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Board Audit Committee’s Terms of Reference

 

BOARD AUDIT COMMITTEE’S TERMS OF REFERENCE

 

 

1.0       CONSTITUTION

 

1.1     The Board Audit Committee ("BAC") was formed by the Board of Directors pursuant to its meeting held on 26 August 2010.

 

 

2.0       MEMBERSHIP

 

2.1     The BAC shall be appointed by the Board of Directors amongst the directors of the Company who fulfill the following requirements:-

 

(a)         the BAC must be composed of no fewer than three (3) members; a majority of the BAC members must be Independent Directors;

 

(b)         the BAC must be made up entirely of Non-Executive Directors who should be financially literate; and

 

(c)         at least one (1) member of the BAC :-

 

(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;

 

  1. he must have passed the examinations specified in Part 1 of the First  Schedule of the Accountants Act 1967; or
  2. he must be a member of one (1) of the associations of accountants specified in Part II of the First Schedule of the Accountants Act 1967; or

     

(iii)             fulfills such other requirements as prescribed or approved by Bursa Malaysia Securities Berhad.

 

(d)         A former key audit partner to observe at least a 2-year cooling-off period before being appointed as a member of the Audit Committee.

 

2.2        The members of the BAC shall elect a Chairman from amongst themselves who shall be an Independent Director.

 

2.3        No alternate Director shall be appointed as a member of the BAC.

 

    1. In the event of any vacancy in the BAC resulting in the non-compliance of the Main Market Listing Requirements of Bursa Securities pertaining to the composition of the audit committee, the Board of Directors shall within three (3) months of that event fill the aforesaid vacancy.

       
    2. The terms of office and performance of the BAC and each of its members must be reviewed by the Board of Directors at least once every three (3) years to determine whether the BAC and its members have carried out their duties in accordance with their terms of reference.

 

 

3.0       MEETINGS

 

3.1     Frequency

 

  1. Meetings shall be held not less than four (4) times a year.

     
  2. Upon the request of the external auditors, the Chairman of the BAC shall convene a meeting to consider any matter the external auditors believe should be brought to the attention of the Directors or shareholders.

 

3.2        Quorum

 

A quorum shall be two (2) members, both being Independent Directors and one of whom shall be the Chairman of

          the BAC.

 

3.3         Secretary

 

The Company Secretary or, in his absence, another person authorised by the Chairman of the BAC, shall be the Secretary of the BAC.

 

3.4    Attendance

 

  1. The President/Chief Executive Officer, the Chief Financial Officer, Head Internal Audit and a representative of the external auditors shall normally attend meetings.

     
  2. Other Directors and employees may attend any particular meeting only at the BAC's invitation, specific to the relevant meeting.

 

3.5        Reporting Procedure

 

The minutes of each meeting shall be circulated to all members of the Board.

 

3.6        Meeting Procedure

 

The BAC shall 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.

 

 

4.0       RIGHTS

 

4.1     The BAC in performing its duties shall, in accordance with a procedure to be determined by the Board of Directors:

 

(a)         have the authority to investigate any matter within its term of reference;

 

(b)         have the resources which are required to perform its duties;

 

(c)         have full and unrestricted access to any information pertaining to the Company;

 

(d)         have direct communication channels with the external auditors and person(s) carrying out the internal audit functions or activities;

(e)         be able to obtain independent advice, whether professional or otherwise, pertaining to any matter within its term of reference; and

 

(f)          be able to convene meetings with the external auditors, the internal auditors or both while excluding the attendance of other directors and employees of the Company, whenever deemed necessary.

 

 

5.0       DUTIES AND FUNCTIONS

 

5.1     The duties and functions of the BAC shall be:-

 

(a)    External Audit

 

  1. To consider the appointment of the external auditors, the audit fees and any question in relation to resignation or dismissal of the external auditors before making recommendation to the Board; and

     
  2. To review and discuss with the external auditors, before the audit commences, the nature and scope of the audit, and ensure coordination where more than one audit firm is involved.

(b)    Internal Audit

 

(i)           To review the internal audit plan, consider the major findings of internal audits and Management's responses, and ensure coordination between the internal and external auditors;

 

(ii)          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 out its work;

 

(iii)        To approve the appointment/termination of the Head of Internal Audit;

 

(iv)        To review the audit reports; 

 

(v)         To direct and where appropriate supervise any special project or investigation considered necessary;

 

(vi)        To prepare periodic reports to the Board summarising the work performed in fulfilling the BAC's primary responsibilities; and

 

(vii)       To determine the remit of internal audit function which reports directly to the BAC. The internal audit function should be independent of the activities they audit and should be performed with impartiality, proficiency and due professional care.

 

(c)    Financial Reporting Review

 

(i)           any change in accounting policies and practices;

 

(ii)          significant and unusual events;

 

(iii)        major judgemental areas;

 

(iv)        significant adjustments resulting from the audit;

 

(v)         the going concern assumption;

 

(vi)        compliance with accounting standards; and

 

(vii)       compliance with other legal requirements and Main Market Listing Requirements of Bursa Securities.

 

(d)         Related Party Transaction

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

 

(e)         Internal Control

To keep under review the effectiveness of internal control systems and the internal and/or external auditors' evaluation of these systems and in particular review the external auditors' Management Letter and Management's responses.

 

(f)          Risk Management
 
To monitor the Management's risk management practices and procedures.

(g)         Other Matters

 

(i)           To arrange for periodic reports from Management, the external auditors and the internal auditors to assess the impact of significant regulatory changes and accounting or reporting developments proposed by accounting and other bodies, or any significant matter that may have a bearing on the annual examination;

 

(ii)          To discuss problems and reservations arising from the internal audit, interim and final audits, and matters the internal and external auditors may wish to discuss (in the absence of Management where necessary);

 

(iii)        Where the BAC is of the view that a matter reported by it to the Board has not been satisfactorily resolved resulting in a breach of the Main Market Listing Requirements, the BAC must promptly report such matter to the Securities Commission; and

 

(iv)        Carrying out any other functions that may be mutually agreed upon by BAC and the Board.