Terms of Reference of the Audit Committee

Composition

Members of the Committee shall be appointed by the Board from amongst the Directors and Committee shall fulfill the following requirements:-

  1. Membership shall consist of no fewer than three (3) members;
  2. All the members shall be independent non-executive directors;

    In this respect, the Board adopts the definition of “independent director” as defined under the Listing Requirements of Bursa Malaysia Securities Berhad
  3. At least one (1) member of the Audit Committee must be:-
    1. a member of the Malaysian Institute of Accountants (“MIA”); or
    2. if not a member of the MIA, must have at least three (3) years working experience, and either have passed the examinations specified in Part 1 of the First 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 First Schedule of the Accountants Act 1967; or
    3. holds a degree / masters / doctorate in accounting or finance and at least three (3) years’ post qualification experience in accounting or finance; or
    4. has at least seven (7) years’ experience being a Chief Financial Officer of a corporation or having the function of being primarily responsible for the management of the financial affairs of a corporation; and
  4. Shall not comprise any alternate director of the Company.

    All the members of the Committee including the Chairman, shall hold office as long as they serve as Directors of the Company.

    In the event of any vacancy in the Committee, the vacancy shall be filled within three (3) months upon the review and recommendation of a suitable Director by the Nomination Committee and approved by the Board.

Chairman

Members of the Committee shall elect a Chairman from amongst their number who shall be independent non-executive director. In the absence of the Chairman during the meeting, the remaining members present shall elect one of their members who shall be an independent director as a Chairman of the meeting.

Secretary

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

Terms of Office

The Nominating Committee of the Company must review the term of office and performance of the Audit Committee and each of its members annually to determine whether the Audit Committee and its members have carried out their duties in accordance with their terms of reference.

Meetings

The Audit Committee meetings shall regularly, with due notice of issues to be discussed, and shall record its conclusions in discharging its duties and responsibilities. In addition, the Chairman of the Audit Committee may call for additional meetings at any time at the Chairman’s discretion.

Upon the request of the external auditor, the Chairman of the Audit Committee shall convene a meeting of the Audit Committee to consider any matter the external auditor believes should be brought to the attention of the directors or shareholders.

Notice of Audit Committee meetings shall be given to all the Audit Committee members unless the Audit Committee waives such requirement.

The Chairman of the Audit Committee shall engage on a continuous basis with senior management, such as the Chairman, the Executive Directors, 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 CFO, the head of internal audit and a representative of the external auditors would attend meetings upon the invitation of the Chairman of the Audit Committee. Other Board members and employees may attend meetings upon the invitation of the Audit Committee. However, the Audit Committee shall meet with the external auditors without executive Board members present at least twice a year and whenever necessary.

Questions arising at any meeting of the Audit Committee shall be decided by a majority of votes of the members present, and in the case of equality of votes, the Chairman of the Audit Committee shall have a second or casting vote.

Minutes

Minutes of each meeting shall be kept at the registered office and distributed to each member of the Audit Committee and also to the other members of the Board. The Audit Committee Chairman shall report on each meeting to the Board.

The minutes of the Audit Committee meeting shall be signed by the Chairman of the meeting at which the proceedings were held or by the Chairman of the next succeeding meeting.

Quorum

The quorum for the Audit Committee meeting shall be the majority of members present whom must be independent directors.

Circular Resolution

A resolution in writing signed by a majority of the Audit Committee members for the time being shall be as valid and effectual as if it had been passed at a meeting of the Audit Committee duly called and constituted. Any such resolution may consist of several documents in like form, each signed by one (1) or more Audit Committee members. Any such document may be accepted as sufficiently signed by an Audit Committee member if transmitted to the Company by telex, telegram, cable, facsimile or other electrical or digital written message to include a signature of an Audit Committee member.

Reporting

The Audit Committee shall report to the Board of Directors, either formally in writing, or verbally, as it considers appropriate on the matters within its terms of reference.

The Audit Committee shall report to the Board of Directors on any specific matters referred to it by the Board for investigation and report.

Objectives

The principal objectives of the Audit Committee is to assist the Board of Directors in discharging its statutory duties and responsibilities relating to accounting and reporting practices of the holding company and each of its subsidiaries. In addition, the Audit Committee shall:-

  • assess the risk and control environment;
  • oversee financial reporting;
  • evaluate the internal and external audit process; and
  • review conflict of interest situations and related party transactions.

relating to the accounting and reporting practices of the holding company and each of its subsidiaries.

Authority

In discharging its function, the Audit Committee is duly authorised by the Board to:-

  1. have authority to investigate any matter of the Group within its terms of reference. All employees shall be directed to co-operate as requested by members of the Audit Committee;
  2. have the resources which are required to perform its duties;
  3. have full and unrestricted access to any information and documents pertaining to the Company and the Group which are required to perform its duties as well as to the internal and external auditors and senior management of the Company and Group;
  4. have access to independent professional or other advice and to secure the attendance of outsiders with relevant experience and expertise if it considers necessary;
  5. have direct communication channels with external auditors and person(s) carrying out the internal audit function or activity;
  6. be able to convene meetings with the external auditors, internal auditor or both, excluding the attendance of other directors and employees of the Company, whenever deemed necessary; and
  7. report to Bursa Securities where the Audit Committee is of the view that a matter reported by it to the Board of Directors has not been satisfactory resolved resulting in a breach of the Listing Requirements of Bursa Securities.

Duties and Responsibilities

The duties and responsibilities of the Audit Committee are as follows:-

  1. To review the quarterly results and year end financial statements, prior to the approval by the Board, focusing particularly on:-
    • any change in accounting policies and practices;
    • significant adjustments arising from the audit;
    • the going concern assumption;
    • compliance with accounting standards and other legal requirements;
    • significant matters highlighted in the financial statements; and
    • significant judgements made by the Management.
  2. To discuss problems and reservations arising from the interim and final audits, and any matter the auditor may wish to discuss (in the absence of management, where necessary);
  3. To review the external auditor’s management letter and management’s response;
  4. To do the following, in relation to the internal audit function:-
    • review the adequacy of the scope, functions, competency and resources of the internal audit function, and the internal audit programme and results of the internal audit process to ensure that appropriate actions are taken on the recommendations of the internal audit function;
    • review the internal audit plan, consider the internal audit reports and findings of the internal auditors, fraud investigations and actions and steps taken by Management in response to audit findings;
    • review any appraisal or assessment of the performance of members of the internal audit function;
    • approve any appointment or termination of senior staff members of the internal audit function; and
    • take cognizance of resignations of internal audit staff members and provide the resigning staff member an opportunity to submit his reasons for resigning.
  5. To monitor the integrity of the Company’s financial statements.
  6. To report its findings on the financial and management performance, and other material matters to the Board.
  7. To consider the major findings of internal investigations and management’s response;
  8. To discuss with the external auditor before the audit commences, the nature and scope of the audit, and ensure co-ordination where more than one audit firm is involved;
  9. To consider the appointment of the external auditor, the audit fee and any question of resignation or dismissal;
  10. To establish policies governing the circumstances under which contracts for the provision of non-audit services can be entered into and procedures that must be followed by the external auditors;
  11. To assess and monitor the independence and qualification of the Company’s independent auditor;
  12. To review with the external auditor his evaluation of the system of internal controls and his audit report;
  13. To monitor the performance of the Company’s internal audit function;
  14. To determine the remit of the internal audit function;
  15. To review the assistance given by the employees of the Company to the external auditors and the internal auditors;
  16. To review the adequacy and effectiveness of risk management, internal control and governance systems relating to the accounting and reporting practices of the Company;
  17. To review any related party transactions (“RPT”) and recurrent related party transactions (“RRPT”) which exceeds the following thresholds, subject to any amendments to the Main Market Listing Requirements (“MMLR”) from time to time:-

    RPT

    1. Any one (1) of the percentage ratios under Paragraph 10.02(g) of the MMLR of such RPT is 0.25% or more; AND
    2. The value of the consideration of the RPT is more than RM500,000.00;

    RRPT

    1. Any one (1) of the percentage ratios under Paragraph 10.02(g) of the MMLR of such RRPT is 1% or more; OR
    2. The consideration, value of the assets, capital outlay or costs of the RRPT is RM1,000,000.00 or more;

    whichever is the higher;

    and any conflict of interest situations that may arise within the Company or Group including any transaction, procedure or course of conduct that raises questions of management integrity.

  18. To verify the allocation of employees’ share option scheme (“ESOS”) in compliance with the criteria as stipulated in the by- laws of ESOS of the Company, if any;
  19. To monitor the Company’s compliance with relevant laws, regulations and code of conduct relating to the accounting and reporting practices of the Company;
  20. To consider other topics as defined by the Board; and
  21. To consider and examine such other matters as the Audit Committee considers appropriate.