MSM Malaysia Holdings Berhad Annual Report 2019

AUDIT COMMITTEE REPORT TERMS OF REFERENCE The AC’s Terms of Reference (TOR) has been established pursuant to the MMLR and was approved by the Board to guide the AC in the discharge of its functions and duties. In addition, the TOR also recognises and adopts related better practices and guidance from the MCCG 2017 and the Corporate Governance Guide 3 rd Edition. The AC continuously reviews and updates its TOR with the last review and approved by the Board on 20 November 2019. The full details of the AC’s TOR is published in the Company’s corporate website at our-company/corporate-governance. The existence of the AC does not diminish the Board’s ultimate statutory and fiduciary responsibility for decision- making relating to the functions and duties of the AC. SUMMARY OFWORK OFTHE AUDIT COMMITTEE IN 2019 Throughout the six meetings held and various private sessions with the external auditors, and internal auditors, the AC undertook the following principal activities in the discharge of its responsibilities: Financial Reporting • Reviewed unaudited quarterly financial results, any change in accounting policies, the going concerns assumption, and compliance with accounting standards and regulatory requirements for recommendation to the Board for approval. • Considered and reviewed the draft of the audited financial statements for the year ended 31 December 2018 in March 2019 together with the Directors’ and Auditor’s and concluded that the financial report presented a true and a fair view of the Company’s financial performance for the year and was in compliance with regulatory requirements. • Reviewed the significant matters highlighted by the auditors in the financial statements and significant judgment made by management. • Reviewed matters related to loan facilities of MSM before recommending to the Board for approval. • Reviewed the Group’s consolidated cashflow projection for the financial year. • Reviewed the status of construction of Johor Refinery. • Reviewed the compliance of the financial covenants. • Reviewed the closure of MSM Perlis Sdn Bhd (MSM Perlis) • Reviewed the process for the closure of MSM Trading International DMCC (MTID). Assessing the Risks and Control Environment • Evaluated the reports on the assessment of the risks and control environment based on the external auditor’s quarterly financial statement review and statutory financial audits at each AC meeting. • Reviewed all internal audit reports issued by the Group Internal Audit, which detailed the observations from all the internal audits undertaken. • Received assurances from the Group CEO and CFO that the risk management and internal control system of the Group for the financial year 2019 have been operating adequately and effectively, in all material aspects. • Monitored the implementation of corrective actions under taken by management. Management provided justification and improvement for the key matters highlighted by internal and external auditors. • Provided relevant guidance for the improvement of the risks and internal control of the Group, particularly in the areas of raw and refined sugar trading which was the key focus area of the Group during the financial year. This includes improvements in the monitoring and systems. Internal Audit Process • Reviewed and approved MSM Group Annual Internal Audit Plan for the year 2020 by assessing the priority ranking of the audit universe to provide sufficient audit coverage. • Assessed the adequacy of resources of the internal audit function to execute the MSM Group Annual Internal Audit Plan after taking into consideration the number of planned assignments and competencies required. MSM Malaysia Holdings Berhad | Annual Report 2019 84