126 FGV HOLDINGS BERHAD ABOUT FGV MANAGEMENT DISCUSSION & ANALYSIS VALUE CREATION 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 23 March 2021 and 23 August 2021. c. Reviewed the impact of COVID-19 pandemic to the Group’s business operations. d. Evaluated the quarter and annual report on consolidated financial statements for each quarter and appraised the analysis of the results in detail. Where required, the AC provided direction and sought more details on the analysis of the consolidated results to make its recommendation to the Board on the quarterly report. The AC also requested further details on several important matters for its deeper understanding and provided the necessary direction on the matters. e. Assessed the cash flow assumptions and forecast, proposed dividend payment and solvency test. f. Reviewed the calculation of the Land Lease Liability to FELDA and its impact to the Financial Statements. g. Reviewed and endorsed policy revisions relating to accounting, finance, governance and internal control for the Board’s approval. h. Reviewed the Group’s LOA, Group Finance Policies and Procedures and External Auditor Policy and Procedures. The Chairman of the AC held two private meetings with the external auditors to be briefed in detail on the financial results of the Company and the Group. RISKS AND INTERNAL 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 five quarterly 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 FY2021 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 FY2021 operated adequately and effectively, in all material respects. e. Reviewed the implementation progress of a Control Self-Assessment System. f. Reviewed independent consultants’ reports on FGV’s governance mechanisms, risk management processes and cyber security readiness. g. Reviewed ESG matters relating to the Group’s business operations. At each of its meetings, the AC 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, inventory management, construction project management, procurement management, refinery maintenance and plantation operations, which were the main challenges to the Group during the financial year. EXTERNAL AUDIT PROCESS AND OUTCOME a. Assessed the comprehensiveness of the audit plan of the external auditors for FY2021 and ensured coordination with the various other audit firms apart from PricewaterhouseCoopers PLT (PwC) who are involved in the external audit of several subsidiaries. b. Assessed the external auditors for their reappointment for FY2021 based on the established External Auditor Policy and recommended their re-appointment to the Board. The AC also considered the feedback from Management on their evaluation of the external auditors based on the services provided on the external audits for FY2020. c. Assessed the external auditors audit fees for FY2021 and made its proposal to the Board for approval. SUMMARY OF WORK In FY2021, the AC assisted the Board in ensuring effective governance over the appropriateness of the Group’s financial reporting, including the adequacy of related disclosure, the performance of both internal audit function and external auditors, and the oversight over the Group’s system of internal controls, business risks and related compliance activities. The AC also undertook the following principal activities in discharging its responsibilities: How We Are Governed Effective Audit and Risk Management AUDIT COMMITTEE REPORT
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