Audit Committee Report

1. Composition

The composition of Audit Committee during the financial year under review is as follows:

Name
Lau Tiang Hua, Chairman

Neoh Choo Kean, Member

Lim Beng Huat, Member

2.  Terms of reference of the Audit Committee

2.1 Membership

a)  The Audit Committee shall comprise at least 3 directors.
b)  No alternate directors shall be appointed to the Audit Committee.
c)  All the Audit Committee members must be non-executive directors, with a majority of them being independent directors.
d)  At least one member of the Audit Committee:-

• Must be a member of the Malaysian Institute of Accountants; or
• If he is not a member of the Malaysian Institute of Accountants, he must have at least three (3) years working experience; and i) he must have passed the examinations specified in Part I of the 1st Schedule of the Accountant’s Act 1967; or ii) he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountant’s Act 1967; or
• Fulfils such other requirements as prescribed or approved by Bursa Malaysia Securities Berhad.

 

e)  Members of the Audit Committee shall elect a Chairman who shall be an Independent Non- Executive Director, from among themselves.
f)  The term of office and performance of the Committee and each of its members shall be reviewed by the Board of Directors at least once every 3 years.
g)  In the event of any vacancy in the Audit Committee resulting in the number of members is reduced to below 3, the vacancy must be filled within 3 months.

 

2.2 Objectives

a)  The Audit Committee is to serve as a focal point for communication between Directors, the external auditors, internal auditor and the Management on matters in connection with accounting, reporting and controls.
b)  The Audit Committee is to assist the Board in fulfilling its fiduciary responsibilities for ensuring quality, integrity and reliability of the practices of the Group.
c)  The Audit Committee will reinforce the independence of the Group’s external and internal auditors.

 

2.3 Functions

The Audit Committee shall, amongst others, discharge the following functions:-

a)    Review the following and report the same to the Board:-

i)  With the external auditors their audit plan, their evaluation of the system of internal controls and their audit report;
ii)  The assistance provided by employees to the external auditors;
iii)  The adequacy of the scope, functions, competency and resources of the internal audit function and the necessary authority given to the internal auditor in order for him to carry out his work;
iv)  The internal audit plan and the results of the internal audit undertaken and whether or not appropriate action has been taken on the recommendations of the internal auditor;
v)  Quarterly interim financial reports and year end financial statements prior to the approval of the Board focusing particularly on:-

• changes in significant accounting policies;
• significant and unusual events;
• the going concern assumption; and
• compliance with accounting standards and other legal requirements.

vi)  Any related party transactions and conflict of interest situation including any transaction, procedure or course of conduct that raises questions of management integrity;
vii)  Any letters of resignation from the external auditors;
viii)  Whether there is any reason to believe that the external auditors are not suitable for re-appointment;
ix)  The effectiveness of the internal control and management information systems; and
x)  All areas of significant financial risk and the arrangements in place to contain those risks to acceptable levels.

b)    Recommend the nomination of a person or persons as external auditors.

c)    Meet up with the external auditors at least twice a year without the presence of executive directors and management.

d)    Report promptly to Bursa Malaysia Securities Berhad any matter that the Audit Committee had reported to the Board which was not satisfactorily resolved and/or had resulted in a breach of the Listing Requirements and/or the Companies Act, 1965.

2.4 Authority

For the performance of its duties, the Audit Committee shall:-

a)    Have authority to investigate any matter within its terms of reference;

b)    Have the resources required to perform its duties;

c)    Have direct communication channels with the external auditors and persons carrying out the internal audit function;

d)    Have full and unrestricted access to any information pertaining to the Group;

e)    Be able to obtain independent professional or other advice at a cost which is to be approved by the Board;

f)    Be able to convene meetings with the external auditors, the internal auditors or both, with the exclusion of Executive Directors and employees, whenever deemed necessary; and

g)    Be able to invite outsiders with relevant experience to attend its meetings if necessary.

2.5 Meetings

The Audit Committee shall regulate its meetings as follows:-

a)    The Audit Committee shall hold at least 4 meetings in each financial year;

b)    A member of the Audit Committee may at any time summon a meeting of the Audit Committee;

c)    Notice calling for a meeting of the Audit Committee shall be given to its members at least 14 days before the meeting or at shorter notice as the Audit Committee members shall determine or agree;

d)    The quorum for a meeting of the Audit Committee shall be two members, and the majority of members present must be Independent Directors;

e)    Questions arising at any Audit Committee meeting shall be decided by a majority vote of its members present. In case of an equality of votes, the Chairman of the meeting shall have a second or casting vote; and

f)    Minutes of each Audit Committee meeting shall be kept by the Company Secretary.

3.    Summary of activities of the Audit Committee

The Committee members and details attendance of each member at committee meeting during financial year ended March 31, 2011are set out below:

The following is a summary of the activities carried out by the Audit Committee during the financial year ended March 31, 2011:-

a)    Reviewed and recommended for Board’s approval the quarterly interim financial report of the Group for announcement to Bursa Malaysia Securities Berhad;

b)    Reviewed the audit plan for the annual statutory audit with the external auditors;

c)    Reviewed the audit report and observations made by the external auditors on the annual financial statements that required appropriate actions and the Management’s response thereon and reported them to the Board;

d)    Identified and deliberated high risk areas with Executive Directors and Management and the implementation of controls to mitigate such risks identified;

e)    Reported to the Board the matters discussed in the Audit Committee meetings;

f)    Held two private meetings with the external auditors without the presence of the Executive Directors and Management to discuss problems, issues and concerns arising from the interim and final audits, and any other relevant matters;

g)    Reviewed the impact of new or proposed changes in accounting standards and regulatory requirements to the Company;

h)    Reviewed any related party transactions and conflict of interest situation that may arise within the Company or the Group;

i)    Reviewed and approved the annual audit plan of the internal auditor; and j)    Reviewed and deliberated on the report of findings and recommendations from the internal auditor.

4.  Internal audit function

The Group has outsourced its internal audit function to Finfield Corporate Services Sdn. Bhd., a professional company specializing in providing internal audit services.

During the year ended March 31, 2011, the internal auditor has carried out audits to assess the adequacy of the internal controls of the main operating subsidiary, based on the audit plan approved by the Audit Committee. The internal auditor reported his findings and recommendations to the Audit Committee for deliberations together with the Management. Where areas of improvements were required, it was highlighted to the Management for implementation. The Audit Committee monitored the progress of the implementation.

This Audit Committee Report has been approved by a resolution of your Board of Directors dated June 13, 2011.