FGV Annual Report 2015

116 Felda Global Ventures Holdings Berhad Annual Integrated Report 2015 Statement on Corporate Governance PERFORMANCE REVIEW During the financial year, the Board evaluated the Audit Committee’s performance, including the term of office and performance of the Audit Committee and each of its members. This performance assessment constituted part of the annual Board Effectiveness Assessment, pertaining to the assessment of Board Committees. External Auditor Policy The External Auditor Policy approved by the Board on 25 March 2015 covers appointment and re-appointment of external auditors, assessing their performance and independence, audit partner rotation, audit delivery and reporting, engagement of external auditor for non-audit services and removal of external auditor. APPOINTMENT AND RE-APPOINTMENT OF EXTERNAL AUDITORS The External Auditor Policy states that the Group shall only engage external auditor from Top Four firms of professional accountants for the financial statement statutory audit of the Group and as far as practicable, shall retain the engagement of one external audit firm for the Group covering all listed and unlisted subsidiaries within Malaysia and outside Malaysia. Any new appointment or replacement of external auditors shall be through a formal tendering process. FGV currently engages Messrs. PricewaterhouseCoopers (PwC) as its external auditor for the Group. ASSESSING PERFORMANCE OF EXTERNAL AUDITOR The External Auditor Policy requires that the External Auditor’s performance and independence be assessed using an assessment checklist covering the following, upon completion of every annual audit. • Calibre of external audit firm; • Quality of process/performance; • Audit team; • Independence and objectivity; • Audit scope, planning and methodology; • Audit fees; • Audit deliverables; and • Audit communication. The assessment shall be undertaken by the Group subsidiaries before the finalization of the Group’s statutory financial statements and submitted for the Audit Committee’s deliberation. Where the Audit Committee concludes that the performance of the external auditor is less than satisfactory, the Audit Committee shall consider the next course of action, which may include: • Discussion with the external audit firm to resolve performance issues; • Replacement of members within the external audit team; or • Not recommending reappointment of the external auditor. ASSESSING INDEPENDENCE OF EXTERNAL AUDITOR The external auditor shall be required to update the Audit Committee of its Independence Framework and discuss independence issues as part of its Group Audit Plan presented to the Audit Committee by the third quarter of every financial year. The External Auditor shall provide a written assurance confirming that the engagement team has been independent throughout the conduct of the audit of the statutory financial statements in accordance with the terms of all relevant professional and regulatory requirements. The External Auditor Policy states that relationships that may result in impairment of the external auditor’s independence and objectivity shall be prohibited. Any threats to independence shall be disclosed to the Audit Committee together with assessment of the mitigation actions to eliminate the threats or reduce them to an acceptable level. A suitability and independence assessment has been undertaken through a checklist of factors considered prior to proposing the re-appointment of the external auditor for the financial year ended 31 December 2015 at the general meeting in June 2015. The factors considered were calibre of the firm, its quality process/performance, the audit team, its independence and objectivity, audit scope and planning, audit fees and audit communications. From the assessment, the Audit Committee concluded that PwC remains suitable and independent for re-appointment as the external auditor. During the year, the external auditor has presented its written assurance on independence through their Group Audit Plan and Report to the Audit Committee for the audit of the statutory financial statements for the financial year ended 31 December 2015. AUDIT PARTNER ROTATION The External Auditor Policy requires rotation of the lead and signing partner every 5 years and when rotated off the audit, the partner shall not be a member of the engagement team or be a key audit partner on the engagement for two (2) years. The current lead and signing partner of PwC has only been assigned to the Group for two (2) years since the annual audit of the statutory financial statements for the year ended 31 December 2014. AUDIT DELIVERY AND REPORTING Upon approval of the audit fees by the Board, the external auditor’s engagement letter shall be signed by FGV Chief Financial Officer.