AL-SALAM REIT ANNUAL REPORT 2020

97 ANNUAL REPORT 2020 BOARD AUDIT AND RISK COMMITTEE REPORT (e) Reviewed the FY2020 audit fees of Al-Salām REIT and ALSREIT Capital for recommendation to the Board, prior to seeking the approval from the Trustee of Al-Salām REIT. The BARC also considered the non-audit fees applicable to Al-Salām REIT for FY2020, and was satisfied that the non-audit fees were not of significant nature and were necessary compliance costs in order for Al-Salām REIT to comply with the relevant requirements. The details of audit and non-audit fees for FY2020 are disclosed below: AL-SALĀM REIT ALSREIT CAPITAL Audit fee Non-audit fee Audit fee Non-audit fee RM156,000 RM10,000 RM30,000 N/A Internal Audit (a) Reviewed with the internal auditors the internal audit reports (including follow-up review reports), the audit findings and recommendations, management’s responses and/or actions taken thereto, and ensured that material findings were satisfactorily addressed by management. (b) 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. (c) Reviewed and adopted the risk-based internal audit plan for financial year ending 31 December 2020 to ensure sufficient scope and coverage of activities of Al-Salām REIT and the Group, which include review of tenant procedures in the leasing department, a review of assessment procedures involving vendors/contractors, and a review of building and asset maintenance and safety controls. (d) Reviewed internal audit resourcing, with focus on ensuring that the function has sufficient resources together with the right calibre of personnel to perform effectively and that the internal audit team has adequate authority to discharge his functions objectively and independently Risk Management and Internal Control The Board is responsible for the Group’s system of internal control and for reviewing its effectiveness. The BARC supports the Board by advising on the Group’s overall risk appetite, tolerance and strategy, current risk exposures and future risk strategy. The BARC reviews risk registers produced by the management which covers Strategic, Finance, Operational and Compliance Risks at each of its meetings and the status and progress of action plans in respect of significant risks. The BARC also considers that appropriate controls are in place in management of the REIT, that the Manager has a well-defined organisational structure with clear lines of responsibility and a comprehensive reporting system and adequate procedures in financial reporting, risk management, internal control and are in place. Further details in respect of risk management and internal controls are set out on pages 99 to 102. Details in respect of the principal risks and uncertainties are set out on pages 53 to 54. The Committee also reviewed and deliberated on four frameworks relating to compliance and internal controls and recommended to the Board the implementation of the frameworks and policies put forward by the Management, listed as below: No Frameworks & Policy Date of Meeting 1 Anti-Bribery & Corruption Policy and Whistle Blowing Policy 13 May 2020 2 Internal Control Policy 18 November 2020 3 Compliance Framework & Policy 18 November 2020 4 Limits of Authority 18 November 2020 5 Enterprise Risk Management Framework 18 November 2020