AL-SALAM REIT ANNUAL REPORT 2019

93 ANNUAL REPORT 2019 Audit Committee Report AL-SALĀM REIT • 2. Assessing Risks and Control Environment (a) The Committee reviewed the adequacy and effectiveness of the risk management framework and the appropriateness of Management’s responses to key risk areas and proposed recommendations for improvements to be implemented. (b) The Management reported to the Committee on a quarterly basis, all identified risks that were recorded in a risk management scorecard which had facilitated systematic review and monitoring of the risk areas. (c) The Committee also reviewed and deliberated on matters relating to internal control highlighted by the External Auditors in the course of their statutory audit of the financial statements. 3. Evaluate the Audit Process (i) Internal Audit (a) Reviewed the annual internal audit plan with Management to ensure adequate audit coverage of the key risk areas and processes of the business operations activities of Al-Salām REIT. (b) Reviewed the adequacy and relevance of the scope, functions, resources, risk based internal audit plan and results of the internal audit processes. (c) Reviewed the audit activities carried out by the Management and discussed the audit reports, their major findings and recommendations to ensure corrective actions were taken in addressing the risk issues reported. (d) Monitored and reviewed the progress of follow-ups on audit findings to ensure remedial / corrective actions have been taken by Management on a timely basis. (e) Evaluated the adequacy and effectiveness of Internal Audit Function as well as the performance of the Internal Auditors against the audit plan. (ii) External Audit (a) On 6 November 2019, the Audit Committee had reviewed and discussed with the Management and the External Auditors, Deloitte PLT, the Audit Planning Memorandum for 2019. At the aforesaid meeting, the External Auditors explained their audit approach and system of evaluation inclusive of the areas of audit emphasis and scope for the year and their audit strategies as well as the audit procedures prior to the commencement of annual audit. 4. Reviewing Related Party Transaction & Conflict of Interest Situations (a) The Audit Committee reviewed the potential conflict of interest, related party transactions and recurring related party transactions based on its existing framework which requires that such potential conflict of interest, related party transaction and recurring related party transaction situations be: • Carried out in compliance with the REIT Guidelines and the Deed; • Carried out on an arms’ length basis and under normal commercial terms; • Carried out in the best interest of the Unitholders; • Abstention from voting at Board Meetings for interested parties; • Adequately disclose to the unitholders via Bursa Announcements, Quarterly Reports and Annual Report; and • Approved by the Trustee. (b) The Committee took note that there were no management conflict of interest situations for operational matters (including any transaction, procedure or course of conduct) as reported by the Chief Executive Officer.