executive Board at least twice a year.
  7. The Committee actions shall be reported to the Board of Directors with such recommendations, as the Committee deemed appropriate.

Procedure of Audit Committee

The Audit Committee may regulate its own procedure, in particular:

  • a. the calling of meetings;
  • b. the notice to be given of such meetings;
  • c. the voting and proceedings of such meetings;
  • d. the keeping of minutes; and
  • e. the custody, production and inspection of such minutes.

Authority

The Audit Committee was appointed under Chapter 15, Part C, paragraph 15.09 of the Bursa Securities Listing Requirements. The Committee is given the authority to investigate any matter of the Company and its subsidiaries within its terms of reference, the resources which are required to perform its duties, the authority to have full and unrestricted access to any information of the Company and the authority to have direct communication channels with the external auditors and person(s) carrying out the internal audit function. The Committee shall obtain independent/external professional advice and to be able to convene meetings with the external auditors, internal auditors or both excluding the attendance of other directors and employees of the Company, whenever deemed necessary.

Functions and Duties

  1. To consider the appointment of the external auditors, the audit fee and any questions of resignation or dismissal and on whether there is reason (supported by grounds) to believe that the Company’s external auditors are not suitable for re-appointment;
  2. To discuss with the external auditors before the audit commence, the nature and scope of the audit and ensure co-ordination where more than one audit firm is involved;
  3. To review:
    • with the external auditors, their audit plan;
    • with the external auditors, the overall scope of the external audit and discuss the results of their examination and their evaluation of the internal control system;
    • with the external auditors, the audit report;
    • the assistance given by the employees of the Company to the external auditors;
    • the quarterly results and year end financial statements of the Company, prior to the approval by the board of directors, focusing particularly on :
      • any changes in or implementation of major accounting policies and practices;
      • significant adjustments arising from the audit and unusual events;
      • the going concern assumption;
      • compliance with accounting standards, other statutory and legal requirements;
    • any related party transaction and conflict of interest situation that may arise within the Company or Group including any transaction, procedure or course of control that raises questions of management integrity;
    • the external and internal auditor’s management letter and management’s response; and
    • any letter of resignation from the external auditors of the Company.
  4. To recommend the nomination of a person or persons as external auditors;
  5. To discuss problems and reservations arising from the interim and final audits and any other matters the auditors may wish to discuss;
  6. To do the following where an internal audit function exists:
    • to review the adequacy of the scope, functions, competency and resources of the internal audit functions and that it has the necessary authority to carry on its work;
    • to review the internal audit programme, processes, the results of the internal audit programme, processes or investigation undertaken and whether or not appropriate action is taken on the recommendations of the internal audit function;
    • to review any appraisal or assessments of the performance of members of the internal audit function;
    • to approve any appointments or terminations of senior staff members of the internal audit function;
    • to inform itself of resignations of internal audit staff members and provide the resigning staff member an opportunity to submit his/her reasons for resignation;
  7. To consider the major findings of internal investigations and management’s response;
  8. To report promptly such matter to the Bursa Securities where the audit committee is of the view that a matter reported by it to the Board of Directors of the Company has not been satisfactorily resolved resulting in a breach of the Listing Requirements; and
  9. To consider other topics as defined by the Board.