AUDIT COMMITTEE TERMS OF REFERENCE
The Audit Committee shall be appointed from amongst the Board and shall comprise no fewer than three (3) members, a majority of whom shall be independent directors and all members should be non-executive directors.
At least one (1) member must:
- be a member of the Malaysian Institute of Accountants (“MIA”) or possess such other qualifications and/or experience as approved by the Bursa Malaysia Securities Berhad(“Bursa Securities”); or
- if he is not a member of the MIA, he must have at least three years of working experiences and:
- He must have passed the examination specified in Part Iof the 1st Schedule of the Accountant Act 1967; or
- He must be a member of one of the Association of Accountants specified in Part II of the 1st Schedule of the Accountants Act, 1967; or
- fulfills such other requirements as prescribed or approved by Bursa Malaysia Securities Berhad.
No alternate director shall be appointed as a member of the Committee.
In the event of any vacancy with the result that the number of members is reduced to below three, the vacancy shall be filled within three (3) months. Therefore a member of the Audit Committee who wishes to retire or resign should provide sufficient written notice to the Company so that a replacement may be appointed before he leaves.
The terms of office and performance of an audit committee and each of its members must be reviewed by the Board of Directors annually to determine whether such audit committee and members have carried out their duties in accordance with their terms of reference.
The Chairman, who shall be elected by the Audit Committee, shall be an independent director. In the even of the chairman’s absence, the meeting shall be chaired by an independent director.
The Chairman should engage on a continuous basis with senior management, such as the Chairman of the Board, the Chief Executive Officer (“CEO”), the Chief Financial Officer (“CFO”), the head of internal audit and the external auditors in order to be kept informed of matters affecting the company.
The Company Secretary or any authorised person shall be the secretary of the Audit Committee (the “Secretary”). The Secretary shall provide assistance to the members of the Committee, including but not limited to assist the Audit Committee Chairman in planning the work of the Committee, formulating meeting agendas, maintenance of committee minutes, collation and distribution of information required by the Committee and provide practical support, as and when needed.
The secretary shall record minutes of all duly constituted meetings of the Audit Committee.
The Audit Committee shall meet at least four (4) times in each financial year and may regulate its own procedure in lieu of convening a formal meeting by means of video or teleconference. The Audit Committee also may call for a meeting as and when required with reasonable notice as the Audit Committee Members deem fit.
The quorum for a meeting shall be the majority of members present, who shall be independent directors.
The CEO and the CFO may attend the quarterly meetings upon the invitation of the Audit Committee although they do not have any voting rights.
All decisions at such meeting shall be decided on a show of hands on a majority of votes and that the Chairman shall have the casting vote should a tie arise.
The external auditors and internal auditors have the right to appear at any meeting of the Audit Committee and shall appear before the Audit Committee when required to do so by the Audit Committee. The external auditors may also request a meeting if they consider it necessary. At least twice a year and whenever deemed necessary, the Audit Committee shall meet with the external auditors without presence of Executive Director and the Management.
The Audit Committee shall:
(a) have authority to investigate any matter within its terms of reference;
(b) have the resources which are required to perform its duties;
- have full and unrestricted access to any information pertaining to the Group;
- have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity;
- have the right to obtain independent professional or other advice at the Company’s expense;
- promptly report to Bursa Securities or such other name(s) as may be adopted by Bursa Securities, matters which have not been satisfactorily resolved by the Board of Directors resulting in a breach of the listing requirements;
- have the right to pass circular resolutions in writing by a majority vote from the Audit Committee
- meet as and when required on a reasonable notice;
- the Chairman shall call for a meeting upon the request of the External Auditors.
- Risk Management & Internal Control
- Review the adequacy of and recommend such measures to the Board on the effectiveness of the Company’s risk management and risk assurance process.
- Evaluate the quality and effectiveness of the Company’s Internal Control system and management information systems, including compliance with applicable laws, rules, corporate governance requirements and guidelines.
- Review and approve the statements to be included in the Annual Report concerning internal controls and risk management.
- Recommend to the Board the Director’s Statement on Risk Management and Internal Control and any changes to the said Statement.
- Financial Reporting
- Review the quarterly results and annual financial statements before recommendation to the Board for approval for release to Bursa Securities, focusing particularly on:
Propose best practices on disclosure in financial results and annual reports of the Company in line with the recommendations set out in the Malaysian Code of Corporate Governance, other applicable laws, rules, directives and guidelines.
- Any changes in or implementation of accounting policies and practices;
- Significant or material adjustments with financial impact arising from the audit;
- Significant unusual events or exceptional activities;
- Financial decision-making with the presumptions of significant judgments;
- The going concern assumptions;
- The appropriateness of management’s selection of accounting policies and disclosures in compliance with approved accounting standards, stock exchange and other regulatory requirements; and
- Compliance with applicable financial reporting standards.
- Recommend the appointment or re-appointment of the external auditors and audit fee to your Board, after reviewing the suitability, resources, competency, independence of external auditors,the accounting firm and non –audit services
- Confirm the Independence of the external auditor, including reveiwing the external auditor’s non-audit servcices and related fees.
- Make appropriate recommendations to Board on matters of resignation, dismissal or cessation of office of the external auditors and secure the reason of such resignation, dismissal or cessation of office.
- Review and discuss the nature and scope of the external audit strategy and plan for the year.
- Review and discuss issues arising from external auditors’ interim and final letters of recommendation to management, including management responses and the external auditor’s evaluation of the system of internal control and any other matters the external auditor may wish to discuss (in the absence of Management, if required).
- Review the significant financial reporting issues and judgements made in connection with the preparation of the annual financial statements.
Related Party Transactions
- Review the adequacy of the scope, functions, competency, resources and authority of the internal audit function in carrying out its work.
- Review the risk-based internal audit plans and programmes.
- Ensure co-ordination between the internal and external auditors.
- Review the major findings reported by internal audit and follow up on management’s implementation of the recommended actions.
- Meet the head of internal audit on regular basis, to discuss their remit and any issues arising from the internal audits carried out. In addition, the head of internal audit shall be given the right of direct access to the Chairman of the Board and to the Committee.
- Annually assess performance of services provided by the internal audit function.
- To monitor related party transactions entered into by the Company or the Group and to determine if such transactions are undertaken on an arm’s length basis and normal commercial terms and on terms not more favourable to the related parties than those generally available to the public, and to ensure that the Directors report such transactions annually to shareholders via the annual report, and to review conflicts of interest that may arise within the Company or the Group including any transaction, procedure or course of conduct that raises questions of management integrity.
- To announce to Bursa Securities, if there is any related party transactions which exceed the Shareholder Mandate and provide full reason and detailed explanations.
- To report to Bursa Securities, if the Audit Committee views that a matter resulting in a breach of the Listing Requirements of Bursa Securities reported by the Audit Committee to the Board has not been satisfactorily resolved by the Board.
- To highlight such matters as the Audit Committee considers appropriate or as defined by the Board from time to time.
- The Committee Chairman shall report formally to the Board on its proceedings after each meeting on all matters within its duties and responsibilities. The Committee shall make whatever recommendations to the Board it deems appropriate on any area within its remit where action or improvement is needed.
- The Committee shall compile a report to shareholders on its activities to be included in the Company's Annual Report. The Annual Report should explain to shareholders how, if the auditor provides non-audit services, auditor objectivity and independence is safeguarded.
These Terms of Reference were reviewed and approved by the Board of Directors on 30 May 2016.