Tropicana Corporation Berhad Annual Report 2020

AUDIT COMMITTEE REPORT • Discussed significant accounting and audit issues in respect of the financial statements of the Company for the financial year ended 31 December 2019 with the External Auditors and assessed the actions and procedures taken by the External Auditors in respect to those areas. • Reviewed the performance of the External Auditors, by taking into consideration their suitability, objectivity and independence, in relation to their competency, audit quality and resource capacity in performing the audit of the Group and recommended their re-appointment to the Board. The annual assessment was performed by Group Finance Department and the External Auditors have reconfirmed to the Audit Committee their independence in carrying out the audit for the financial statements of the Group for the financial year ended 31 December 2019 vide the report of audit results submitted to the Audit Committee as well confirmation obtained at the Audit Committee meeting. The Board had recommended the re-appointment of Messrs. Ernst & Young PLT as External Auditors of the Company for FY2020 at the Company’s 41 st Annual General Meeting held on 9 September 2020, which was approved by the shareholders. • Reviewed audit planning memorandum for FY2020 with the External Auditors’ including the adequacy of the external audit team. The areas of audit emphasis and action plans were discussed in length with the External Auditors and the Management to ensure that adequate actions were carried out to ascertain compliance with the relevant accounting standards, prior to finalizing the audited financial statements of the Group. Received the declaration of independence in writing by the External Auditors in respect of the audit for FY2020. • Reviewed the amount of audit and non-audit fees paid or payable by the Group and its subsidiaries to the External Auditors for FY2019. The total amount of both the audit and non-audit for FY2020 was compared against the previous year and any increase or decrease in fees was appropriately justified by the Management, taking into consideration the implementation of MFRS framework, level of activities of the Group, inflationary factors and reference to the fees payable to other companies in the same industry. • Held two (2) private sessions on 24 February 2020 and 12 November 2020 with the External Auditors without the presence of the Executive Directors and Management, to review key issues within their sphere of coverage and responsibilities in regards to the Audit of the Financial Statements of the Group for FY2019. It was noted that Audit Committee members had confirmed that they did not have any knowledge of fraud within the Group. The activities of the audit committee for the FY2020 with regard to matters relating to internal audit function, internal controls and operations were as follows: • Reviewed the internal audit reports prepared by the Internal Auditors and provided constructive feedback in ensuring the adequacy and effectiveness of the internal control system of the Group. Where appropriate, the Audit Committee directed the Management to rectify and improve control procedures. The Audit Committee also monitored the progress of the agreed upon action plans taken by Management to close the audit findings. • Reviewed the business plan for the financial years 2020-2022 for recommendations to the Board for approval. • Reviewed the proposed issuance of rated sukuk program proposed by Group Treasury for recommendations to the Board for approval. • Reviewed the Audit Committee report, Statement of Risk Management and Internal Control and the Additional Compliance Information to ensure adherence to legal and regulatory reporting requirements and appropriate resolution of accounting matters requiring judgement and recommended the same to the Board for approval. • Reviewed the proposed amendments to the TOR of the Audit Committee for recommendations to the Board for approval. • Reviewed and approved the Internal Audit Plan for FY2020 proposed by the Internal Auditors to ensure adequate scope and coverage of the Group’s activities based on identified and assessed key risk areas. Also considered the adequacy of the manpower sufficiency of the internal audit team to perform the activities envisaged in the internal audit plan. • Reviewed the procedures for recurrent related party transactions for purposes of ensuring that the processes and controls were in place to ensure that recurrent related party transactions were not more favorable to the related parties than those generally available to the public and were not to the detriment of the minority shareholders. INTERNAL AUDIT FUNCTION The Audit Committee is supported by an independent and adequately resourced in-house Group Internal Audit (“ GIA ”) in the discharge of its duties and responsibilities. The function of GIA is guided by its Internal Audit Charter which defines the authority, duties, and responsibilities and independence of all GIA members. GIA is headed by Ms. Rachel Ng Kim Gek, a chartered accountant and a member the Institute of Internal Auditors Malaysia and member of Malaysian Institute of Accountants. GIA reports functionally to the Audit Committee and maintains its impartiality, proficiency and due professional care. The principal responsibility of GIA is to provide independent and objective assurance and advisory services designed to add value and improve the operations of the Group. This includes the continuous examination and evaluation of the adequacy and effectiveness of the Group’s risk management, internal control and governance processes. The audit approach and objectives are based on the guidance of the Institute of Internal Auditors’ International Professional Practices Framework (“ IPPF ”) and the Committee of Sponsoring Organisations of the Treadway Commission (“ COSO ”) Internal Control – Integrated Framework. Reference is made to the frameworks in assessing and reporting on the adequacy and effectiveness of the internal control, governance and risk management. During the year GIA carried out the following key activities: • Performed audit engagement which covered the review of internal controls on key operating processes based on the approved internal audit plan using a risk-based approach, and progressively issuing detailed internal audit reports to the AC. During FY2020, internal audit reports which incorporates key control issues, significant risks, recommendations to improve on matters raised during the course of the audits and managements comments and remedial actions were issued and tabled to the Audit Committee. None of the audit findings have resulted in any material losses, contingencies or uncertainties that would require disclosure in the Company’s Annual Report. • Prepared the annual audit plan for deliberation and approval by the Audit Committee. • Performed follow up procedures on the implementation of agreed upon action plans to ensure that necessary actions have been taken/ are being taken as recommended. • Reviewed recurring related party transactions on a quarterly basis on the adequacy, appropriateness and compliance of existing established procedures on monitoring of recurrent related party transactions. • Reviewed on ad-hoc basis, areas where there were concerns that affected financial reporting, internal controls and governance. In an effort to provide value added services, GIA also provided additional assurance and advisory services upon request by Management in relation to compliance, governance, risk management and internal controls. GIA is adequately resourced with a total of 7 internal auditors. All internal auditors are equipped with relevant experience and professional qualifications and are members of The Institute of Internal Auditors Malaysia. In order to perform their functions effectively, the internal auditors are encouraged to continuously enhance their knowledge, skills and competencies through relevant professional courses, seminars, training courses and on-the-job-training. None of the internal audit personnel has any relationships or conflict of interest that could impair their objectivity and independence in conducting their internal audit functions. The total costs incurred for the internal audit function for FY2020 was RM981,628 (2019: RM1,002,023). The Audit Committee Report is made in accordance with a resolution of the Board dated 19 May 2021. 146 147 ANNUAL REPORT 2020 TROPICANA CORPORATION BERHAD GOVERNANCE