FGV Annual Integrated Report 2019

97 ANNUAL INTEGRATED REPORT 2019 04 S E C T I O N AUDIT COMMITTEE REPORT SUMMARY OF WORK OF THE AUDIT COMMITTEE In 2019, the Audit Committee undertook the following principal activities in discharging its responsibilities: AREA OF FOCUS MATTERS CONSIDERED Assessment of the Risks and Control Environment a. Evaluated the reports on the assessment of the risks and control environment based on the external auditors’ quarterly financial information review in each quarter and statutory financial audit at year-end. b. Reviewed four reports from the Chief Internal Auditor summarising the main observations from the internal audit reports issued, which included information relevant for the assessment of the risks and control environment. c. Considered the overall rating of the internal audit reports issued in 2019 as a reflection of the overall effectiveness of the system of internal control vis-à-vis the risks, control environment and compliance requirements of the Group. d. Received assurances from the GCEO and the GCFO that the risk management and internal control system of the Group for FY2019 operated adequately and effectively, in all material respects. e. Considered the development and reviewed the implementation progress of a Control Self-Assessment (CSA) Model Development. At each of its meetings, the Audit Committee gave guidance which was relevant for the improvement of the risks and control environment of the Group, in particular in the areas of commodities trading, receivables management, construction project management, procurement management and plantation operations, which were the main challenges to the Group during the financial year. Overseeing Financial Reporting a. Reviewed reports of the external auditors from their quarterly Financial Statements review and annual statutory financial audit at each meeting. Among the main focus areas of the reports were the assessments of impairment and provision exposures of various assets, land lease arrangements, goodwill on investments and onerous contracts based on applicable financial reporting standards. b. Met with the external auditors in two private sessions during the financial year without the presence of Management on 17 May 2019 and 20 August 2019. In these sessions, the following matters were discussed, among others: • The impact of cpo price on fgv group’s profitability. • Yield and production of fresh fruit bunches from fgv group’s estates. • Impact of government policy on local sugar market. • Assessment of finance function under FGV Group. The Audit Committee comprises exclusively of Non-Executive Directors, a majority of whom are Independent Non-Executive Directors. The Chairman of the Audit Committee is a Member of the Institute of Chartered Accountants in England and Wales (ICAEW), a Chartered Accountant with the Malaysian Institute of Accountants (MIA) and a Member of the Malaysian Institute of Certified Public Accountants (MICPA). All members of the Audit Committee are financially literate and are able to analyse and interpret Financial Statements to effectively discharge their duties and responsibilities. The Audit Committee, therefore, meets the requirements of paragraph 15.09(1)(c) of the Bursa Securities Listing Requirements which stipulates that at least one member of the Audit Committee must be a qualified accountant. The Audit Committee held 9 meetings and the GCEO, the GCFO, the Chief Internal Auditor and various Management attended the meetings upon invitation of the Audit Committee. The Audit Committee also held various private sessions with the external auditors. The purpose of the Audit Committee is to assist the Board in fulfilling the following key responsibilities: • Assessing the risks and control environment. • Overseeing financial reporting. • Evaluating the internal and external audit processes and outcomes. • Reviewing conflict of interest situations and related party transactions. • Providing oversight on the Annual Integrated Report. • Undertaking any such other functions as may be determined by the Board from time to time. The existence of the Audit Committee does not diminish the Board’s ultimate statutory and fiduciary responsibility for decision making relating to the functions and duties of the Audit Committee. The Audit Committee may empower one or more of its members to meet or communicate with external auditors and/or internal auditors independently. Further details of the Audit Committee ’ s Terms of Reference are published on our website at www.fgvholdings.com HOW WE ARE GOVERNED GOVERNANCE AT FGV: ACCOUNTABILITY