Terms of Reference of Audit Committee

  1. Constitution and Membership

    1. The Audit Committee shall be appointed by the Board of Directors from amongst their members of which shall fulfils the following requirements:-
      • the audit committee shall consist of not less than three (3) members, with a majority of them being independent directors;
      • all members of the audit committee shall be Non-Executive Directors and financially literate and are able to understand matters under the purview of the Audit Committee, including the financial reporting process; and
      • at least one (1) member of the Audit Committee:-
        • must be a member of the Malaysian Institute of Accountants; or
        • 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;
        • fulfils such other requirements as prescribed or approved by the Bursa Malaysia Securities Berhad (“Bursa Securities”).
    2. No alternate director is to be appointed as a member of the Audit Committee.
    3. Chairman of the Board should not be a member of the Audit Committee.
    4. The members of the Audit Committee shall elect a Chairman from amongst their members.
    5. A former key audit partner and/or the affiliate firm (including those providing advisory services, tax consulting etc.) of the Company or any entity within the Group must observe a cooling-off period of at least three (3) years before being appointed as a member of the Audit Committee.
    6. In the event of any vacancy in the Audit Committee resulting in the non-compliance of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the Board of Directors shall within three (3) months of that event fill the vacancy.
    7. The term of office and performance of the Audit Committee and each of its members shall be reviewed by the Nomination Committee annually to determine whether the Audit Committee and its members have carried out their duties in accordance with their terms of reference.
    8. All members of the Audit Committee should undertake continuous professional development to keep themselves abreast of relevant developments in accounting and auditing standards, practices and rules.

  2. Authority

    1. The Audit Committee in performing its duties shall in accordance with a procedure to be determined by the Board of Directors:-
      • have authority to investigate any matter within its terms of reference;
      • have full and unrestricted access to any information pertaining to the Company;
      • have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity;
      • have the resources which are required to perform its duties;
      • be able to obtain independent professional or other advice; and
      • 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.

  3. Functions and Duties

    1. To review the following and report the same to the Board of Directors:-
      • with the external auditors:-
        • the annual audit plan, its scope and nature; and special audit if necessary;
        • their evaluation of the system of internal control;
        • their audit report;
        • their management letter on internal control issues arising from the audit and management’s response; and
        • the assistance given by the employees of the Company to the external auditors
      • the quarterly results and year-end financial statements prior to the approval of the Board of Directors, focusing particularly on:-
        • changes in or implementation of accounting policies and practices;
        • significant highlighted issues including financial reporting issues, significant judgments made by management, significant and unusual events or transactions and how these matters are addressed;
        • compliance with accounting standards and other legal requirements;
        • significant adjustment arising from the audit;
        • the going concern assumption; and
        • major judgmental areas.
      • any related party transaction and conflict of interest situation that may arise within the Company or Group including any transaction, procedure or course of conduct that raises questions of management integrity; and
      • financial reporting process, detection of financial irregularities, to ascertain that the financial statements are consistent with operational and other information known, where there are significant matters requiring judgement.
    2. To monitor the management’s risk management practices and procedures.
    3. In respect of the appointment of external auditors:-
      • to review whether there is reason (supported by grounds) to believe that the external auditors are not suitable for re-appointment;
      • to consider the nomination of a person or persons as external auditors and to determine the audit fee;
      • to conduct annual assessment on the suitability, objectivity and independence of the external auditor through established policies and procedures; and
      • to consider any questions of resignation or dismissal of external auditors.
    4. To address the criteria on the appointment and re-appointment of the external auditors after assessing their independence. The criteria should include assessment of competence, audit quality, and resource capacity. The assessment may also consider the Annual Transparency Report of the audit firm, or in its absence, engage the firm on governance, quality control, and risk management.
    5. To assess the appropriateness of audit fees to support a quality audit.
    6. To approve non-audit services before they are rendered by the external auditors and its affiliates, considering the nature and extent of services and fees relative to the audit fee. If non-audit fees are significant (e.g., 50% or more of audit fees), the Company must disclose the nature of non-audit services in the Annual Report.
    7. Review any letter of resignation or suggestion for dismissal from the external auditors, including written representations or statements of circumstances, if applicable.
    8. In respect of the internal audit function:-
      • to review the adequacy of the scope, functions, budget, competency and resources of the internal audit function;
      • to review the internal audit programme, processes and results of assessments or investigations, ensuring appropriate action is taken;
      • to review performance appraisals of internal audit members, if any;
      • to approve appointment or termination of senior staff of internal audit; and
      • to acknowledge resignations and provide the opportunity for the staff to explain reasons for resigning.
    9. To promptly report to the Exchange if any matter has not been satisfactorily resolved by the Board, resulting in a breach of Main Market Listing Requirements.
    10. To carry out other functions mutually agreed upon by the Audit Committee and the Board.

  4. Meetings

    1. Frequency
      • Meetings shall be held not less than four (4) times in a financial year.
      • The Chairman shall convene meetings upon request of the external auditors to address matters they believe should be brought to the attention of the Directors or shareholders.
    2. Quorum
      • A quorum shall consist of the majority of members present, who must be independent directors.
    3. Secretary
      • The Secretary of the Audit Committee shall be the Company Secretary. In their absence, another person authorised by the Chairman of the Audit Committee shall assume the role.
    4. Attendance
      • The Head of Finance, the Internal Auditors and representatives of the external auditors shall normally attend meetings upon invitation by the Audit Committee.
      • Other Board members and employees may attend meetings only at the invitation of the Audit Committee.
      • At least twice in a financial year, the Audit Committee shall meet with the external auditors without the presence of executive Board members.
    5. Reporting Procedure
      • The minutes of each meeting shall be circulated to all members of the Audit Committee.
      • The Audit Committee shall report to the Board on any key issues affecting the Company and its subsidiaries.
    6. Meeting Procedure

      The Audit Committee shall regulate its own procedures, in particular:-

      • the calling of meetings;
      • the notice to be given of such meetings;
      • the voting and proceedings of such meetings;
      • the keeping of minutes; and
      • the custody, production, and inspection of such minutes.

      The notice of each meeting confirming the date, time, venue, and agenda of items to be discussed shall, unless under exceptional circumstances, be forwarded to each member of the Audit Committee at least three (3) business days in advance of the scheduled meeting date. Supporting papers shall be sent to Committee members and other attendees, as appropriate, at the same time.

      The meetings of the Committee may be conducted via telephone conferencing or other methods of simultaneous electronic or telegraphic communication. The minutes of such meetings, signed by the Chairman, shall be conclusive evidence of the proceedings.

      A resolution in writing signed or approved via letter, facsimile, or other electronic means by a majority of members, all of whom must be Independent Directors, shall be effective for all purposes as if it were a resolution passed at a duly convened meeting. Any such resolution may consist of several documents in like form, each signed by one or more members.

*These Terms of Reference should be reviewed annually and be amended as required, subject to the approval of the Board.