MISC Annual Report 2017

153 Corporate Governance BOARD AUDIT AND RISK COMMITTEE REPORT C. EXTERNAL AUDIT • Reviewed and approved the External Auditors’ terms of engagement, audit plan, nature and scope for the financial year. • Reviewed the results and issues arising from External Auditors’ audit for the financial year and the resolution of issues highlighted in their report to the BARC and Management’s response. • The BARC had 2 private meetings with the External Auditors without the presence of Management during the financial year ended 31 December 2017 (i.e. on 7 February 2017 and 31 October 2017) to discuss any matters the External Auditors may wish to present and to ensure that there were no restrictions in the scope and discharge of their audit activities. • The BARC also recommended the External Auditors’ re- appointment to the Board to be proposed for shareholders’ approval at the last AGM. The Company also engages the External Auditors for other non- audit works as and when required. For the financial year ended 31 December 2017, the amount of non-audit fees incurred for services rendered by the External Auditors or their affiliates to MISC Group is RM1.29 million, which includes limited review of quarterly financial results and tax advisory. To ensure that the External Auditors’ independence is not impaired, the Audit Engagement Partner in charge of the Company is changed every 5 years. Internally, the External Auditors conduct an Independent Partner Review in order to preserve their independence. The External Auditors had also provided written assurance to the BARC that in accordance with the terms of all relevant professional and regulatory requirements, they had been independent throughout the audit engagement. The Company has also adopted a Policy on the Assessment of External Auditors. With this policy, the BARC had carried out an assessment on the performance, suitability and independence of the External Auditors based on the following criteria, and will continue to do so on an annual basis :- • quality of engagement team. (including sufficiency of resources) • quality of communication and interaction. • independence, objectivity and professional scepticism. D. FINANCIAL RESULTS AND OTHER FINANCE MATTERS • Reviewed the quarterly and annual financial statements of the Company and the Group including the relevant announcements to Bursa Securities with focus on compliance with the Financial Reporting Standards and other relevant regulatory requirements or changes in accounting policy. • Reviewed the adequacy and effectiveness of existing risk policies relating to the financial risk appetite for MISC Group, namely the Foreign Exchange Risk Appetite and Financial Institutions (FIs) Credit Counterparty Risk Appetite, as well as endorsed the adoption of additional risk policies, namely the Interest Rate Risk Appetite, Optimum Debt Level and Minimum Cash Balance. E. CORPORATE GOVERNANCE AND REGULATORY COMPLIANCE • Reviewed and deliberated on the Related Party Transactions (RPTs) and Recurrent Related Party Transactions (RRPTs) reports on quarterly basis, including the framework and procedures of RRPTs. • Reviewed and recommended to the Board the Statement on Risk Management and Internal Control, BARC Report and Additional Compliance Information for inclusion in the 2017 Annual Report. • Reviewed the Directors’ Conflict of Interest report for MISC Group. • Enhanced the Whistleblowing framework and structure, which includes establishment of the new Whistleblowing Committee 1 (WBC 1) for any whistleblowing reports against senior management members, and the Whistleblowing Committee 2 (WBC 2) for any reports against other employees. • Reviewed the Whistleblowing quarterly reports of the Company. • Reviewed and endorsed the following amendments to the BARC Terms of Reference to comply with the MMLR and MCCG 2017 : i) inclusion of a policy that any key audit partner shall observe a 2-year cooling-off period before being appointed as BARC member (as per MCCG 2017); ii) clarification on establishment of policy and procedures to assess the external auditor which includes suitability, objectivity and independence and assessment to be conducted on annual basis; iii) inclusion of decision/recommendation by BARC relating to appointment, transfer and removal of Head of GIA and performance of GIA;