ASSESSMENT POLICY AND PROCEDURES

INTRODUCTION

The Audit Committee (“AC”) of the Company is assigned to assess, review and supervise the suitability, objectivity and independence of External Auditors to safeguard the quality and reliability of the Audited Financial Statements of the Company.

Pursuant to Section 271 (1) of the Companies Act 2016, the Company shall at each Annual General Meeting appoint or re-appoint the External Auditors of the Company, and the External Auditors appointed shall hold office until the conclusion of the next Annual General Meeting of the Company.

This Assessment Policy and Procedures will assist the AC to assess and review the External Auditors prior to making recommendation to the Board of Directors (“Board”) on the appointment and removal of the External Auditors.

SELECTION AND APPOINTMENT PROCEDURE

The AC will follow the following procedures for selection and appointment of External Auditors: -

(a) to identify the audit firms which meet the following criteria for appointment:

• provide a fee quotation which is cost effectiveness for its quality audit services;
• must satisfy the AC and the Board that it is independent from the Company and its ability to maintain independence throughout the engagement;
• there being no conflict of interest situations that could affect the independence of the External Auditors; and
• professional competency and industry experience i.e. the breadth and depth of resources, expertise and experience of the engagement team members.

(b) to assess the proposals received and shortlist the suitable audit firm

(c) to meet and/or interview the shortlisted audit firms. The AC may seek the assistance of the Chief Financial Officer (“CFO”) to carry out items (a) to (c) above; and

(d) to recommend the suitable audit firm to the Board for appointment as External Auditors;

The Board will endorse the recommendation of the AC and seek shareholders’ approval for the appointment of the new External Auditors and/or resignation/removal of the existing External Auditors at the general meeting.

ASSESSMENT OF INDEPENDENCE

The External Auditors are precluded from providing any services that may impair their independence or conflict with their role as External Auditors. In avoidance of doubt, the AC shall obtain a written assurance from the External Auditors confirming that they are, and have been, independent throughout the conduct of the audit engagement in accordance with the terms of all relevant professional and regulatory requirements.

NON-AUDIT ENGAGEMENT

The External Auditors can be engaged to perform non-audit engagement that are not, and are not perceived to be, in conflict with the role of the External Auditors. This excludes audit related work in compliance with statutory requirements.

The three (3) basic principles on the prohibition of non-audit engagement are as follows:

• Not to function as Management;
• Not to audit their own work; and
• Not to serve in an advocacy role of the Company and its subsidiaries.

The External Auditors shall observe and comply with the By-Laws of the Malaysian Institute of Accountants (“MIA”) in relation to the provision of non-audit engagement, which include the following: -

• Accounting and Book Keeping Services;
• Valuation Services;
• Taxation Services;
• Internal Audit Services;
• IT Systems Services;
• Litigation Support Services;
• Recruitment Services; and
• Corporate Finance Services.

The following non-audit services shall not be provided by the Group’s external auditors in pursuant to the By-Laws of the MIA: -

• bookkeeping and other services relating to accounting records and corporate financial statements;
• the design, implementation and operation of financial information systems;
• internal control functions;
• litigation support services;
• recruitment services; and
• valuation of financial instruments

All engagements of the External Auditors to provide non-audit services are subject to the approval by the AC; and with expectation on the Management to obtain confirmation from the External Auditors on their independence which shall not be impaired by the provision of non-audit engagement.

The CFO shall report to the AC on an annual basis on any significant non-audit services and its related fees on non-audit rendered to the Company or its subsidiaries by the External Auditors.

TERM OF AUDIT ENGAGEMENT PARTNER

The audit partner responsible for the audit of the Group is subject to rotation at least every five (5) financial years in accordance with By-Laws of the MIA which requires that the engagement partner involved in the external audit should not remain in a key audit role beyond five (5) years and cannot be re-engaged to play a significant role in the audit of the Company for at least another two (2) successive years.

ANNUAL AUDIT PLAN

The External Auditors will issue an annual audit planning memorandum for review and discussion with the AC. The External Auditors will provide a management letter to the AC upon completion of the annual audit.

ANNUAL PERFORMANCE ASSESSMENT

The AC shall carry out annual assessment on the performance of the External Auditors and may request any Executive Directors or CFO to join the assessment to evaluate the suitability and independence of the External Auditors. The AC will consider, among others: -

• adequacy of the experience and resources of the firm;
• service quality and performance of the persons assigned to the audit;
• independence, objectivity and professionalism of the firm and the persons assigned to the audit;
• appropriateness of audit fee; and
• audit engagements.

The assessment should also consider information presented in the Annual Transparency Report* of the audit firm. If the audit firm is not required to issue an Annual Transparency Report, the AC will engage the audit firm on matters typically covered in an Annual Transparency Report including the audit firm’s governance and leadership structure as well as measures undertaken by the firm to uphold audit quality and manage risks.

* Audit firms registered with the Audit Oversight Board with more than 50 public interest entity (PIE) audit clients; and total market capitalisation of the audit firm’s PIE clients above RM10 billion at the end of the calendar year for two consecutive years are required to issue an Annual Transparency Report

REVIEW OF THE ASSESSMENT POLICY AND PROCEDURES

The AC will review this Assessment Policy and Procedures periodically to ensure that it continues to remain relevant and appropriate.