Email This Print This Terms of Reference of Audit Committee

1.0COMPOSITION OF THE COMMITTEE
 

The Board of Directors shall appoint the Committee from amongst its members who fulfil the following requirements: -

1.1At least three (3) non-executive directors, a majority of whom are independent directors;
1.2.At least one member of the audit 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 3 years' working experience and -
(aa)he must have passed the examinations specified in Part I of the First Schedule of the Accountant Acts 1967; or
(ab)he must be a member of the associations of accountants specified in Part II of the First Schedule of the Accountants Act 1967; or
(iii)fulfils such other requirements as prescribed or approved by the Bursa Malaysia Securities Berhad.
1.3No alternate directors shall be appointed as a member of the Committee.
1.4The members of the Committee must elect a Chairman from among themselves who is an Independent Director.
1.5All members of the Committee hold office only so long as they are Directors of the Company. In the event the vacancy in the Committee, arising from retirement or resignation or non-compliance with paragraphs 1.1, 1.2 and 1.4 above, with the result that the number of members is reduced below 3, the Board of Directors must fill the vacancy within 3 months.
2.0OBJECTIVES
 

The primary objectives of the Committee are to: -

2.1Assist the Board of Directors in fulfilling its fiduciary responsibilities particularly in the areas of accounting and management controls, financial reporting and to ensure financial statements comply with the applicable financial reporting standards;
2.2Reinforce the independence and objectivity of the Internal Audit Division;
2.3Provide the focal point for communication between external auditors, internal auditors, risk managers, Directors and the Management on matters in connection with accounting, reporting, risks and controls and providing a forum for discussion independent of the Management; and
2.4Undertake additional duties as may be deemed appropriate and necessary to assist the Board of Directors.
3.0RIGHTS
 

The Committee shall: -

3.1Have the authority to investigate any matter within its terms of reference;
3.2Have the resources, which are required to perform its duties;
3.3Have full and unrestricted access to any information pertaining to the Company and the Group;
3.4Have direct communication channels with external auditors, internal auditors and risk managers;
3.5Be able to obtain independent professional or other advice; and
3.6Have the authority to convene meetings with external auditors, internal auditors or both, in the absence of other directors and employees, at least twice a year.
4.0DUTIES AND RESPONSIBILITIES
 

The following are the main duties and responsibilities of the Audit Committee: -

4.1External Audit
a.To review with external auditors, their audit plan, scope and nature of the audit;
b.To review with external auditors, their audit report and audit findings and Management's response including the status of previous audit recommendations.
c.To recommend the nomination of a person or persons as external auditors;
d.To consider the appointment of external auditors, their audit fee and any question of their resignation or dismissal and to make recommendations to the Board.
e.Assess the qualification, expertise, resources, effectiveness, suitability and independence of the external auditors.
f.Monitor the effectiveness of the external auditors' performance and their independence and objectivity.
g.Review the assistance given by the Group's officers to the external auditors and any difficulties encountered in the course of the audit work, including any restrictions on the scope of activities or access to required information.
h.To approve the provision of non-audit services by the external auditors, evaluating whether such non-audit services would impair their independence.
i.To ensure that there are proper checks and balances in place so that the provision of non-audit services does not interfere with the exercise of independent judgment of the auditors
j.To meet with the external auditors at least once a year without the presence of the management to discuss any key concerns and obtain feedbacks.
k.To ensure that the financial statements are prepared in a timely and accurate manner with frequent reviews of the adequacy of provisions for loan impairments and values ascribed to financial instruments.
4.2.Financial Reporting

To review the Group's quarterly financial statements and reports, the Group's and Company's audited annual financial statements before submission to the Board of Directors for approval, focusing on: -

i.Changes in or implementation of major accounting policy changes;
ii.Significant matters highlighted including financial reporting issues, significant judgments made by management, significant and unusual events or transactions, and how these matters are addressed; and
iii.Compliance with accounting standards and other legal requirements.
4.3.Related party transaction

Review any related party transactions and conflict of interest situation that may arise within the Company or Group including any transaction, procedures or course of conduct that raises questions on Management's integrity;

4.4.Internal Audit

To establish an internal audit function and identify a Head of Internal Audit who reports directly to the Audit Committee. The Head of Internal Audit will be responsible for the regular review and /or appraisal of the effectiveness of the risk management, internal control and governance processes within the Company and the Group;

To do the following, in relation to the internal audit functions: -

a)Review the adequacy of the scope, functions, resources and competency of the Internal Audit Division and that it has the necessary authority to carry out its duties;
b)Review the internal audit programme, processes, results of the internal audit programme, processes or investigation undertaken and whether or not appropriate action is taken on the recommendation of the Internal Audit Division.
c)To perform the appointment, transfer or removal of the Head of Internal Audit. The appraisal of the Head of Internal Audit would be evaluated and moderated by the Chairman of the Audit Committee;
d)To evaluate and review or assessment the performance and decide on remuneration package of internal auditors.
e)Approve any appointment or termination of senior staff members of the internal audit function;
f)Take cognisance of resignations of senior internal audit staff members and provide the resigning staff member an opportunity to submit his reasons for resigning.
g)Ensure that the internal audit function is adequately resourced and staffed with competent and well trained officers.
h)Ensure the independence of the internal audit function.
i)On a regular basis, meet separately with the Head of Internal Audit to discuss any matters that the committee or internal audit believes should be discussed privately.
j)To ensure the internal audit function is well placed to undertake review or investigation on behalf of the AC, thus internal auditors should have an appropriate standing within the institution and be placed under the direct authority and supervision of the AC.
k)Review the effectiveness of the infrastructure for ensuring Shariah compliance.
l)Exercise direct authority and supervision over the functions of the Internal Audit Division and review its effectiveness and compliance with "BNM Guidelines on Internal Audit Function" requirement.
4.5.Write off

To review, evaluate and endorse all debts writing off.

4.6.Others
a)To undertake any other activities as authorised by the Board of Directors.
b)To review operational policies and processes of the Group and to formulate new ones where appropriate with a view to improve efficiency, cost effectiveness and control over the resources of the Group.
4.7.Training

The committee is entitled to and required to attend structured training programmes organised for independent directors to enable them to better fulfil their responsibilities.

5.0MEETINGS
 

The Committee shall: -

5.1The Committee meets every quarter or more frequently as circumstances dictate.
5.2In order to form a quorum in respect of a meeting of an audit committee, the majority of members present must be independent directors.
5.3As part of its duty to foster communication, the Chief Executive Officer, the Management Team and the Head of Internal Audit are invited to attend the meetings for the purpose of briefing the Committee on the activities involving their areas of responsibilities. The presence of the external auditors will be requested when required.
5.4The Chairman of the Committee shall report and update the Board of Directors on significant issues and concerns discussed during the Committee meetings and where appropriate, make the necessary recommendations to the Board of Directors.
5.5The Chairman of the Committee should engage on continuous basis with senior management, such as Chairman, the Chief Executive Officer, the Chief Financial Controller, the Head of Internal Audit and the external auditors in order to be kept informed of matters affecting the Company and the Group.
5.6The Head of Internal Audit shall be the Secretary to the Committee.