hock seng lee berhad

audit committee – terms of reference

Establishment

  1. The Board of Directors of Hock Seng Lee Berhad resolved to establish an Audit Committee on 23 March 1996. The present terms of reference was approved by the Board on 28 February 2008.

 

Objectives

2. The objectives of the Audit Committee are :-

  • to comply with Paragraph 3.15 and Chapter 15 Part C of the Listing Requirements of the Bursa Malaysia Securities Berhad (“Listing Requirement’); and
  • to assist the Board of Directors in the effective discharge of its responsibilities relating to financial reporting, corporate governance and corporate control.

 

composition

  1. The Board of Directors shall appoint an Audit Committee with no fewer than three (3) directors from among their number (excluding alternate directors).
  1. All member of the Audit Committee should be non-executive directors, majority of whom must be independent directors with at least one member who is a member of the Malaysian Institute of Accountants or a member who fulfils the requirements of the Listing Requirements.
  1. The members of the Audit Committee shall elect a chairman from among their number who shall be an independent director.
  1. In the event of any vacancy in the Audit Committee resulting in the non-compliance of clause 2 or clause 3 above, the Board of Directors shall appoint such member or members to fill the vacancy within three (3) months.
  1. The members of the Audit Committee and the chairman of the Audit Committee shall be re-appointed annually by the Board of Directors and the members of the Audit Committee respectively.

 

meetings

  1. The Audit Committee shall hold at least three meetings a year and any additional meetings at the discretion of the Chairman of the Audit Committee in order to fulfil its duties.
  1. The head of Internal Audit will attend the meetings. The Audit Committee members shall meet with the external auditors at least twice a year, without any executive board members present.
  1. Other directors and employees of the Company may attend any particular Audit Committee meeting only at the Audit Committee’s invitation, specific to the relevant meeting.
  1. The quorum for each meeting shall be two members and the majority of the members present must be independent directors.
  1. The Company Secretary shall be the Secretary of the Audit Committee.

 

Authority

  1. The Audit Committee shall, wherever necessary and reasonable for the performance of its duties and 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 the resources which are required to perform its duties;
  • have full and unrestricted access to any information pertaining to the Company and the Group;
  • have direct communication channels with both the internal and external auditors;
  • be able to obtain independent professional or other advice; and
  • be able to convene meetings with the external auditors, internal auditors or both, excluding the attendance of other directors and employees of the Company, whenever deemed necessary

 

duties and responsibilities

  1. The duties and responsibilities of the Audit Committee shall be :
Financial Reporting

i   To review the quarterly results and the annual audited financial statements, prior to the approval by the Board of Directors, focusing particularly on :-

  • any changes in or implementation of major accounting policies and practices;
  • significant adjustments arising from the audit;
  • significant and unusual events;
  • the going concern assumption; and
  • compliance with accounting standards and other legal requirements.
Internal Control and Risk Management

ii    To review the adequacy and effectiveness of risk management and internal control systems of the Group;

Internal and external audit

iii    To 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;

iv   To review the effectiveness and quality of the control environment, the management information and the internal control systems of the Company and the Group including the scope of the internal audit plan, processes and performance, the results of the internal audit, processes or investigations undertaken and whether or not appropriate action is taken on the recommendations of the internal audit;

v    To review any appraisal or assessment of the performance of members of the internal audit function and the appointment or termination of senior staff member;

vi   To review with the external auditor, their audit plan including the nature and scope of audit, their evaluation of the system of internal controls including their audit findings / external auditor’s management letters and actions taken by management to rectify any matter noted and the audit reports;

vii   To ensure that the assistance and cooperation given by the employees of the Company and the Group to the internal and external auditors is at a level which enables them to complete their work economically, efficiently and effectively;

viii  To recommend to the Board of Directors the appointment and remuneration of the external auditors and any questions of resignation or dismissal of the external auditors;

related party transactions

ix   To review any related party transactions that may arise within the Company and the Group;

other functions

x    to perform any other functions as may be agreed by the Board of Directors.

 

reporting

  1. The Secretary shall circulate the minutes of meetings of the Audit Committee to all members of the Board of Directors.
  1. The Audit Committee shall prepare a report for the board of directors at the end of each financial year summarising the activities carried out by the Audit Committee and the internal audit functions that comply with the listing requirements, for inclusion in the annual report.

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