TERMS OF REFERENCE OF AUDIT COMMITTEE

1.0 Objectives

The principal objective of the Audit Committee is to assist the Board of Directors in discharging its statutory duties and responsibilities relating to risk management and accounting and reporting practices of the holding company and each of its subsidiaries and oversee the compliance with the relevant rules and regulations governing listed companies.

2.0 Size and Composition

The Audit Committee shall be appointed by the Board and comprise exclusively of non-executive directors. The number shall be at least three (3), of which the majority must be independent non-executive directors.

At least one (1) of the independent non-executive Directors of the Audit Committee must be a member of the Malaysian Institute of Accountants or fulfils such requirements as prescribed or approved by Bursa Malaysia Securities Bhd.

3.0 Chairman of the Audit Committee

The Audit Committee shall elect a Chairman from among its members and the elected Chairman shall be an independent non-executive Director.

In the event the elected Chairman is not able to attend a meeting, a member of the Audit Committee shall be nominated as Chairman for the meeting. The nominated Chairman shall be an independent non-executive Director.

4.0 Meetings of the Audit Committee

  • 4.1 Frequency

    • Meetings shall be held not less than four (4) times a year. In addition, the Chairman shall call for a meeting of the Audit Committee if requested to do so by any member of the Audit Committee, the Board of Directors, the senior management or the internal or external auditors.
    • Prior notice shall be given for the Audit Committee’s meeting.

  • 4.2 Quorum

    • A minimum of two (2) members, with a majority of independent non-executive Directors, shall form the quorum.

  • 4.3 Circular Resolution

    • A resolution in writing signed or approved by letter, electronic mail, telegram, telex or telefax or other form of electronic communication by MAJORITY of the Audit Committee members, shall be valid and effectual as if it had been passed at a meeting of the Audit Committee duly called and constituted.
    • All such resolutions shall be described as “Audit Committee Members’ Resolution in Writing” and shall be forwarded or otherwise delivered to the Company Secretary without delay and shall be recorded by the Company Secretary in the Company’s Minutes Book. Any such resolution may consist of several documents in the like form, each signed by one (1) or more Audit Committee members.

  • 4.4 Secretary of the Audit Committee

    • The Company Secretary shall be the secretary of the Audit Committee and shall be responsible for issuing the agenda with the concurrence of the Chairman and circulating it, supported with explanatory documentation to Audit Committee members prior to each meeting.
    • The secretary shall also be responsible for keeping the minutes of meetings of the Audit Committee, circulating them to Audit Committee members and to the other members of the Board of Directors and for following up on outstanding matters.
    • The secretary shall keep the minutes of meetings properly filed and shall produce the minutes of meetings for inspection when necessary.

5.0 Duties and Rights

  • 5.1 The duties of the Audit Committee shall include the following:-

    • 5.1.1 To review the following and report the same to the Board of Directors;
      • with the external auditors, the audit plan;
      • with the external auditors, their evaluation of the internal controls and management information systems;
      • with the external auditors, their audit report;
      • the adequacy of existing external audit arrangements, with particular emphasis on the scope and quality of the audit;
      • the quarterly and annual financial statements of the Group, focusing particularly on:
        • any changes in or implementation of major accounting policies and practices;
        • significant adjustments arising from the audit;
        • significant matters highlighted including financial reporting issues, significant judgements made by Management, significant and unusual events or transactions, and how these matters are addressed;
        • the going concern assumption; and
        • compliance with accounting standards and other legal requirements;
      • any management letter sent by the external auditors to the Company and the management’s response to such letter;
      • the assistance given by the Company’s officers to the external auditors;
      • all areas of significant financial risks and the arrangements in place to manage those risks;

    • 5.1.2 To consider the appointment/re-appointment of the external auditors, the audit fees and any questions of resignation or dismissal, including a formal evaluation of the external auditors at least once a year;
    • 5.1.3 To recommend the nomination of a person or persons as external auditors;
    • 5.1.4 To discuss with the external auditors before the audit commences, their audit plan including the nature and scope of audit, and ensure co-ordination where more than one audit firm is involved;
    • 5.1.5 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);

    • 5.1.6 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 that it has the necessary authority to carry out its work;
      • Review the internal audit programme and results of the internal audit process and where necessary, ensure that appropriate action is taken on the recommendations of the internal audit function;
      • Review any appraisal or assessment of performance of members of the internal audit function;
      • Approve any appointment or termination of senior staff members of the internal audit function;
      • Take cognisance of resignations of internal audit staff members and provide resigning staff member an opportunity to submit his reasons for resigning;
      • To discuss problems and reservations arising from the audits, and any matter the auditor may wish to discuss (in the absence of management where necessary);
      • Where the internal audit function is outsourced, the duties with regard to staffing of the internal audit function shall be modified and the service provider shall inform the Audit Committee on all relevant material changes in staffing.

      • To review the Risk Management Committee’s reports and assist in ensuring that an appropriate risk management framework is in place and controls to manage the risks are appropriate;
    • 5.1.7 To consider any related party transaction and potential conflict of interest situation that may arise within the Company or group;
    • 5.1.8 To consider the major findings of internal investigations and management’s response; and
    • 5.1.9 To consider other matters delegated by the Board of Directors.

  • 5.2 The Audit Committee shall:-

    • 5.2.1 Have explicit authority to investigate any matter within its terms of reference;
    • 5.2.2 Have the resources which it needs to perform its duties;
    • 5.2.3 Have full and unrestricted access to any information pertaining to the Company and its subsidiaries;
    • 5.2.4 Have direct communication channels with the external auditors and person(s) carrying out the internal audit function;
    • 5.2.5 Be able to obtain independent professional or other advice in the performance of its duties at the cost of the Company;
    • 5.2.6 Be able to invite outsiders with relevant experience to attend its meetings if necessary; and
    • 5.2.7 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.

  • 5.3 Management shall provide the fullest co-operation in providing information and resources to the Audit Committee, and in implementing or carrying out all requests made by the Audit Committee.

6.0 Audit Committee Reports

The 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 at least once a year, but more frequently if it so wishes.

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

A Statement on Risk Management and Internal Control shall be prepared at the end of each financial year that complies with regulatory guidelines for inclusion in the annual report of the Company.

An Audit Committee report shall be prepared at the end of each financial year that complies with sub paragraph (6.1) and (6.2) below.

  • 6.1 The Audit Committee Report must be clearly set out in the annual report of the Company;

  • 6.2 The Audit Committee Report shall include the following or such content as may be varied or prescribed by Bursa Malaysia Securities Berhad:-

    • 6.2.1 The composition of the Audit Committee, including the name, designation (indicating the Chairman) and directorship of the members (indicating whether the directors are independent or otherwise);
    • 6.2.2 The number of Audit Committee meetings held during the financial year and details of attendance of each Audit Committee member;
    • 6.2.3 A summary of the work of the Audit Committee in the discharge of its functions and duties for that financial year and how it has met its responsibilities; and
    • 6.2.4 A summary of the work of the internal audit function.

7.0 Rights of Auditors

  • 7.1 The external auditors and internal auditors have the right to appear and be heard at any meeting of the Audit Committee and shall so appear when required by the Audit Committee.

  • 7.2 Upon the request of the external auditors or internal auditors, the Chairman of the Audit Committee shall convene a meeting of the Committee to consider any matter that the auditors believe should be brought to the attention of the directors.

8.0 Functional Independence

The Audit Committee shall function independently of the other directors and officers of the Company and its group. Such other directors and officers may attend any particular Audit Committee meeting only at the Audit Committee’s invitation, specific to the relevant meeting.

9.0 Reporting of Breaches to the Exchange

Where an Audit Committee is of view that a matter reported by it to the Board of Directors has not been satisfactorily resolved resulting in a breach of the Listing Requirements, the Audit Committee must promptly report such matter to Bursa Malaysia Securities Berhad.

10.0 Retirement and Resignation

A member of the Audit Committee who wishes to retire or resign shall provide sufficient written notice to the Company so that a replacement may be appointed before he leaves. In the event of any vacancy resulting the number of the members reduced to below three (3) and the election of an Independent Chairman of the Audit Committee, the Company shall fill the vacancy within two (2) months, but in any case not later than three (3) months.

11.0 Review of the Audit Committee

The Nomination and Remuneration Committee must review the term of office and performance of an audit committee and each of its members annually to determine whether such audit committee and members have carried out their duties in accordance with their terms of reference.

 
Willowglen (Malaysia) Sdn. Bhd. (Company No. 351570-A). No 17, Jalan 2/149B, Taman Sri Endah, Bandar Baru Sri Petaling, 57000, Kuala Lumpur, Malaysia.
Tel: (603) 90571228 Fax: (603) 90571218

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