Corporate Governance


Report Of Audit Committee


OBJECTIVE

The objective of the Audit Committee (“AC”) is to assist the Board of Directors (“the Board”) in fulfilling its fiduciary responsibilities relating to internal controls, financial and accounting records and policies as well as integrity in financial reporting practices of the Company and its subsidiaries (“the Group”).


COMPOSITION AND MEETINGS ATTENDANCE

The composition of the AC and their respective attendance record of meetings during the financial year ended 31 December 2020 are as follows:


Name of Committee MembersDesignationDate of AppointmentMeeting Attendance
Loo Choo Hong (Chairman) Independent Non-Executive Director12/05/20175/5
Datuk Yap Pak Leong Senior Independent Non-Executive Director30/12/20045/5
Agnes Soei-Tin LameyNon-Independent Non-Executive Director12/05/20175/5

All the members fullfill the provision of Paragraph 15.09(1)(c) of the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”).


TERMS OF REFERENCE

The detailed Terms of Reference of the AC is available on the corporate website of the Company at www.timwell.com.my


ACTIVITIES OF AC

The AC met five (5) times during the financial year ended 31 December 2020 (“FYE 2020”). During the FYE 2020, the AC conducted the following activities to discharge its functions and duties:-

  1. Financial Results
    • Reviewed the unaudited quarterly results for announcements to Bursa Securities before recommending the same for approval by the Board upon being satisfied that it had complied with applicable approved Malaysia Financial Reporting Standards (“MFRS”) issued by the Malaysian Accounting Standards Board (“MASB”), MMLR and other relevant regulatory requirements.
    • Reviewed and discussed the audited financial statements with the External Auditors and the Management. Having been satisfied that the financial statements and reports complied with the relevant accounting standards and other applicable laws and regulations, the ACs recommended the same for the Boards’ consideration and approvals.
    • Reviewed the application of major accounting policies and practices to ensure that the Group’s financial statements had been prepared in compliance with approved accounting standards, and that the Group had adhered to all legal and regulatory requirements.
  2. External Audit
    • Reviewed and approved the External Auditor’s audit plan, audit approach and reporting requirements prior to the commencement of audit works for the year under review.
    • Reviewed and discussed the External Auditors' audit report and areas of concern highlighted in the management letter (i.e. revenue recognition, going concern, property, plant and equipment, recoverability of receivables and proper measurement and recognition of liabilities), including Management's response to the concerns raised by the External Auditors, and evaluation of the system of internal controls.
    • Met with the External Auditors without the presence of Management twice to provide the External Auditors with an avenue to express any concerns they may have.
    • Reviewed and assessed the performance, suitability, objectivity and independence of the External Auditors and recommended to the Board for re-appointment and the audit fee thereof and also approved the provision of non-audit services by the External Auditors.
  3. Internal Audit
    • Reviewed and approved the annual internal audit plan to ensure adequate scope and comprehensive coverage of the Group’s activities.
    • Reviewed the internal audit reports which highlighted major findings, agreed management action plan, and management’s responses thereto. Discussed with the Management and Internal Auditors on the actions to be taken to improve the system of internal controls based on improvement opportunities identified in the internal audit reports.
    • Ensured that the Internal Auditors monitored the implementation of the management's action plan on outstanding issues through follow-up reports to ensure that all audit findings were adequately dealt with by Management.
    • Reviewed the adequacy of the scope, functions, resources and competency of the internal audit functions, and the results of the internal audit process to ensure the appropriate actions are taken on the recommendations of the internal audit function
    • Reviewed and assessed the performance of the Internal Auditors in terms of their technical competencies and the manpower resources sufficiency and they have the necessary authority to carry out their work.
  4. Related Party Transactions
    • Reviewed the system for identifying, monitoring and disclosing related party transactions for the Group and ensured that related party transactions are not made to the detriment of minority shareholders of the Company.
    • The report of Related Party Transactions of the Group was tabled and reviewed by the AC at every quarterly meeting.
  5. Annual Reporting
    • Reviewed and recommended the AC Report and Statement on Risk Management and Internal Control for inclusion in the Annual Report for the financial year ended 31 December 2020 to the Board for approval. This Statement was approved by the Board on 26 March 2021.

GROUP EXTERNAL AUDIT

1. DUTIES AND RESPONSIBILITIES

The External Auditors' objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue auditor report that includes their opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with International Standard on Auditing ("ISA") will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Paragraph 40(b) of this ISA explains that the shaded material below can be located in an Appendix to the auditor's report. Paragraph 40(c) explains that when law, regulation or national auditing standards expressly permit, reference can be made to a website of an appropriate authority that contains the description of the auditor's responsibilities, rather than including this material in the auditor's report, provided that the description on the website addresses, and is not inconsistent with, the description of the auditor's responsibilities below.

As a part of an audit in accordance with ISAs, the External Auditors exercise professional judgment and maintain professional skepticism throughout the audit. They also:

  • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for their opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
  • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management.
  • Conclude on the appropriateness of Management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If the External Auditor conclude that a material uncertainty exists, they are required to draw attention in their auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify their opinion. The External Auditors' conclusions are based on the audit evidence obtained up to the date of their auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
  • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

The External Auditors communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that they identify during their audit.

They also provide those charged with governance with a statement that they have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on their independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, the External Auditors determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. The External Auditors describe these matters in their auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, they determine that a matter should not be communicated in their report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

2. SUITABILITY AND INDEPENDENCE

The AC had considered the suitability and independence of the external auditors, Messrs Baker Tilly Monteiro Heng PLT during their discussion of the Group Audit Plan for the financial year ended 31 December 2020. The factors that taken into account including the adequacy of experience and resources of the firm and professional staff assigned to the audit and the level of non-audit services to be rendered by the external auditors to the Group for the financial year under review.

The Board is aware of the potential conflict of interest situation that may arise if the Company’s External Auditors are engaged to provide non-audit services to the Group. The External Auditors have reviewed the non-audit services provided to the Group during the year and that to the best of their knowledge, the non-audit services did not impair their independence. The Company had also disclosed fees received by the External Auditors for non-audit work for the financial year under review in Additional Disclosure Requirements.

The fee incurred for audit and non-audit services by the External Auditors for the financial year ended 31 December 2020 were as follows:-



Group
Audit Fees
(RM)
Non-Audit Fees
(RM)
Baker Tilly Monteiro Heng PLT 145,0005,000

3. SUMMARY OF ACTIVITIES

The External Auditors will attend and brief the AC on matters relating to external audit. During the financial year, the External Auditors attended three (3) AC meetings to provide review of the financial position of the Group and updates on the Financial Reporting Standards and relevant regulatory requirements, recognises the implication of those changes and complies with the requirements.

Time was also set aside for the External Auditors to have private discussions with the AC in the absence of Management. This is the forum at which the External Auditors highlight, among other matters, any concern they may have on the compliance aspect of the financial statements. During the financial year, two (2) private sessions were held between the AC and the External Auditors.

The Directors consider that in preparing the financial statements, the Group has used appropriate accounting policies, consistently applied and supported by reasonable and prudent judgment and estimates. All accounting standards which the Board considers to be applicable have been adopted, subject to any explanation for material departures disclosed in the notes to the financial statements.


GROUP INTERNAL AUDIT

1. DUTIES AND RESPONSIBILITIES

The basic understanding of the internal auditors’ role is one of fundamental “checks and balances’’ for sound corporate governance. A robust and objective internal auditor with the technical skills and knowledge in accordance to Institute of Internal Auditors (IIA) to identify problems with risk control and forms an opinion on the adequacy and effectiveness of systems of risk management and internal control.

The internal auditor, on the other hand, seeks to advise Management on whether its operations have sound systems of risk management and internal controls.

As a part of an audit function, the internal auditor also:

  • Identifies, assesses, and mitigates risks that can affect a business area or processes.
  • Evaluates and recommends improvements of the Group and Company’s internal control.
  • Supports the Risk Management by monitoring risks and internal controls through technical competency for the management and the AC.
  • Assesses and makes appropriate recommendations for improvement to the governance process.


2.SUMMARY OF ACTIVITIES

The internal audit function was outsourced and carried out by an independent firm, Messrs. Lim Chong & Co., to assist the AC in discharging its duties and responsibilities.

Messrs. Lim Chong & Co. provides independent and objective assurance on areas of operations reviewed, and advice on best practices that will improve and add value to the Group. The internal audit activities are aligned to the strategic plan/objectives of the Company.

During the financial year, Internal Auditors had conducted the following audits as per the approved internal audit plan:-

  1. Follow-up Audit Review on the Process of Plantation Development and Operations.
  2. Internal Audit Review on the Group’s Policies and Control Procedures over Business Process for Property, Plant and Equipment and Sales and Trade Receivables.

The fee incurred for internal audit function of the Group for the financial year ended 31 December 2020 amounted to RM30,000.00.


ANNUAL PERFORMANCE ASSESSMENT

During the financial year, the Board, through the Nomination and Remuneration Committee had reviewed the term of office and assessed the performance of the AC on 22 February 2021. The Board was satisfied that the AC and its members have has discharged their duties in accordance with the AC’s Terms of Reference.