AUDIT
& RISK MANAGEMENT COMMITTEE
REPORT
The Board
on 27 February 2012 approved
on the re-named of Audit Committee
to Audit & Risk Management
Committee for the purpose
of expediency since the same
members are entrusted with
the functions of both the
Audit Committee and Risk Management
Committee. Members of the
Audit & Risk Management
are mindful of their dual
roles which are clearly reflected
and demarcated in the agendas
of each meeting.
The Audit
& Risk Management Committee
(“ARMC”) of Country Heights
Holdings Berhad was established
with the objective of assisting
the Board of Directors in
the areas of corporate governance,
system of internal control,
risk management and financial
reporting of the Group.
Membership and Meetings
The ARMC
comprises the following members,
all of whom are independent
Directors:
● Nik Hassan Bin Nik Mohd
Amin (Chairman of ARMC, Independent
Non-Executive Director)
● Gen Tan Sri (Dr) Mohamed
Hashim Bin Mohd Ali (Rtd)
(Independent Non-Executive
Director);
● Academician Tan Sri Emeritus
Professor Datuk Dr. Ong Soon
Hock (Independent Non-Executive
Director); and
● Chew Chong Eu (Independent
Non-Executive Director);
There were
five (5) meetings held during
the financial year ended 31
December 2011 and the records
of their attendance are as
follows:-
| Name
of Director |
No.
of Meetings Attended |
| General Tan Sri (Dr)
Mohamed Hashim Bin Mohd
Ali (Rtd) |
4/5 |
| Academician Tan Sri
Emeritus Professor Datuk
Dr. Ong Soon Hock |
4/5 |
| Nik Hassan Bin Nik
Mohd Amin |
5/5 |
| Chew Chong Eu |
5/5 |
The Group
CEO, Group CFO, other Senior
Management members and the
external auditors attended
these meetings upon invitation
to brief the ARMC on specific
issues.
Prior to
some ARMC meetings, private
sessions were held between
the Chairman, the Internal
Auditors and external auditors
without the Management’s presence.
Minutes of
meetings of the ARMC were
circulated to all members
and significant matters reserved
for CHHB Board’s approval
were tabled at CHHB Board
meetings. The Chairman of
the ARMC provides a report
on the decisions and recommendations
of the ARMC to CHHB Board.
TERMS
OF REFERENCE
The ARMC
has reviewed and endorsed
its Terms of Reference to
be in line with the Main LR
of Bursa Securities and best
practices propagated by Bursa
Securities Corporate Governance
Guide; towards Boardroom Excellence.
Composition
The ARMC
shall be appointed by the
Board from amongst the Directors
of the Company and shall consist
of not less than 3 members
of whom the majority shall
be independent directors.
All members of the ARMC shall
be non-executive directors.
All members of the ARMC shall
be financially literate and
at least one member of the
ARMC:
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 years working
experience and;
• he must have passed the
examinations specified in
Part I of the 1st Schedule
of the Accountants Act 1967;
• he must be a member of one
of the associations of accountants
specified in Part II of the
1st Schedule of the Accountants
Act 1967; or
• fulfils such other requirements
as prescribed or approved
by the Bursa Malaysia Securities
Berhad.
No alternate
Director shall be appointed
as a member of the ARMC. The
members of the ARMC shall
elect a Chairman from among
their members who shall be
an independent non-executive
director. In the absence of
the Chairman and/or an appointed
deputy, the remaining members
present shall elect one of
themselves to chair the meeting.
Appointments to the ARMC shall
be for a period of up to three
(3) years, which may be extended
further periods of up to three
(3) years, provided the director
still meets the criteria for
membership of the ARMC.
Quorum
The quorum shall not be less
than 2, the majority of whom
shall be independent directors.
Attendance
& Frequency of Meetings
The ARMC shall meet as the
Chairman deems necessary but
not less than 4 times a year.
The Chairman shall be entitled
where deemed appropriate to
invite any person(s) to meetings
of the Audit & Risk Management
Committee.
The ARMC shall meet with the
external auditors, internal
auditors or both, without
executive board members and
employees present at least
twice a year.
Authority
The ARMC is authorised by
the Board:-
i) to seek any information
relevant to its activities
from employees of the Company.
ii) the necessary resources
required to carry out its
duties and to obtain independent
professional advice it considers
necessary.
iii) full and unlimited access
to any information and documents
pertaining to the Company.
| Functions
|
A.
Financial Statements,
External Audit and Other
Information
The duties of the ARMC
shall be:-
|
| |
a)
to make appropriate
recommendations to the
Board on matters pertaining
the nomination, appointment
and dismissal of external
auditors and the fee
thereof;
b) to review and discuss
with the external auditors
and internal auditors
before the commencement
of audit, the nature
and scope of the audit;
c) to review the quarterly
and year-end financial
statements of the Group
and Company prior to
submission to the Board
of Directors, focusing
particularly on:- |
| |
|
i)
public announcement
of results and dividend
payments;
ii) any significant
changes in accounting
policies and practices;
iii) significant adjustments
and unusual events resulting
from the audit;
iv) the going concern
assumption;
v) compliance with stock
exchange, accounting
standards and legal
requirements.
d) to discuss problems
and reservations arising
from the interim and
final audits, and any
other matters the external
auditors may wish to
discuss (in the absence
of Management where
necessary);
e) to review any external
auditors’ letter to
management (if any)
and management’s response;
f) to 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;
g) review the internal
audit planning memorandum
and results of the internal
audit process and where
necessary ensure that
appropriate action is
taken on the recommendations
of the internal audit
function;
h) review any appraisal
or assessment of the
performance of Head
of the internal audit
function;
i) approve any appointment
or dismissal of the
Head of internal auditors;
j) inform itself of
resignation of the Head
of internal auditors
and provide him/her
an opportunity to submit
reasons for resigning;
k) to consider any related
party transactions and
conflict of interest
situation that may arise
within the Company or
Group that may raise
questions over management’s
integrity;
l) to consider the findings
of internal audit investigations
and management’s response; |
| |
| B. Risk
Management, Internal Control
and Information Systems |
| The ARMC
will review and obtain
reasonable assurance that
the risk management, internal
control and information
systems are operating
effectively to produce
accurate, appropriate
and timely management
and financial information.
This includes:- |
| |
a)
to advise the board
on the Group’s overall
risk appetite, tolerance
and strategy, taking
account of the current
and prospective macroeconomic
and financial environment
drawing on financial
stability assessments
and other authoritative
sources that may be
relevant for the Group’s
risk policies;
b) to champion and promote
the Enterprise Risk
Management and to ensure
that the risk management
process and culture
are embedded throughout
the Group;
c) to provide routine
monthly and quarterly
reporting and update
the Board on key risk
management issues and
Potential Loss Event;
d) to review Risk Management
Framework and Policy
& Guide annually;
e) to oversee and advise
the board on the current
risk exposures of the
Group and future risk
strategy to ensure development
and growth of the Group
on a sustainable basis;
f) in relation to risk
assessment:- |
| |
|
i)
to keep under review
the Group’s overall
risk assessment processes
that inform the board’s
decision making, ensuring
both qualitative and
quantitative metrics
are used;
ii) to review regularly
and approve the parameters
used in these measures
and the methodology
adopted; and
iii) to set a standard
for the accurate and
timely monitoring of
large exposures and
certain risk types of
critical importance.
iv) to consider whether
the Group has effective
management systems in
place to identify, assess,
monitor and manage its
key risk areas. |
| |
g)
to review the Group’s
capability to identify
and manage new risk
types;
h) to review reports
on any material breaches
of risk limits and the
adequacy of proposed
action;
i) to follow up on management
action plans based on
the status of implementation
compiled by the management;
j) to review the Business
Risk Analysis &
Evaluation and Mitigation
Plans to be escalated
to the Board on an annual
basis and to report
any major breach of
Risk policies and tolerance
limits and ensure Risk
Mitigants are in place;
k) to give a view on
proposal/feasibility
studies prepared by
project sponsor or project
consultants which meet
the requisite threshold
before recommending
to the Board for final
decision;
l) to keep under review
the effectiveness of
the Group’s internal
financial controls and
internal controls and
risk management systems
and review and approve
the statements to be
included in the annual
report concerning internal
controls and risk management;
m) to review the Group’s
procedures for preventing
fraud; and
n) to consider and approve
the remit of the risk
management function
and ensure it has adequate
resources and appropriate
access to information
to enable it to perform
its function effectively
and in accordance with
the relevant professional
standards. The Committee
shall also ensure the
function has adequate
independence and is
free from management
or other restrictions. |
Summary
of Activities of the ARMC
During the
financial year, the ARMC carried
out its duties as set out
in its Terms of Reference,
including but not limited
to:-
• review
of audit plans prepared by
both internal and external
auditors;
• review of unaudited quarterly
financial statements during
the financial year prior to
submission to the Board for
consideration and approval;
• review and evaluate the
policies for risk management
and systems of internal control;
• review of internal audit
reports presented by internal
auditors and consider the
major findings by the internal
auditors and management’s
responses thereto;
• review of the audited financial
statements for the financial
year ended 31 December 2011
and to discuss significant
audit issues and findings
with the external auditors;
• review the procedures for
identification of related
party transactions for compliance
with the Listing Requirements
of Bursa Securities and the
appropriateness of such transaction,
if any, before recommending
to the Board for approval;
and
• met with the external auditors
without the presence of the
Executive Director and management.
Summary
of Activities of the Internal
Audit Function
The ARMC
is aware of the fact that
an independent and adequately
resourced internal audit function
is essential to assist in
obtaining the assurance it
requires regarding the effectiveness
of the system of internal
controls.
The internal
audit function is undertaken
by an independent firm of
consultants appointed by the
Board. The outsourced internal
audit function reports independently
to the ARMC and its role encompasses
the examination and evaluation
of the adequacy and effectiveness
of the Group’s system of internal
control to provide reasonable
assurance to the members of
the ARMC.
During the
financial year, the Group
established an in-house Internal
Audit Department. The internal
audit activities carried out
for the financial year include,
inter alia, the following:
i. Formulated
annual risk based audit plan
and reviewed the resource
requirements for audit executions;
ii. Executed internal audit
reviews in accordance with
the approved annual audit
plan;
iii. Issued reports on the
internal audit findings identifying
weaknesses and highlighting
recommendations for improvements
on a periodic basis;
iv. Followed-up on the implementation
of corrective action plans
or best practices agreed with
management; and
v. Attended ARMC meetings
to table and discuss the audit
reports and followed up on
matters raised.
The internal
audit reviews conducted did
not reveal weaknesses that
have result in material losses,
contingencies or uncertainties
that would require separate
disclosure in the annual report.
