KWANTAS CORPORATION BERHAD
Audit Committee Terms of Reference
Introduction
The Bursa Malaysia Main Market Listing Requirements (“Listing Requirements”) have mandated the establishment of the Audit Committee (“the Committee”) to assist the Board of Directors in the discharging of its responsibilities for corporate governance, corporate control and financial reporting. The Committee is guided by the terms of reference as set out below and it shall be assessed and reviewed at least once annually and updated as necessary, especially when they are changes made to the Listing Requirements.
Composition of the Committee
The Committee shall be appointed by the Board from among its members and shall consist of not less than three (3) members.
All members of the Committee must be Non-Executive Directors with a majority of them being independent.
At least one (1) member of the Committee:-
| (i) | | must be a member of the Malaysian Institute of Accountants; or |
| (ii) | | if he is not a member of the Malaysian Institute of Accountants, he must have at least three (3) years’ working experience and |
| (aa) | | he must have passed the examinations specified in Part I of the First Schedule of the Accountants Act 1967; or |
| (bb) | | he must be a member of one (1) of the associations of accountants specified in Part II of the First Schedule of the Accountants Act 1967. |
Chairman of the Committee shall be elected among the Committee members of Independent Non-Executive Director.
The Company Secretary shall be the Secretary of the Committee.
Subject to review by the Board, the appointment of the members of the Committee shall be for a period of three (3) years after which the Board will review the term of office and performance of the Committee for re-appointment. Notwithstanding the foregoing, in the event the member ceases to be a Non-Executive Director in accordance with paragraph 2.2 above, the membership of that particular Committee member shall automatically be terminated.
In the event that a member of the Committee resigns, dies or for any other 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 that event, appoint such number of new members as may be required to make up the minimum number of three (3) members.
Authority
The Committee is authorised by the Board of Directors and at the expense of the Group to:-
| (i) | | investigate any matter within its terms of reference |
| (ii) | | secure resources in order to perform its duties |
| (iii) | | have full and unrestricted access to any information pertaining to the Company and the Group |
| (iv) | | have direct communication channels with the external auditors and internal auditors |
| (v) | | obtain external legal or other independent professional advice as necessary |
| (vi) | | convene meetings with the external auditors, the internal auditors or both, without the attendance of other Directors and employees of the Group, whenever deemed necessary |
| (vii) | | conduct an investigation where there is possible fraud, illegal acts or suspected violation of the Code of Ethics involving members of the Board and Senior Management with the assistance from internal audit department |
| (viii) | | report any matter that is not satisfactory resolved resulting in a breach of the Listing Requirements to Bursa Malaysia |
Functions
The Committee performs, among others, the following functions:-
Financial Reporting Review
To review the unaudited quarterly results and the audited year-end financial statements of the Group with the Management and external auditors prior to the approval by the Board, focusing particularly on:
| (a) | | changes in or implementation of major accounting policies and practices; |
| (b) | | significant adjustments arising from the audit |
| (c) | | the going concern assumption |
| (d) | | compliance with accounting standards and other regulatory requirements |
External Audit
| (a) | | To consider and make recommendations to the Board of Directors on the appointment, re-appointment, resignation and dismissal of the external auditor. |
| (b) | | To approve the terms of engagement and the remuneration to be paid to the external auditor in respect of audit services provided |
| (c) | | To assess the qualification, expertise and resources, effectiveness and independence of the external audit |
| (d) | | To discuss with the external auditor, prior to the commencement of audit, the nature and scope of the audit, their audit plan and coordination of audit where more than one (1) audit firm is involved |
Internal Audit
| (a) | | To review 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. |
| (b) | | To review the internal audit plans, programmes, activities and staffing needs |
| (c) | | To review the major findings of internal audit investigation and Management’s responses and ensure appropriate actions are taken on the recommendations of the internal audit function |
| (d) | | To approve any appointment or termination of senior staff members of the internal audit function |
| (e) | | To review the regular internal reports to Management prepared by the internal audit. |
Related Party Transactions
To ensure that Management establishes a comprehensive framework to identify, evaluate, approve, report and monitor any related party transactions and conflict of interest situations that may arise within the Group, including any transaction, procedure or course of conduct that raises questions of Management integrity, and that the Directors must report such transactions annually to the shareholders in the annual report.
Whistleblowing Mechanism
The Company has in place a mechanism to allow its employees and stakeholders to raise genuine concerns about possible wrongdoing in financial reporting, accounting, auditing or other related matters to the Chairman of the Committee. The Committee shall ensure that the mechanism provides adequate safeguards against victimisation of persons using such mechanism to report wrongdoing or improper conduct to the Chairman of the Committee.
Share Issuance Scheme (“Scheme”)
To verify the allocation of shares to the eligible employees under the Scheme and ensure the same is disclosed in the Company’s annual report at the end of each financial year, if any.
Risk Management and Internal Control
| (a) | | To review the effectiveness of the Group’s overall enterprise risk management framework, strategies, policies and systems to identify, assess and manage risks |
| (b) | | To assess the adequacy and effectiveness of the system of risk management and internal control based on the reports it received from independent reviews |
Meetings
The Committee shall meet at least four (4) times in a financial year. The Chairman shall also convene a meeting of the Committee if requested to do so by any member, the Management or the internal or external auditors to consider any matter within the scope and responsibilities of the Committee.
The Independent Non-Executive Directors, the Group Chief Executive Officer, the Accountant, the head of internal audit and representative of the external auditors shall normally attend the meetings. However, the Committee may invite any person to be in attendance to assist in resolving and clarifying matters raised, where necessary.
The presence of two (2) Committee members shall be a quorum.
The Company Secretary shall be the Secretary of the Committee. Minutes of each meeting shall be distributed to each member of the Committee and also to the other members of the Board. The head of internal audit and relevant members of Senior Management shall also be provided with the minutes for follow-up actions.
Notice of meeting confirming the venue, time and date will be circulated at least one (1) week prior to the scheduled meeting.
The Committee shall meet with the external auditors without the presence of any Executive members at least once a year.
Review of the Terms of Reference
The terms of reference shall be assessed, reviewed and updated where necessary i.e. when there are changes to the Code, Listing Requirements or any other regulatory requirements. It should also be reviewed and updated to reflect the directions or strategies adopted by the Group.
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