COMPOSITION OF AUDIT COMMITTEE

The Audit Committee currently consists of three (3) members, all of whom are Independent Non-Executive Directors. A total of four (4)  Audit Committee meetings were held during the financial year ended 31 December 2015 and the details of attendance are as follows:-

Director Designation Attendance
Mr Wong Heang Fine

(Chairman of AC)

Independent Non-Executive Director

3/4

Mr Yeoh Chong Keat Independent Non-Executive Director

4/4

Mr Cheong Marn Seng Independent Non-Executive Director

4/4

 

TERMS OF REFERENCE

 Constitution

The Board of Directors has established a Committee of the Board known as the Audit Committee (hereinafter referred to as “the Committee”). The Committee assists the 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.

Membership

  1. The Committee shall be appointed by the Board of Directors from amongst the Directors of the Company and shall comprise of at least three (3) members, all of whom must be non-executive directors, with a majority of them being independent.
  1. At least one member of the Committee:-

(i)         must be a member of the Malaysian Institute of Accountants; or

(ii)        if he is not a member of the Malaysian Institute of Accountants, 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; or

(iii)       fulfils such other requirements as prescribed or approved by the Exchange.

  1. No alternate director shall be appointed as a member of the Committee.
  1. The members of the Committee shall elect a Chairman from among their number who shall be an Independent Director.
  1. The Company Secretary or such other persons authorised by the Board of Directors shall act as the Secretary to the Committee.
  1. If a member of the Committee resigns or for any other reason ceases to be a member resulting in the number of members to reduce to below three (3), the Board of Directors shall, within three (3) months from the date of that event, appoint such number of new members as may be required to make up the minimum number of three (3) members.
  1. The terms of office and performance of the Committee and each of its members shall be reviewed by the Board of Directors at least once every three (3) years to determine whether such Committee and its members have carried out their duties in accordance with their terms of reference.

Meetings and Minutes

  1. The Committee shall meet at least four (4) times in a financial year, although additional meetings may be called at any time at the Committee Chairman’s discretion.
  1. The quorum for a meeting of the Committee shall consist of not less than two (2) members, majority of whom must be Independent Directors.
  1. Other than in circumstances which the Chairman of the Committee considers inappropriate, the Chief Financial Officer, the representatives of the internal auditors and external auditors will attend any meeting of the Committee to make known their views on any matter under consideration by the Committee or which in their opinion, should be brought to the attention of the Committee. Other Board members, employees and external professional advisers shall attend any particular meetings upon invitation by the Committee.
  1. At least twice in a financial year, the Committee shall meet with the external auditors without the Executive Directors being present.
  1. The Committee shall report to the Board and its minutes tabled and noted by the Board of Directors. The books containing the minutes of proceedings of any meeting of the Committee shall be kept by the Company at the registered office or the principal office of the Company, and shall be open for inspection by any member of the Committee and the Board of Directors.

Authority

  1. The Committee is authorised by the Board to investigate any matter within the Committee’s terms of reference. It shall have full and unrestricted access to any information pertaining to the Group and shall have the resources it requires to perform its duties. All employees of the Group are required to comply with the requests made by the Committee.
  1. The Committee is authorised by the Board to obtain legal or external independent professional advice and secure the attendance of outsiders with relevant experience and expertise if it considers necessary, the expenses of which will be borne by the Company.
  1. The Committee shall have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity.
  1. The Committee shall be able to convene meetings with the external auditors, the internal auditors or both, excluding the attendance of other Directors and employees of the Company, whenever deemed necessary, in order to enable the Committee and the external auditors or the internal auditors or both, to discuss problems and reservations and any other matter the external auditors or internal auditors may wish to bring up to the attention of the Committee.
  1. The Internal Auditors report directly to the Committee and shall have direct access to the Chairman of the Committee on all matters of control and audit. All proposals by Management regarding the appointment, transfer and removal of senior staff members of the Internal Audit of the Group shall require prior approval of the Committee.  The Committee is also authorised by the Board to obtain information on any resignation of internal audit staff members and provide the staff member an opportunity to submit his reasons for resigning.

Functions and Duties

  1. The Committee shall, amongst others, discharge the following functions:-

18.1     Review the following and report the same to the Board of Directors of the Company:-

  • with the external auditors, the audit plan, the nature and scope of work and ascertain that it will meet the needs of the Board, the shareholders and regulatory authorities;
  • with the external auditors, their evaluation of the quality and effectiveness of entire accounting system, the adequacy and integrity of the internal control system and the efficiency of the Group’s operations;
  • with the external auditors, their audit report;
  • the assistance given by employees of the Group to the external and internal auditors;

(e)        the 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 including inter-alia the appointment of internal auditors;

(f)        the internal audit programme, processes and results of the internal audit programme, processes, major findings of internal investigation and Management’s response and whether or not appropriate action is taken on the recommendations of the internal audit function;

(g)        review any appraisal or assessment of the performance of members of the internal audit function;

(h)        the quarterly results and annual financial statements prior to the approval by the Board of Directors, focusing particularly on:-

(i)         changes in or implementation of major accounting policies and practices;

(ii)        significant and unusual events;

(iii)       significant adjustments arising from the audit;

(iv)       compliance with accounting standards, other statutory and legal requirements and the going concern assumption;

(v)        the accuracy and adequacy of the disclosure of information essential to a fair and full presentation of the financial affairs of the Group;

(i)         any related party transactions and conflict of interest situations that may arise within the Company or Group and any related parties outside the Group including any transaction, procedure or course of conduct that raises questions of management integrity;

(j)         any letter of resignation from the external auditors of the Company;

(k)        whether there is reason (supported by grounds) to believe that the Company’s external auditors are not suitable for re-appointment; and

(l)         any significant audit findings, reservations, difficulties encountered or material weaknesses reported by the external and internal auditors, particularly any comments and responses in Management letters as well as the assistance given by the employees of the Group in order to be satisfied that appropriate action is being taken.

18.2     Recommend the nomination of a person or persons as external auditors and the external audit fee.

18.3     Promptly report to Bursa Malaysia Securities Berhad on any matter reported by it to the Board of the Company which has not been satisfactorily resolved resulting in a breach of Bursa Malaysia Securities Berhad’s Listing Requirements.

  • Carry out any other functions that may be mutually agreed upon by the Committee and the Board of Directors which would be beneficial to the Company and ensure the effective discharge of the Committee’s duties and responsibilities.
  • To ensure the internal audit function of the Company reports directly to the Committee.

SUMMARY OF ACTIVITIES

During the financial year, the Audit Committee in the discharge of its duties and functions carried out the following activities:-

(a)        Reviewed the unaudited quarterly financial results and audited financial statements of the Group to ensure compliance with approved accounting standards and adherence to other regulatory requirements prior to submission to the Board for consideration and approval;

(b)        Reviewed the report from the External Auditors arising from the audit of the Group and seeks clarification and explanations from Management on issues highlighted in the audit report.

(c)        Reviewed and discussed with the External Auditors their audit plan and timetable, the nature and scope of work including the audit approach, area of audit emphasis as well as new developments on accounting standards and regulatory requirements;

(d)       Reviewed the assistance provided by Management to the External Auditors during the course of their audit;

(e)        Reviewed the internal audit reports, recommendations made and management responses;

  • Reviewed the Internal Audit Plan submitted by the Internal Auditors;
  • Reviewed the independence and re-appointment of the External Auditors against the evaluation criteria provided in the Listing Requirements and the audit fees;

(h)        Reviewed the guidelines and procedures for the Group’s recurrent related party transactions and made the relevant statement in the circular to shareholders in connection therewith;

(i)         Reviewed the draft Audit Committee Report and Statement on Risk Management and Internal Control for inclusion in the 2014 Annual Report;

(j) Reviewed the established policies and procedures for assessment of suitability and independence of External Auditors

INTERNAL AUDIT FUNCTION

The Audit Committee is supported by the in-house Internal Audit Department in discharging its duties and responsibilities. The internal audit function is established to add value and improve the Company’s operations and also to ensure consistency in the control environment and the application of policies and procedures. The in-house internal audit function provides an independent and objective feedback to the AC and the Board on the adequacy, effectiveness and efficiency of the internal control system within the Group. The Internal Auditors report to the AC on their audit findings, their recommendations of the corrective actions to be taken by Management together with Management’s responses in relation thereto. The Internal Auditors will follow up on the implementation of their recommendations by Management.

The Audit Committee ensure that the Internal Auditors are given full access to all documents relating to the Company’s governance, financial statements and operational assessments, and direct access to the Audit Committee.

The Internal Auditors undertakes internal audit functions based on the audit plan that has been reviewed and approved by the Audit Committee. The audit plan covers review of the adequacy of operational control, risk management, compliance with established policies and procedures, laws and regulations.

The Internal Auditors had during the financial year under review carried out reviews on the following functions of Syarikat Bukit Granite Sdn Bhd with the relevant reports prepared and submitted for AC’s review:-

  1. Issuance of Tax Invoices for project management and retails sales; and
  2. Issuance of Tax Invoices for project management and purchases.

The Internal Auditors, in the discharge of its duties had during the year conducted review on the guidelines and procedures for recurrent related party transactions of the Group and reported to the AC that the required policies, procedures and controls are in place and there was no exception noted. The proposed Internal Audit Plan for 2016 was also tabled to the AC for review.

It was reported that overall, the internal control for the key areas reviewed are in place and adequate and there are no major exceptions noted and reported by the Internal Auditors that requires AC’s attention.

This Report is made in accordance with the resolution passed at the Board of Directors’ Meeting held on 8 April 2016.