CORPORATE GOVERNANCE 92 Al-`Aqar Healthcare REIT | Annual Report 2024 EXTERNAL AUDIT AND INTERNAL CONTROLS Independence of External Auditors The External Auditors serve a vital role in safeguarding shareholder interests by enhancing the credibility of the financial statements. They provide independent assurance on the reliability of the financial disclosures presented by the REIT. The Board Audit and Risk Committee (“BARC”) oversees the engagement of the External Auditors on behalf of the Board. In discharging this responsibility, the BARC reviews and evaluates the reappointment, remuneration, and independence of the External Auditors annually, including prior to any reappointment. The evaluation of the External Auditors is based on the following key criteria: • Competency, audit quality, and resource capacity; • Audit planning, process quality, and scope; • Effectiveness of audit communications; • Independence and objectivity; • Appropriateness of non-audit services and associated fees; • Written confirmation of independence in accordance with professional and regulatory requirements. These assessments are supplemented with input from the Head of Finance and form the basis of BARC’s recommendation to the Board regarding the appointment of External Auditors. The BARC holds regular meetings with the External Auditors to review the audit scope and discuss findings. At least twice a year, private sessions are conducted without Management’s presence to provide an avenue for open dialogue on any audit-related concerns. The External Auditors are invited to attend the Annual General Meeting to respond to queries from unitholders regarding the statutory audit and the audited financial statements. The External Auditors have confirmed their independence and compliance with ethical and professional standards. The BARC concluded that the External Auditors maintained a high standard of audit quality, demonstrated professional competence, and possessed adequate resources to discharge their responsibilities effectively. Internal Audit Function The Manager has outsourced its internal audit function to PKF Risk Management Sdn Bhd (“PKF”) to ensure independent and objective oversight of the internal control environment. PKF reports functionally to the BARC and administratively to the Chief Executive Officer and the Corporate Services Department. This reporting structure preserves the independence and integrity of the internal audit function. The internal audit activities are governed by an Audit Charter, approved by the BARC, and aligned with the International Professional Practices Framework of the Institute of Internal Auditors. Key responsibilities of PKF include: • Conducting independent reviews of internal control systems; • Identifying and reporting internal control weaknesses or deficiencies; • Recommending improvements to enhance control effectiveness; • Undertaking investigative audits when required. Audit areas are prioritised based on a risk-based methodology, and high-risk functions are audited annually in accordance with the BARCapproved Internal Audit Plan. PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT CORPORATE GOVERNANCE OVERVIEW STATEMENT
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