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KPJ 2015 Annual Report
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1. OBJECTIVES OF THE COMMITTEE

a) To ensure transparency, integrity and accountability in the Group's activities so as to safeguard the rights and interests of the shareholders;

b) To provide assistance to the Board in fulfilling its fiduciary responsibilities relating to corporate accounting and reporting practices;

c) To improve the Group's business efficiency, the quality of the accounting and audit function and strengthen public confidence in the Group's reported financial results;

d) To maintain a direct line of communication between the Board and the External and Internal Auditors;

e) To ensure the independence of the External and Internal Audit functions; and

f) To create a climate of discipline and control which would will reduce the opportunity for fraud.

2. MEMBERSHIP

a) The Committee members shall be appointed by the Board, amongst its Directors which fulfils the following requirements:

i) the Committee must comprise of not less than three (3) members;

ii) all members must be Non-Executive Directors, with a majority of them being Independent Directors; and

iii) all members should be financially literate and at least one (1) of them must meet the criteria set by the Bursa Malaysia Listing Requirements i.e.:

- must be a member of the Malaysian Institute of Accountants (MIA) or

- if he/she is not a member of the Malaysian Institute of Accountants, he/she must have at least three (3) years' working experience, and:

✓ must have passed the examinations specified in Part 1 of the 1st Schedule of the Accountants Act 1967; or

✓ must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act 1967.

b) The Chairman from the Committee that is elected by the Board shall be an Independent Director as set by Bursa Malaysia Listing Requirements;

c) The term of office and performance of the Committee shall be reviewed by the Board to determine whether the Committee has carried out its duties in accordance with its terms of reference; and

d) No alternate Director of the Board shall be appointed as a member of the Committee.

3. REPORTING RESPONSIBILITIES

The Committee will report to the Board on the nature and extent of the functions performed by it and may take such recommendations to the Board on any audit and financial reporting matters as it may think fit.

4. MEETINGS AND ATTENDANCE

a) At a minimum, the Committee should meet at least four (4) times a year, which is on a quarterly basis, to properly carry out its duties and ensure effective discharge of its responsibilities. Additional meetings may be called at any time at the Chairman's discretion;

b) The External Auditor should normally be invited to attend the meeting to present their findings and opinion to the financial statements;

c) The Committee has the right to convene separate meeting with the Internal Auditors, External Auditors or both, without the attendance of Management;

d) The Company Secretary, who acts as the secretary of the Committee meeting plays an important role in organising and providing assistance for the meetings. The meeting agenda shall be drawn up in consultation with the Chairman of the Committee. The minutes shall be circulated to and confirmed by the Committee before disseminating to the Board.

5. AUTHORITY

The Committee is empowered by the Board to:-

a) investigate any matter within its terms of reference or as directed by the Board;

b) determine and obtain the resources which are required to perform its duties;

c) have full and unrestricted access to any information pertaining to the Group;

d) have direct communication channels with the External and Internal Auditors; and

e) obtain external independent professional advice, legal or otherwise deemed necessary.

6. DUTIES AND RESPONSIBILITIES

The duties of the Committee shall be:-

a) Financial Reporting

i) To review and recommend acceptance or otherwise of accounting policies, principles and practices;

ii) To review the quarterly results and annual financial statements of the Company and Group before submission to the Board. The review should focus primarily on:

- public announcement of results and dividend payment;

- any changes in existing accounting policies or implementation of new accounting policies;

- major judgment areas, significant and unusual events;

- significant adjustments resulting from the audit;

- the going concern assumptions;

- compliance with accounting standards; and

- in compliance with Bursa Malaysia Listing Requirements and other legal and statutory requirements.

iii) To review with Management and the external auditors the results of the audit, including any difficulties encountered; and

iv) To review and verify the allocation of scheme options pursuant to the Company's Employees' Share Option Scheme (ESOS) in accordance with the Bursa Malaysia Listing Requirements, following which a statement shall be provided by the Audit Committee in the Annual Report.

b) Risk Management

i) To review the adequacy and provide independent assurance to the Board on the effectiveness of risk management functions in the Group;

ii) To ensure that the principles and requirements of managing risk are consistently adopted throughout the Group; and

iii) To review the risk profile of the Group and major initiatives having significant impact on the business.

c) Internal Control

i) To assess the quality and effectiveness of the system of internal control and the efficiency of the Group's operations; and

ii) To review the findings on internal control within the Group by the Internal and External Auditors.

d) Internal Audit

i) To approve the Audit Charter and ensure the Internal Audit functions are adequately resourced;

ii) To review the adequacy of Internal Audit Plan, the scope of audits and that the Internal Audit function has the necessary authority, competency and resources to carry out its work;

iii) To review the results of the Internal Audit process and where necessary, to ensure that appropriate action is taken on the recommendations of the Internal Audit function;

iv) To approve appointment, replacement and dismissal of the Head of Internal Audit;

v) To evaluate the performance of the Head of Internal Audit; and

vi) To direct any special investigation to be carried out by the Internal Audit.

e) External Audit

i) To review the External Audit plans, scope of work and their audit reports;

ii) To consider the appointment of the External Auditor, the audit fee and any questions of resignation or dismissal of the External Auditor before making any recommendation to the Board;

iii) To discuss issues and reservations arising from the interim and final audits, as well as any matters the Auditor may wish to discuss;

iv) To review the External Audit reports and Management's response and actions taken in respect of the findings; and

v) To review the independence and objectivity of the External Auditors and their services, including non-audit services.

f) Corporate Governance

i) To review the effectiveness of the system for monitoring compliance in line with the laws and regulations, the results of Management's investigation and follow up (including disciplinary action) of any instances of non-compliance;

ii) To review the findings of any examinations by regulatory authorities.

iii) To review reports of related party transactions, deliberated on the nature of the transactions and that proper disclosures were made in line with the listing requirement;

iv) To review any conflict of interest situation that arises within the Group including any transaction, procedure or course of conduct that raises questions of integrity;

v) To review and approve the Statement of Corporate Governance for the Annual Report as required under Bursa Malaysia Listing Requirements; and

vi) To examine instances and matters that may have compromised the principles of corporate governance and report back to the Board.

g) Other Matters

Consider such other matters as the Committee considers appropriate or as authorized by the Board.

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