NAIM INDAH CORPORATION BERHAD
Audit Committee - Terms of Reference
To assist the Board of Directors in discharging its responsibilities to safeguard the Company's assets, maintain adequate accounting records, develop and maintain effective systems of internal control with the overall objective of ensuring the Management creates and maintain an effective control environment in the Group. The Committee also provides a communication channel between the Board of Directors, Management, External Auditors and Internal Auditors.
Composition of members
The Board shall appoint the Committee members from amongst themselves, comprising no fewer than three (3) Non-Executive Directors. The majority of the Committee members shall be Independent Directors.
In this respect, the Board adopts the definition of "Independent Director" as defined under the Listing Requirements of Bursa Malaysia Securities Berhad ("Bursa Securities").
All members of the Committee shall be financially literate and at least one (1) member of the Committee must be:-
- a member of the Malaysian Institute of Accountant ("MIA"); or
- if he is not a member of MIA, he must have at least three (3) years of working experience and:
- he must have passed the examinations specified in Part I of the First Schedule of the Accountants Act 1967; or
- 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
- fulfils such other requirements as prescribed or approved by Bursa Securities.
No alternate director of the Board shall be appointed as a member of the Committee.
The term of office and performance of the Committee and each of its members shall be reviewed by the Nomination Committee annually to determine whether such Committee and members have carried out their duties in accordance with their terms of reference.
Retirement and resignation
If a member of the Committee resigns, dies, or for any reason ceases to be a member resulting in non-compliance to the composition criteria as stated in paragraph 2 above, the Board shall within three (3) months of the event appoint such number of the new members as may be required to fill the vacancy.
The Board of Directors or members of the Committee shall elect a Chairman from amongst their number who shall be an Independent Non-Executive Director.
In the absence of the Chairman of the Committee, the other members of the Committee shall amongst themselves elect a Chairman who must be Independent Director to chair the meeting.
The Committee Chairman should assume, amongst others, the following responsibilities:-
- Planning and conducting meetings;
- Overseeing reporting to the Board of Directors;
- Encouraging open discussion during Meetings; and
- Developing and maintaining an active on-going dialogue with Senior Management and both the Internal and External Auditors.
The Company Secretary shall be the Secretary of the Committee and as a reporting procedure, the Minutes shall be circulated to all members of the Board.
The Committee shall meet at least four (4) times in each financial year, i.e. on a quarterly basis, to properly carry out its duties and ensure effective discharge of its responsibilities as spelt out in its Terms of Reference. In addition, the Committee Chairman may call for additional meetings at any time at the Chairman's discretion. Sufficient time must be allocated to thoroughly address all items in the Agenda and for all parties involved to ask questions or provide input.
Upon the request of the external auditor, the Committee Chairman shall convene a meeting of the Audit Committee to consider any matter the external auditor believes should be brought to the attention of the directors or shareholders.
Notice of Audit Committee meetings shall be given to all the Committee members unless the Committee waives such requirement. The Committee members may participate in a meeting by means of conference telephone, conference videophone or any similar or other communications equipment by means of which all persons participating in the meeting can hear each other. Such participation in a meeting shall constitute presence in person at such meeting.
The Committee Chairman shall engage on a continuous basis with senior management, such as the Chairman, the Chief Executive Officer, the Chief Financial Officer, the internal auditors and the external auditors in order to be kept informed of matters affecting the Company. The Committee shall meet with the internal auditors without executive Board members or employees present, whenever deemed necessary.
The related Finance staffs, a representative of the internal auditors and external auditors should normally attend meetings. Other Board members and employees may attend meetings upon the invitation of the Committee. However, the Committee shall meet with the external auditors without executive Board members or employees present at least once a year and whenever necessary.
Questions arising at any meeting of the Audit Committee shall be decided by a majority of votes of the members present, and in the case of equality of votes, the Committee Chairman shall have a second or casting vote.
Minutes of each meeting shall be kept at the registered office and distributed to each member of the Committee and also to the other members of the Board. The Committee Chairman shall report on each meeting to the Board.
The minutes of the Audit Committee 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.
A resolution in writing signed or approved via letter, telex or facsimile by all the Committee members shall be effective for all purposes as a resolution passed at a meeting of the Committee duly convened, held and constituted. Any such resolution may be contained in a single document or may consist of several documents all in the like form signed by one or more members.
The Audit Committee shall, in accordance with a procedure to be determined by the Board and at the expense of the Company,
- 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 Committee.
- 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.
- obtain independent professional or other advice and to invite outsiders with relevant experience to attend, if necessary.
- have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity (if any, which can be outsourced).
- where the Committee is of the view that the matter reported by it to the Board has not been satisfactorily resolved resulting in a breach of the Listing Requirements, the Committee shall promptly report such matter to Bursa Securities.
Duties and Responsibilities
The duties and responsibilities of the Committee are as follows:-
- Assessing the risks and control environment;
- Overseeing financial reporting;
- Evaluating the internal and external audit process;
- Reviewing conflict of interest situations and related party transactions that may arise within the Company or the Group including any transactions, procedures or course of conduct that raises questions or management integrity;
- Reviewing the quarterly results and year-end financial statements, before submission to the Board of Directors for approval, focusing particularly on:-
- Changes in or implementation of major accounting policies and practices;
- Major risk areas;
- Significant and unusual events;
- Significant adjustments resulting from the audit; and
- Compliance with accounting standards, Listing Requirements and other legal requirements.
- Reviewing the following with the External Auditors and report the same to the Board of Directors:-
- The audit plan;
- The audit report;
- Evaluation of the system of internal controls;
- Letter to Management and the Management's response;
- The assistance given by the employees to the External Auditors; and
- Any suspected fraud or irregularity, or suspected infringement of any relevant laws, rules or regulations, which has or is likely to have a material impact on the Company's and the Group's operating results or financial position, and Management's response.
- Reviewing the following with the Internal Auditors and report the same to the Board of Directors:-
- The adequacy of the scope, functions, competency and resources of the internal audit functions and that it has the necessary authority to carry out its work; and
- The internal audit programme, processes, the 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.
- Undertaking such other reviews and projects as may be requested by the Board of Directors, and report to the Board of Directors its findings from time to time on matters arising and requiring the attention of the Committee;
- Establishing procedures for receipt, retention and treatment of complaints received by the Company and the Group regarding inter alia, criminal offences involving the Company and the Group or its employees, questionable accounting, auditing, business, safety or other matters that impact negatively on the Company and the Group;
- Monitoring, reviewing and assessing the utilization of proceeds are consistent with the intention presented to investors for any fund raising exercise;
- Considering and recommending the appointment or re-appointment of the Internal and External Auditors and matters relating to the resignation or dismissal of the auditors;
- Reviewing resignation from the External Auditors;
- Undertaking such other functions and duties as may be required by statute or the Listing Requirements, or by such amendments as may be made thereto from time to time; and
- Accessing the suitability and independence of the External Auditors.
* The Audit Committee - Terms of Reference last reviewed and approved by the Board on 30 May 2016.