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AUDIT COMMITTEE CHARTER

  1. PURPOSE

    The purpose of this Audit Committee Charter is to provide guideline for the organization, operation and governance of the Audit Committee.

  2. SCOPE
  3. REFERENCE

  4. DEFINITIONS/ABBREVIATIONS

  5. GENERAL POLICY

    5.1 Objective of Audit Committee

    The Audit Committee is appointed by the Board to assist the Board in the oversight of:

    1. The integrity of the financial statements of the Company

    2. The independent auditors’ qualifications and independence

    3. The quality of the audit conducted by the internal and external auditors;

    4. The adequacy of the Company’s control environment;

    5. The compliance by the Company with legal and regulatory requirements and observance of a proper code of conduct; and

    6. The Company’s policies and practices with respect to major risk exposure

    5.2 Composition

    The Audit Committee shall be appointed by the Board of Directors on the recommendation of the Nomination Committee from amongst their members and comprising not less than three (3) members, all of whom shall be Non-Executive Directors, with a majority being Independent Directors. An Independent Director shall be the one who fulfills the requirements as provided in the Listing Requirements of Bursa Malaysia Securities Berhad.


    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, must have at least three (3) years working experience and either have passed the examinations specified in Part I of the First Schedule of the Accountants Act, 1967, or a member of one of the associations of accountants specified in Part II of the First Schedule of the Accountants Act, 1967 or fulfils such other requirements as prescribed or approved by Bursa Malaysia Securities Berhad.


    No Director may serve as member of the Audit Committee if such Director serves on the audit committee of more than two (2) other public companies unless the Board determines that such simultaneous service would not impair such director’s ability to serve effectively on the Audit Committee.


    The members of the Audit Committee shall elect a Chairman from amongst their number who shall be an Independent Non-Executive Director. No alternate Director shall be appointed as a member of the Committee.


    If a member of the Audit Committee, for whatever reason, ceases to be a member with the result that the number of members is reduced below three (3), the Board of Directors shall, within three (3) months of the event, appoints such number of new members as may be required to make up the minimum number of three (3) members.

    5.3 Audit Committee Authority

    The Audit Committee shall have the sole authority to appoint or replace the independent auditors (subject, if applicable, to shareholder ratification), and shall approve all audit engagements and the fees and terms thereof and all non-audit engagements with the independent auditors. The Audit Committee may consult with Management but shall not delegate these responsibilities to Management. The independent auditors shall report directly to the Audit Committee.


    The Audit Committee shall be directly responsible for the compensation and oversight of the work of the independent auditor (including resolution of disagreements between Management and the independent auditor regarding financial reporting) for the purpose of preparing and issuing an audit report or related work.


    The Audit Committee may delegate to a member of the Committee the authority to approve audit engagements and permitted non-audit engagements with the independent auditors. If such authority is delegated, any decisions to pre-approve any activity shall be presented to the full Audit Committee at its next meeting.


    The Audit Committee is authorized by the Board of Directors to investigate any activity within its terms of reference and shall have unlimited access to both the internal and external auditors, as well as the employees of the Company. All employees are directed to co-operate with any request made by the Audit Committee.


    The Audit Committee shall also 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.


    The Committee shall have unlimited access to all information and documents relevant to its activities, to the internal and external auditors, and to senior management of the Company.


    The Committee shall have the authority to obtain independent legal or other professional advice as it considers necessary.The Company shall provide appropriate funding, as determined by the Audit Committee, for payment of compensation to any advisors employed by the Audit Committee.


    It shall also have the power to establish Sub-Audit Committee(s) to carry out certain investigation on behalf of the Committee in such manner, as the Committee shall deem fit and necessary.

    5.4 Audit Committee Oversight Responsibilities

    The Audit Committee recognizes that the preparation of the Company’s financial statements and other financial information is the responsibility of the Company’s management. The auditing, or conducting limited reviews, of those financial statements and other financial information is the responsibility of the Company’s independent auditors. The Company’s financial executive management and its independent auditors, in the exercise of their responsibilities, acquire greater knowledge and more detailed information about the Company and its financial affairs than the members of the Committee. Consequently, the Committee is not responsible for providing any expert or other special assurance as to the Company’s financial statements and other financial information.


    The Committee’s responsibility is to oversee the financial reporting process and practices of the Company and to assist the Board in fulfilling its responsibilities to the shareholders, potential shareholders and the investment community to ensure the corporate accounting and reporting practices of the Company are in accordance with all applicable requirements. The Audit Committee members are not expected to conduct field work or other types of technical reviews to assure themselves of the quality of work performed. The Committee shall be entitled to rely upon the integrity of the Company’s financial executive management and the independent auditors. Should financial executive management or the independent auditors become aware that information provided to the Committee cannot be relied upon, that party has the responsibility to promptly report such findings to the Audit Committee and the Board of Directors.

    The Audit Committee, to the extent it deems necessary or appropriate, shall:

    1. Review and reassess the adequacy of this Charter annually, and when considered necessary, make recommendations to the Board to modify it;

    2. Conduct an annual performance evaluation of the Committee and report to the Board of Directors;

    3. consider and recommend the appointment and re-appointment of the external auditors, the compensation and any questions of resignation or dismissal, if any;

    4. discuss with the external auditors on their audit plan including the assistance given by the employees of the Company to the external auditors;

    5. review and discuss the quarterly financial statements and audited financial statements of the Company, with the Management and the independent auditors, focusing particularly on:

      • any changes in accounting policies and practices;

      • significant adjustments arising from the audit;

      • the going concern assumption;

      • compliance with accounting standards and other legal requirements; and

      • significant and unusual events;

    6. discuss problems and reservations arising from the interim and final audits, and any matter the auditors may wish to discuss, including resolution of disagreements between management and the independent auditors regarding financial reporting (in the absence of management where necessary);

    7. review the external auditors’ management letter and management’s response;

    8. do the following where an internal audit function exists;

      • 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, processes, results of the internal audit programme, processes or investigation undertaken and whether or not, appropriate action is taken on the recommendations of the internal audit function;

      • review any appraisal or assessment of the performance of the internal audit function;

      • approve any appointment or termination of the internal audit function;

      • review the resignation of internal audit function and its reasons for resigning;

    9. consider any related party transactions that may arise within the Company or the Group including any transaction, procedure or course of conduct that raises questions of management integrity;

    10. verify that the allocation of options at the end of each financial year is in compliance with the allocation criteria stipulated in the By-Laws of the ESOS;

    11. consider the major findings of internal investigations and management’s response; and

    12. consider other topics as defined by the Board.

  6. OPERATING GUIDELINE

    6.1 The Committee is at liberty to determine the frequency of its meetings which in any event shall not be less than four (4) times a year. The quorum shall consist of two (2) members of whom the majority of members present must be independent directors.

    6.2 The Senior Finance Manager and representatives of the internal and external auditors should normally attend meeting. Other Board members may attend meeting upon the invitation of the Committee. However, the Committee should meet with the external auditors without Executive Board members present at least twice a year. The Committee may invite any person to be in attendance to assist in its deliberations.

    6.3 Operation of the Committee meeting is stipulated in the Board Charter.

    6.4 The Audit Committee shall report to the Board on its activities through presentations during the next Board meeting and/or by submission of the Minutes of the Audit Committee meetings to the Board.

  7. REPORTING

    7.1 The Audit Committee shall, through its Chair, provide reports of the Audit Committee’s meeting and actions to the Board of Directors. Such reports shall contain recommendations for Board action when required under the provision of any applicable regulation or when deemed appropriate by the Committee.

  8. LIMITATION OF AUDIT COMMITTEE’S ROLE

    8.1 While the Audit Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Audit Committee to determine that Management has established and maintained appropriate internal control over financial reporting, that the Company’s financial statements and disclosures are complete and accurate and have been prepared in accordance with Financial Reporting Standards and the provisions of the Companies Act, 1965 in Malaysia or that the audit of the Company’s financial statements by the independent auditors has been carried out in accordance with approved standards on auditing in Malaysia. Management is responsible for the financial statements and the reporting process, including the system of internal control and the independent auditors is responsible for expressing an opinion on the conformity of those audited financial statements with Financial Reporting Standards and the Companies Act, 1965 in Malaysia.

 


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