UEM EDGENTA BERHAD ANNUAL REPORT 2021 1 2 3 4 5 6 7 GOVERNANCE 147 146 AUDIT COMMITTEE REPORT The Board is pleased to present the Audit Committee (“AC”) Report which provides insights on how the AC discharge its function and duties for the financial year ended 31 December 2021. The AC assists the Board in its oversight of the Company’s financial reporting, and in fulfilling its fiduciary responsibilities relating to internal controls. This includes overseeing the proper maintenance of financial and accounting records and setting policies as well as financial reporting practices of the Group. It also reviews related party transactions and conflict of interest situations that may arise within the Group. COMPOSITION AND MEETING ATTENDANCE The composition of the AC and meeting attendance for financial year 31 December 2021 are available in pages 134 to 135 of the Corporate Governance Overview Statement. SUMMARY OF ACTIVITIES OF THE AC During the year, the Chairman of AC met the Internal Audit team regularly and had pre-meeting discussions of their activities and reports. In line with the terms of reference of the AC, the following works were carried out by the AC during the financial year ended 31 December 2021:- FINANCIAL STATEMENTS AND CORPORATE GOVERNANCE A B C 1. Reviewed the quarterly and annual financial statements of the Company and of the Group; and recommended them for Board’s approval, focusing particularly on:- a) appropriateness and relevance of accounting policies and practices adopted and their application in compliance with current accounting standards; b) any significant non-recurrent or unusual transactions made or events occurred during the year; c) any significant changes to the basis of preparation of the financial statements or new accounting standards adopted during the year which impacted the result or financial position of the Group; d) the going concern assumption used in the preparation of the financial statements; e) significant accounting and auditing matters including financial reporting issues, estimates or judgements made by Management, unusual events or transactions, and how these matters are addressed; and f) compliance with financial reporting standards and other regulatory requirements. 2. Reviewed recurrent related party transactions of a revenue or trading nature which are necessary for the day-to-day operations in the ordinary course of business of the Company and its subsidiaries to ascertain as to whether they are undertaken on an arm’s length basis on normal commercial terms not more favourable to the related parties than those generally available to the public or those extended to unrelated parties and are not detrimental to the minority shareholders. 3. Reviewed the Circular to Shareholders in respect of the proposed shareholders’ mandate for recurrent related party transactions and proposed new mandate for additional recurrent related party transactions of a revenue or trading nature. 4. Reviewed and recommended the Corporate Governance Overview Statement, Corporate Governance Report, AC Report and Statement on Risk Management and Internal Control, to the Board for its approval. 5. Reviewed the Terms of Reference of the AC to reflect the changes in the revised Malaysian Code on Corporate Governance issued on 28 April 2021 and subsequently recommended to the Board for approval. AUDIT COMMITTEE REPORT INTERNAL AUDIT A B C 1. Reviewed the scope, functions and resources of the Internal Audit Department (“IAD”) to ensure that it had the necessary competency, independence and authority expected by the professional standards and applicable guidelines to carry out its work professionally and with impartiality and propriety. 2. Reviewed and deliberated the internal audit reports (planned and ad-hoc) and ensured that audit observations and appropriate recommendations were discussed and agreed with Management including timelines set to be taken for remedial actions on gaps or lapses of controls or procedures identified by IAD. 3. Discussed with Internal Audit, their follow-up on corrective action taken by Management on audit issues to ensure that all the key risks and control lapses have been addressed adequately on timely manner. 4. Assessed and approved the performance rating of IAD and the IAD Scorecard. 5. Reviewed and approved the revised Internal Audit Charter to reflect the mission of internal audit and mandatory elements of the International Professional Practices Framework’s (Core Principles for the Professional Practice of Internal Auditing, Code of Ethics, International Standards for the Practice of Internal Auditing) requirements. 6. Reviewed and approved the updated Internal Audit Manual which outlines the authority and scope of the Internal Audit. 7. Reviewed and approved the Internal Audit Plan, including changes for adequacy and appropriateness of coverages. The above included the risk-based planning methodology, high-level review scope and its manpower requirement for the proposed audit activities. EXTERNAL AUDIT A B C 1. Reviewed with the External Auditors:- a) The audit plan, audit methodology and scope of work, especially on areas identified for audit focus for the year; b) Their comments and issues arising from their annual audit, their audit report and management letter of comments on the group internal control; c) The key audit matters highlighted for inclusion in the audit report and the audit process in addressing them; and d) The Group’s financial reporting process including consolidation. 2. Assessed the objectivity, suitability and independence of the External Auditors in carrying out their audit during the year and this included their appointment for non-audit services. 3. Reviewed with the External Auditors on 19 November 2021 and 21 February 2022 without the presence of the Managing Director/Chief Executive Officer and Management, on any concerns/issues affecting their audit, the results of audit, including the level of cooperation rendered by Management in respect of their access to financial information and accounting records. 4. Reviewed and recommended the Policy for the Engagement of Auditors for Non-Audit Services, to the Board for its approval. 5. Reviewed and approved the appointment of the Company’s External Auditors for the provision of nonaudit services, for the projects undertaken by the Company after assessing and considering the following:- a) The nature of the non-audit services provided by the external auditors or its affiliates and fees paid for such services relative to the audit fee; b) The scope of work as required are permitted under the By-Laws (On Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants and the International Code of Ethics for Professional Accountants; and c) The services should not impair their independence or there are safeguard in place to ensure that there is no threat to the objectivity and independence of the audit arising from the provision of non-audit services or tenure of the external auditors. 6. Evaluated the performance of the External Auditors and recommended their re-appointment to the Board of Directors.
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