Audit and Governance Committee

Duties and Responsibilities

On Audit

A) Review the quarterly, half-year and annual financial statements before their submission to the Board, with particular focus on the following matters:

1. Any change/s in accounting policies and procedures
2. Major judgmental areas
3. Significant adjustments resulting from the audit
4. Going concern assumptions
5. Compliance with accounting standards
6. Compliance with tax, legal and regulatory requirements

B) To review all financial statements by:

1. Obtaining an understanding of the Company’s significant financial reporting matters, including, but not limited to:
   • Financial Results
   • Information on management discussion and analysis
   • Significant balance sheet changes
   • Accounting principles, including changes
   • Significant accounting issues and complex transactions
   • Significant related company transactions
   • Recent professional and regulatory pronouncements and its impact on the financial statements.

 

2. Reviewing with management and the external auditors the results of the audit, including any difficulty encountered.   This review will include any restriction on the scope of the independent auditor’s activities or on access to requested information, and any significant disagreement with management.
3. Discussing the annual audited financial statements and quarterly financial statements with management and the external auditors.
4. Reviewing other sections of the annual report and related regulatory filings before release and consider the accuracy and completeness of the information.
5. Understanding how management develops interim financial information and the nature and extent of internal and external auditor involvement.
6. Reviewing interim financial reports with management and the external auditors before filing with regulators, and consider whether they are complete and consistent with the information known to committee members.

C) To perform oversight function in the management of the Company’s internal controls by:

1. Monitoring and evaluating the effectiveness of the Company’s internal control system in management, operations, finance, including information system security and control.
2. Understanding the scope of internal and external auditors’ review of internal control over the reliability of the company’s financial reporting, and obtain reports on significant findings and recommendations, together with management’s responses.
3. Promoting a culture of integrity in the company.
4. Meeting periodically with Risk Management Committee and key management to discuss the control environment.
5. Perform oversight and review function of the cost-effectiveness and efficiency of business units against established performance standards.
6. Formulating policies as to how staff may in confidence raise concerns about possible improprieties in matters of financial reporting or other matters, ensure proportionate and independent investigation and follow-up action.

D) To review Internal Audit Department’s plans, activities, organizational structure and effectiveness in complying with the International Standards for the Professional Practice of Internal Auditing; and to ensure there is no unjustified restrictions, or limitations, on the reviews conducted by Internal Audit Department, such as but not limited to the following:

1. Review and approve the Internal Audit Department’s charter, plans, activities, staffing, and organizational structure.
2. Review the effectiveness of the internal audit function, including compliance with The Institute of Internal Auditors’ International Standards for the Professional Practice of  Internal Auditing by promoting quality assessment (QA) activities and receiving results of QA reviews.
3. Review and concur in the appointment, replacement, or dismissal of the chief audit executive (CAE); conduct performance appraisal and approve compensation and salary adjustments of the CAE
4. Ensure that there are no unjustified restrictions in scope or budgetary limitations that impede the ability of the Internal Audit Department to execute its responsibilities.
5. Establish and identify the reporting line of the Internal Auditor to enable him to properly fulfill his duties and responsibilities. He shall functionally report directly to the Audit Committee. The Audit Committee shall ensure that, in the performance of the work of the Internal Auditor, he shall be free from interference by outside parties.
6. On a regular basis, meet separately with the chief audit executive to discuss any matters that the Committee or Internal Audit believes should be discussed separately.

E) To oversee adequacy of external audit activities by:

1. Selecting an external auditor and reviewing the audit fee and engagement letter.
2. Reviewing the external auditors’ proposed audit scope and approach, including coordination of audit effort with internal audit.
3. Reviewing with management the external audit reports and findings as well as the company’s reply to audit findings.
4. Reviewing the performance of the external auditors and exercising final approval on the appointment or discharge of the auditors.
5. Reviewing and confirming the independence of the external auditors by obtaining statements from the auditors on relationships between the auditors and the company, including non-audit services and discussing the relationships with the auditors.
6. Meeting separately, as necessary, with the external auditors to deliberate on any matter that the committee or auditors believe should be discussed.
7. To perform oversight function in the Company’s compliance to all rules, laws, regulations and policies by:
   • Formulating policies that will promote compliance;
   • Closely coordinating with the monitoring function of the Compliance Officer; and
   • Reviewing potential conflicts of interests and related party transactions.
8. Evaluating and determining the non-audit work, if any, of the external auditor, and review periodically the non-audit fees paid to the external auditor in relation to their significance to the total annual income of the external auditor and to the corporation’s overall consultancy expenses. The Committee shall disallow any non-audit work that will conflict with his duties as an external auditor or may pose a threat to his independence. The non-audit work, if allowed, should be disclosed in the corporation’s annual report

 On Governance and Compliance:

A) In coordination with the Compliance Officer, monitor and facilitate the company’s compliance to all rules, laws, regulations, and company policies that would have an impact in the organization’s objectives.

B) Formulate policies that will promote compliance to rules, laws, regulations and company policies.

C) Perform oversight and review function of potential conflicts of interest and related party transactions.

D) Review the findings of any examinations by regulatory agencies and any auditor observations.

E) Review the process for communicating the code of conduct to company personnel and for monitoring compliance therewith.

F) Obtain regular updates from the Compliance Officer, management and company legal counsel regarding compliance matters.

G) Review the Company’s corporate governance activities and programs, and oversee the implementation thereof by the Company.