Audit Committee

HomeAudit Committee

Membership

Directors

Chong Peng Khang Chairman
Yap Koon Roy Member
Peter Yong Kuen Fook Member

Terms of Reference

1. PURPOSE

The principle objective of the Audit Committee (“AC”) is to assist the Board of Directors (“Board”) in discharging its fiduciary responsibilities relating to financial reporting process and internal controls of the Group.

2. COMPOSITION AND APPOINTMENT

  1. The Board shall appoint the AC members from amongst themselves, comprising no fewer than three (3) non-executive directors. The majority of the AC members shall be independent directors.In this respect, the Board adopts the definition of “independent director” as defined under the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”) and any practice notes issued thereto.
  2. All members of the AC shall be financially literate and be able to understand matters under the preview of AC including financial reporting process.
  3. At least one (1) member of the AC must be:-
    1. a member of the Malaysian Institute of Accountant (“MIA”); or
    2. if he is not a member of MIA, he must have at least three (3) years of working experience and:
      1. he must have passed the examinations specified in Part I of the First Schedule of the Accountants Act 1967; or
      2. he must be a member of one of the associations of the accountants specified in Part II of the First Schedule of the Accountants Act 1967; or
    3. fulfils such other requirements as prescribed or approved by Bursa Securities.
  4. No alternate director of the Board shall be appointed as a member of the AC.
  5. No former key audit partner shall be appointed as a member of the AC before first observing a cooling-off period of at least 2 years.
  6. The term of office and performance of the AC and each of its members shall be reviewed by the Nomination Committee annually to determine whether such AC and members have carried out their duties in accordance with their terms of reference.
  7. In the event of any vacancy in the AC, the vacancy must be filled within three (3) months of that event as may be required to ensure compliance with Bursa Securities MMLR requirements.

3. CHAIRMAN

  1. The members of the AC shall be elected amongst themselves who shall be an Independent Director. The Chairman of the AC shall not be the Chairman of the Board.
  2. In the absence of the Chairman of the AC, the other members of the AC shall amongst themselves elect a Chairman who must be independent director to chair the meeting.

4. AUTHORITY

  1. The AC shall is authorised by the Board and at the expense of the Group to:-
    1. Have explicit authority to investigate any matter within its terms of reference, the resources to do so, and full access to information. All employees shall be directed to co-operate as requested by members of the AC.
    2. Have full and unlimited/unrestricted access to all information and documents/resources which are required to perform its duties as well as to the internal and external auditors and senior management of the Company and Group.
    3. Obtain independent professional or other advice or other services.
    4. Have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity (if any).
    5. Where the AC is of the view that the matter reported by it to the Board has not been satisfactorily resolved resulting in a breach of the MMLR, the AC shall promptly report such matter to Bursa Securities.
    6. Convene meetings with the external auditors, the person(s) carrying out the internal audit function or activity or both, without the presence of executive members of the AC, whenever deemed necessary.
  2. Notwithstanding anything contrary hereinbefore stated, the AC does not have executive powers and shall report to the Board on matters considered and its recommendations thereon, pertaining to the Company and the Group.

5. DUTIES AND RESPONSIBILITIES

The overall duties and responsibilities of the AC are as follows:

  1. Financial Reporting
    1. To review the quarterly and year-end financial statements of the Company and the Group, focusing particularly on:–
      1. any change in or implementation of accounting policies and practices;
      2. significant matters highlighted including financial reporting issues, significant judgement made by the Management, significant and unusual events or transactions, and how these matters are addressed; and
      3. the going concern assumption; and
      4. compliance with applicable approved accounting standards and other legal requirements.
  2. External Audit
    1. To consider and recommend to the Board for approval of the appointment or re-appointment of the external auditor, the audit fee and any question of resignation or dismissal;
    2. To review the following:-
      1. any letter of resignation from the external auditors; and
      2. whether there is reason (supported by grounds) to believe that the external auditors are not suitable for reappointment.
    3. To assess the performance, suitability, objective and independence of the external auditors on an annual basis.
    4. To recommend the nomination of person or persons as external auditors.
    5. To review the following with the external auditors:-
      1. the nature and scope of audit, including the coordination of audit where more than one audit firm involved;
      2. the audit plan;
      3. the assistance given by the employees to external auditors;
      4. the evaluation system of internal controls,
      5. the effectiveness of the management information system, including any improvement suggestions and management’s response;
      6. any change in or implementation of accounting policies and practices;
      7. the external auditors’ audit reports; and
      8. the management letter from the external auditors and Management’s response to their suggestions for improvements.
    6. To discuss any significant audit findings, reservations and difficulties encountered arising from the interim and final audits, or material internal control weaknesses reported by the external auditors and other matter the external auditors and any matter the external auditors may wish to discuss (in the absence of the Management).
  3. Internal Audit
    1. To determine the remit of the internal audit function;
    2. To ensure that the internal audit function is effective an able to function independently.
    3. 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;
    4. To review the internal audit plan, processes, the results of the internal audit assessments, investigation undertaken and, where necessary, ensure that appropriate actions are taken on the recommendations of the internal audit function;
    5. To review any appraisal or assessment of the performance of members of the internal audit function;
    6. To review the following:-
      1. any letter of resignation from the internal auditors; and
      2. whether there is reason (supported by grounds) to believe that the internal auditors are not suitable for reappointment.
  4. Risk Management and internal control
    1. To review the adequacy and effectiveness of risk management, internal control and governance systems implemented within the Group;
    2. To monitor risk management processes are integrated into all core business processes and that the culture of the organization reflects the risk consciousness of the Board;
    3. To review the Risk Register/Report and ensure that all risks are well managed;
    4. To review the enterprise risk rating and determine the risks to be escalated to the Board once a year;
    5. To review a consolidated risk and assurance report to the Board to support the statement relating to risk management and internal control in the Company’s annual report; and
    6. To review the Group’s risk management policy and implementation of the risk management framework.
  5. Related Party Transaction
    1. To consider any related party transactions 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.

6. MEETINGS

  1. Frequency of Meeting
    1. The AC shall meets at least give (5) times a year with due notice of issues to be discussed, and shall record its conclusions in discharging its duties and responsibilities. In addition, the Chairman may call for additional meetings at any time at the Chairman’s discretion.
    2. Upon the request of the external auditors, the Chairman of the AC shall convene a meeting of the AC to consider any matter the external auditors believe should be brought to the attention of the directors or shareholders.
    3. A member of AC may participate in meeting of AC by means of telephone of a telephone conference or video conference or any other means of audio-visual communications and the person shall be deemed to be present in person at the meeting and shall be entitled to vote or be counted in a quorum accordingly.
  2. Notice and Agenda
    1. Notice of AC meetings shall be circulated to all the AC members and those who are required to attend the meeting at least five (5) working days before each meeting unless the AC waives such requirement.
    2. The AC shall engage on a continuous basis with senior management, such as the Chairman, the Managing Director, the Executive Directors, the internal auditors and the external auditors in order to be kept informed of significant matters affecting the Company.
    3. The Executive Directors, the representatives of internal auditor and external auditors should normally attend meetings. Other Board members and employees may attend meetings upon the invitation of the AC.
    4. The AC shall be entitled to convene meetings with the external auditors, the internal auditors or both, without executive Board members or employees present whenever deemed necessary and at least twice a year with the external auditors, and at least once a year with the internal auditors.
    5. Questions arising at any meeting of the AC shall be decided by a majority of votes of the members present, and in the case of equality of votes, the Chairman of the AC shall have a second or casting vote.
  3. Circular ResolutionA resolution in writing signed or approved by letter, electronic mail, telex or telefax or other form of electronic communications by the majority of the members who are sufficient to form a quorum, shall be valid and effectual as if it had been passed at a meeting. All such resolutions shall be described as “AC Members’ Circular Resolutions” and shall be forwarded or otherwise delivered to the Company Secretary without delay and shall be recorded by the Company Secretary in the minutes book. Any such resolution may consist of several documents in like form, each signed by one or more members.
  4. Quorum

    The quorum for the AC meeting shall be the majority of members present whom must be Independent Directors.

  5. Secretary

    The Company Secretary shall be the Secretary of the AC and shall be responsible for keeping the minutes of meetings of the AC, circulating them to members of the AC and to the other members of the Board, and for following up on outstanding matters.

  6. Meeting Minutes
    1. Minutes of each meeting shall be kept at the registered office and distributed to each member of the AC and also to the other members of the Board.
    2. The minutes of each AC meeting shall be tabled to the Board for notation.
    3. The minutes of the AC meeting shall be signed by the Chairman of the meeting at which the proceedings were held or by the Chairman of the next succeeding meeting.

7. REVIEW OF THE AUDIT COMMITTEE

The Board through the Nominating Committee shall review the term of office and performance of the AC and each of its members annually to determine the effectiveness of the AC and each of its members in carrying out their duties in accordance with their terms of reference.

8. REPORTING

  1. The AC shall prepare a report each year concerning its activities in compliance with these terms of reference to be tabled to the Board and for inclusion in the Company’s Annual Report.
  2. The AC Chairman shall report on each meeting, either formally in writing or verbally, to the Board regarding all relevant matters and appropriate recommendations, for noting or approval by the Board.
  3. The AC shall report to the Board on any specific matters referred to it by the Board for investigation and report.
  4. The AC may from time to time submit to the Board its recommendation on matters within its purview, for the Board’s decision.

9. REVIEW OF THE TERMS OF REFERENCE

The AC shall recommend any changes to its terms of reference in such manner as the AC deems appropriate to the Board for approval. The terms of reference shall be assessed, reviewed and updated where necessary, to reflect the current best practice in corporate governance and risk management, MMLR of Bursa Securities or any other regulatory requirements.

© 2018 Hock Heng Stone Industries Bhd (840040-H). All rights reserved.