Serba Dinamik Annual Report 2016

2016 Annual Report 095 AUDIT COMMITTEE REPORT (Cont’d) 5. SUMMARY OF ACTIVITIES For the financial year ended 31 December 2016, the ARC had executed the following activities in the discharge of its roles and responsibilities: a) Financial Reporting The ARC had reviewed the unaudited quarterly and half-yearly financial results as well as the annual audited financial statement of the Group. The review, covers among others, an assessment on the appropriateness of the accounting policies applied. The ARC had sought explanations and additional information from the Senior Management including the Group Chief Financial Officer on the reasons for the variances / fluctuations in the financial performance of the Group, including the key income and operating expenses. In reviewing the quarterly and annual financial results, the ARC focused on the following: • Profits contribution by domestic and overseas operations; • Profits contribution by business segments; • Trends on financial ratios such as return on equity, net interest margin, cost of funds, cost to- income ratio, loan loss allowances ratio and capital ratio; and • Significant issues relating to adoption of accounting policies and fiscal reporting. b) External Audit The ARC reviewed and evaluated the external auditors’ audit plan for the financial year ending 31 December 2017. The external auditors’ audit plan covered its engagement team, concept of materiality, independence and objectivity, and the areas of audit emphasis. The ARC also reviewed key audit issues raised by the external auditors from its annual audit in its management letter including Management’s responses/actions taken on the resolution of such issues. c) Internal Audit In its oversight over the Internal Audit Function, the ARC approved the internal audit framework and the annual audit plan to ensure adequate scope and comprehensive coverage over the activities of the Group and ensured that all high risk areas are audited at least annually. During the year, the ARC reviewed and deliberated on the revisions made to the Internal Audit Charter and recommended the same to the Board for approval. The ARC reviews and monitors the Internal Audit’s performance, progress of achievement of approved annual audit plan and adequacy of audit coverage on a quarterly basis. The ARC also reviewed and approved the action plans to address the competency gaps and audit methodology of the Internal Audit Function. The Internal Audit reports were tabled to the ARC in their meetings for their review, deliberations and noting / approval. Senior Management officers were invited to attend the meetings as and when necessary to brief the ARC on matters relating to their areas of responsibility. Where appropriate, the ARC had directed Management to rectify and improve control procedures based on the internal auditors’ recommendations. The ARC also monitored the progress of the corrective actions taken by Management to ensure appropriate remedial actions were taken on a timely basis to address all key areas of risk and control issues. For the financial year under review, the ARC noted that there was no significant disagreement between the Internal Audit Function and the Management.