4 Duties and Responsibilities
In fulfilling its primary objectives, the Committee will n e e d t o u n d e r t a k e t h e f o l l o w i n g d u t i e s a n d responsibilities summarised below:
i To review with management on a periodic basis, the Company’s general policies, procedures and controls especially in relation to management accounting, financial reporting, risk management and business ethics.
ii To consider the appointment of the external auditors, the terms of reference of their appointment, the audit fee and any questions of resignation or dismissal.
iii To review with the external auditors their audit plan, scope and nature of the audit for the Company and the Group.
iv To review the external auditors’ management letter and management’s response.
v To review with the external auditors with regard to problems and reservations arising from their interim and final audits.
vi To review with the external auditors the audit report and their evaluation of the system of internal controls.
vii To review the assistance given by employees of the Company or Group to the external auditors. viii To do the following, in relation to the internal
audit function:
• review the adequacy of the scope, functions, competency and resources of the internal audit function and that it has the necessary authority to carry out its work.
• review 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.
• review any appraisal or assessment of the performance of members of the internal audit function.
• approve any appointment or termination of senior staff members of the internal audit function.
• take cognisance of resignations of internal audit staff members and provide the resigning staff member an opportunity to submit his reasons for resigning.
ix To review the Company and the Group's quarterly financial statements and annual financial statements before submission to the Board.
The review shall focus on:
• any changes in or implementation of major accounting policies and practices.
• significant and unusual events.
• significant adjustments and issues arising from the audit.
• the going concern assumption.
• compliance with the applicable approved a c c o u n t i n g s t a n d a r d s a n d o t h e r l e g a l requirements.
x To review any related party transaction and conflict of interest situations that may arise within the Company or the Group including any transaction, procedure or course of conduct that raises questions of management integrity.
xi To undertake such other responsibilities as may be agreed to by the Committee and the Board. xii To consider the report, major findings and
m a n a g e m e n t ’ s r e s p o n s e o f a n y i n t e r n a l investigations carried out by the internal auditors. xiii To verify the allocation of options pursuant to
Executive Share Option Scheme (“ESOS”) in compliance with the criteria of the ESOS at the end of each financial year.
5 Conduct of Meetings
Number of Meetings
The Committee shall meet at least five (5) times a 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.
Attendance of Meetings
The head of finance and head of internal audit division and representatives of the external auditors shall normally be invited to attend meetings of the Committee. However, the Committee shall meet with the external auditors without executive board members present at least twice a year. The Committee may also invite other Directors and employees to attend any of its meeting to assist in resolving and clarifying matters raised.
Quorum
A quorum shall consist of a majority of Independent Non- Executive Directors and shall not be less than two (2).
6 Secretary to the Committee and Minutes
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.
IOI Corporation Berhad
C ACTIVITIES
During the financial year ended 30 June 2013, the Committee discharged its duties and responsibilities in accordance with its terms of reference.
The main activities undertaken by the Committee were as follows:
i Review of the external auditors’ scope of work and their audit plan and discuss results of their examinations and recommendations.
ii Review with the external auditors the results of their a u d i t , t h e a u d i t r e p o r t a n d i n t e r n a l c o n t r o l recommendations in respect of control weaknesses noted in the course of their audit.
iii Review the audited financial statements before recommending them for the Board of Directors’ approval. iv Review the Company’s compliance, in particular the
quarterly and year end financial statements with the Main Market Listing Requirements of Bursa Malaysia Securities Berhad and the applicable approved accounting standards issued by the Malaysian Accounting Standards Board.
v Review of the quarterly unaudited financial results announcements of the Group and the Company prior to recommending them to the Board for consideration and approval.
vi Review of the Internal Audit Department’s resource requirement, programmes and plan for the financial year to ensure adequate coverage over the activities of the respective business units and the annual assessment of the Internal Audit Department’s performance. vii Review of the audit reports presented by Internal Audit
Department on findings and recommendations and management’s responses thereto and ensure that material findings are adequately addressed by management.
viii Review of the following related party transactions: a) proposed acquisition of 10% equity interest in
Property Village Berhad and Property Skyline Sdn Bhd respectively by IOI Properties Group Berhad from Summervest Sdn Bhd.
b) proposed acquisition of the remaining 39% equity interest in Future Link Properties Pte Ltd by IOI Properties Berhad.
ix Review and assess the risk management activities and risk review reports of the Group, as follows:
• Bi-annual risk review reports compiled by the respective operating units’ Risk Management Committees, and annual presentation to and discussion with the Committee.
• Operating units’ CEO/CFO’s Internal Control Certification and Assessment Disclosure.
• Operating unit’s response to the Questionnaire on Control and Regulations.
x Review of the extent of the Group's compliance with the relevant provisions set out under the Malaysian Code on Corporate Governance for the purpose of preparing the Statement on Corporate Governance and Statement on Risk Management and Internal Control pursuant to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.
xi Review of whistleblowing activities to monitor the actions taken by the Group in respect of whistleblowing reports received.
Number of Meetings and Details of Attendance
Eight (8) meetings were held during the financial year ended 30 June 2013. The attendance record of each member was as follows: Members Total Number of Meetings Number of Meetings Attended
Datuk Hj Mohd Khalil b Dato’ Hj Mohd Noor
8 8
Datuk Karownakaran @ Karunakaran a/l Ramasamy
8 8
Quah Poh Keat
(Resigned on 13 September 2013)
8 8
Three (3) meetings were held subsequent to the financial year end to the date of Directors’ Report and were attended by the following members:
Members Total Number of Meetings Number of Meetings Attended
Datuk Hj Mohd Khalil b Dato’ Hj Mohd Noor
3 3
Datuk Karownakaran @ Karunakaran a/l Ramasamy
3 3
Quah Poh Keat
(Resigned on 13 September 2013)
3 3
IOI Corporation Berhad
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D INTERNAL AUDIT FUNCTION
The annual Internal Audit plan is approved by the Committee at the beginning of each financial year.
The Internal Audit Department performs routine audit on and reviews all operating units within the Group, with emphasis on principal risk areas. Internal Audit adopts a risk-based approach towards planning and conduct of audits, which is partly guided by an Enterprise Risk Management ("ERM") framework. Impact on IOI’s vision is taken into consideration in determining the risk level as a holistic approach in contributing to the achievement of the Group’s objective and in enhancing shareholders’ value.
140 audit assignments were completed during the financial year on various operating units of the Group covering plantation, properties, manufacturing, hotels and other sectors. Audit reports were issued to the Committee and Board incorporating findings, recommendations to improve on the weaknesses noted in the course of the audits and management's comments on the findings. An established system has been put in place to ensure that all remedial actions have been taken on the agreed audit issues and recommendations highlighted in the audit reports. Significant issues and matters unsatisfactorily resolved would be highlighted to the Committee quarterly.
The total costs incurred for the internal audit function of the Group for the financial year ended 30 June 2013 was RM3,205,000 (2012: RM2,878,000).
E RISK MANAGEMENT
The Board and Management drive a proactive risk management culture and ensure that the Group’s employees have a good understanding and application of risk management principles towards cultivating a sustainable risk management culture through education. Regular risk awareness sessions are conducted at the operational level to promote the understanding of risk management principles and practices across different functions within the Group. In addition, a risk- based approach is embedded into existing key processes as well as new key projects, and is compatible with the Group’s internal control systems.
This is elaborated in details under a separate statement called “Statement on Risk Management and Internal Control” on pages 106 to 108.
IOI Corporation Berhad
INTRODUCTION
The Board recognises the paramount importance of good corporate governance to the success of the Group. It strives to ensure that a high standard of corporate governance is being practised throughout the Group in ensuring continuous and sustainable growth for the interests of all its stakeholders.
The Group’s corporate governance practices are guided by its “Vision IOI” whereby responsible and balanced commercial success is to be achieved by addressing the interests of all stakeholders. A set of core values guides our employees at all levels in the conduct and management of the business and affairs of the Group. We believe that good corporate governance results in
GOVERNANCE FRAMEWORK
quantifiable and sustainable long term success and value for shareholders as well as all other stakeholders, as reflected by our performance and track record over the years. During the financial year, the Group has received numerous accolades and awards in recognition of its efforts.
The Group will continue its efforts in evaluating its governance practices in response to evolving best practices and the changing needs of the Group. The paragraphs that follow in this Statement outline the governance framework of the Group and explain how the Group has applied the principles and recommendations set out in the Malaysian Code on Corporate Governance 2012 (“the Code”).