127 CORPORATE GOVERNANCE PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT Independence Of External Auditors The External Auditors play an essential role to the shareholders by enhancing the reliability of the financial statements and giving such reliability assurance to users of these financial statements. The Board Audit and Risk Committee ("BARC") manages the relationship with the External Auditors on behalf of the Board. The BARC reviews and considers the re-appointment, remuneration and annually assessed the independence and objectivity of the external auditors during the year and before any appointment of the external auditors. The evaluation process involving the track record and prior performance of the external auditor's centres around the areas below: • The competency, audit quality, and resource capacity of the external auditor in relation to the audit; • Quality of the audit process, scope and planning; • Effectiveness of the audit communications; • Auditors’ independence and objectivity; • The nature and extent of the non-audit services rendered and appropriateness of the level of fees; • Written assurance from the external auditors confirming that they are, and have been, independent throughout the conduct of the audit engagement following the terms of all relevant professional and regulatory requirements. The results of these assessments formed the basis of the BARC’s appointment of External Auditors. The assessment takes into account the feedback from the Head of Finance of the REIT Manager, focusing on a range of factors that are considered relevant to audit quality. The BARC meets with the External Auditors regularly to discuss their audit plans and audit findings in relation to the financial statements. Private sessions between the BARC and the External Auditors were held without the presence of Management at least twice a year to discuss any other matters the external auditors may wish to highlight and to ensure that there were no restrictions in the scope and performance of their audit activities. In addition, the External Auditors are invited to attend the Annual General Meeting and be available to answer unitholders’ inquiries on the conduct of the statutory audit and preparation of their audit report. The External Auditors have confirmed their independence and that no circumstances and relationship create threats to their independence and that the ethical requirements have been complied with. The BARC was satisfied with the independence of the present external auditor based on the quality of audit, performance, competency, and sufficiency of the resources that the Internal Auditor provided to the Fund. Internal Audit Function The REIT Manager has entered into an outsourcing arrangement with PKF Risk Management Sdn Bhd ("PKF") to carry out its internal audit function. To preserve the independence and objectivity of Internal Auditor, the PKF reports functionally to the BARC and administratively to the CEO and Compliance & Risk Department and is independent of the business activities or operations of the REIT Manager. PKF’s authority, scope, and responsibilities are governed by its Audit Charter which is approved by the BARC and aligned with the International Professional Practice Framework on Internal Auditing issued by the Institute of Internal Auditors. PKF serves as an important source of reasonable assurance and advice for the BARC concerning areas of weaknesses or deficiencies in internal control processes to facilitate appropriate remedial improvements by the Management. PKF also carries out investigative audits where required. The appointed internal auditor independently and objectively reviews the effectiveness of the internal control structures over the Group activities focusing on high-risk areas as determined using a risk-based approach. All high-risk activities in each auditable area are audited annually following the BARC-approved Internal Audit Plan. The audit reports which provide the findings and results of the audit conducted are discussed with the Management and presented to the BARC for review and deliberation. Key control issues, significant risks, and recommendations are highlighted, along with Management’s responses and action plans for improvement and/or rectification, where applicable. CORPORATE GOVERNANCE OVERVIEW STATEMENT
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