Homeritz | Home Living Furniture Manufacturer and Export
Term of Reference of the Audit Committee
1.0 Objectives
The primary objective of the Audit Committee is to assist the Board in fulfilling their responsibilities relating to accounting and reporting practices of the Company and each of its subsidiaries (collectively referred to as “the Group”). In addition, the Audit Committee will:-
oversee and appraise the quality of the audit conducted by the Company’s External Auditors and the Internal Auditors in order to strengthen the confidence of the public in the Groups’ reported results;
maintain, by scheduling regular meetings, open lines of communication amongst the Board, the External Auditors and the Internal Auditors, to exchange view and information as well as to confirm their respective authority and responsibilities;
review related party transactions entered into by the Company and the Group to ensure that such transactions are undertaken on the Group’s normal commercial terms and that the internal control procedures with regards to such transactions are sufficient;
provide assistance to the Board in fulfilling its fiduciary responsibilities relating to the Company’s administrative, operating and accounting controls; and
act upon the Board’s request to investigate and report on any issues or concerns on the management of the Group.
2.0 Composition
The Audit Committee shall be appointed by the Board from among their number and compose no fewer than three (3) members. All members of the Audit Committee must be Non-Executive Directors with a majority of them being Independent Directors.
At least one (1) member of the Audit Committee:-
must be a Member of the Malaysian Institute of Accountants (MIA); or
if he is not a Member of MIA, he must have at least three (3) years’ working experience and:-
he must have passed the examinations specified in Part 1 of the 1st Schedule of the Accountants Act 1967; or
he must have passed the examinations specified in Part 1 of the 1st Schedule of the Accountants Act 1967; or
he must have:-
a degree/masters/doctorate in accounting or finance and at least three (3) years’ post qualification experience in accounting or finance; or
at least 7 years’ experience being a chief financial officer of a corporation or having the function primarily responsible for the management of the financial affairs of a corporation.
The members of the Audit Committee shall elect a Chairman from among their number who shall be an Independent Non-Executive Director. No Alternate Director is appointed as a member of the Audit Committee.
In the event that if a member of the Audit Committee vacates office resulting in the total number reduced to below three (3), the Board shall, within three (3) months of that event, appoints a new member to make up the minimum number of three (3).
3.0 Meetings
The Audit Committee will meet at least once quarterly and such additional meetings as the Chairman shall decide in order to fulfill its duties. In addition, the Chairman may call a meeting if a request is made by any Committee Member, the Company’s Managing Director, the External Auditors or the Internal Auditors where applicable.
Senior managements, representatives of the External Auditors and Internal Auditors should normally be invited to attend Audit Committee Meetings. Other Board Members may attend meeting upon the invitation of the Audit Committee. However, the Audit Committee should meet with the External Auditors without Executive Board Members present at least twice a year.
The Chairman may appoint a Secretary responsible for keeping the minutes of meetings of the Committee, and circulating them to Committee Members and to other members of the Board. A quorum for a meeting shall be two (2) members, with the majority of the members present shall be Independent Directors. The Audit Committee must prepare an Audit Committee Report at the end of the financial year in the Annual Report of the Company which summaries the Audit Committee’s activities during the financial year and the related significant findings.
4.0 Authority
The Audit Committee is authorised to investigate any activity of the Company within this Terms of Reference and all employees shall be directed to co-operate with any request made by the Audit Committee. The Audit Committee shall have unrestricted access to all information pertaining to the Company and have direct communication channels with the External and Internal Auditors, and to the senior management of the Group. The Audit Committee shall be empowered to engage persons or experts having special competence as necessary to assist the Audit Committee in fulfilling its responsibilities.
5.0 Duties and responsibilities
The duties and responsibilities of the Audit Committee shall be as follows:-
to consider and recommend the nomination and appointment of the External Auditors, the audit fees, the questions of their resignation or dismissal and any other related matters with include the suitability and independence of External Auditors;
to oversee all matters pertaining to audit including the review of the audit plan and audit report with the External Auditors;
to review and evaluate factors relating to the independence of the External Auditors and work closely with the External Auditors in establishing procedures in assessing their suitability and independence, in confirming that they are, and have been, independent throughout the conduct of the audit engagement with the Group in accordance with the independence criteria set out by the International Federation of Accountants and the Malaysian Institute of Accountants;
to review the financial statements of the Group, and to discuss problems and reservations arising from the interim and final results, focusing particularly on -
(i) changes in or implementation of major accounting policy changes;
(ii) significant matters highlighted including financial reporting issues, significant judgments made by management, significant and unusual events or transactions, and how these matters are addressed;
(iii) compliance with accounting standards and other legal requirements; and
(iv) any matters that the External Auditors may wish to discuss (in the absence of the management where necessary);
the Chairman of the Audit Committee to engage on a continuous basis with senior management such as the Finance Director, the External Auditors as well as the Internal Auditors in order to be kept informed of matters affecting the Company;
in relation to the internal audit function:
- review the adequacy of the scope, function, competency and resources of the internal audit function, and that it has the necessary authority to carry out its works;
- review the internal audit programme and results of the internal audit process and where necessary ensure that appropriate action is taken on the recommendations of the internal audit function;
- review the performance and competency of the Internal Auditors if the internal audit function is outsourced;
- review internal audit reports, recommendations and Management’s responses and assess on the actual and potential impact of any failure or weakness of the internal controls in place. Improvement actions in the areas of internal control, systems and efficiency enhancements suggested by the Internal Auditors are discussed together with the Management Team in a separate forum; and
- review implementation of the recommendations made by the Internal Auditors through follow-up internal audit reports to the Audit Committee.
in relation to the risk management process:
- assess on the resources and knowledge of the Management and employees involved;
- review and monitor principal risks which may affect the Group directly or indirectly, and if deemed necessary, recommend additional course(s) of action to mitigate such risks;
- monitor and communicate the risk assessment results to the Board;
- review on the adequacy and effectiveness of the enterprise risk management framework from time to time.
to review the whistle-blowing policy for adoption by the Board.
to review any related parties transactions that may arise within the Company or the Group;
to review the application of corporate governance principles and the extent of the Group’s compliance with the best practices set out under the Code;
to consider all areas of significant financial risks and arrangements in place to contain those risks to acceptable levels;
to ensure that the Group is in compliance with accounting standards, the regulations of Companies Act, 1965, Main Market Listing Requirements and other legislative and reporting requirements;
to identify and direct any special project or investigate and to report on any issues or concerns in regards to the management of the Group; and such other functions as may be agreed by the Audit Committee and the Board.
6.0 Others
This Terms of Reference will be made available on the Company’s website.