Audit Committee – Terms of Reference
I. COMPOSITION
The Audit Committee (“Committee”) shall be appointed by the Board of Directors (“Board”) of Oxford Innotech Berhad (“Company”) amongst the Directors of the Company, subject to the following requirements:-
1. the Committee must be composed of not fewer than three (3) members;
2. all the Committee members must be non-executive directors with a majority of them being independent non-executive directors;
3. at least one (1) member of the Committee:-
(a) must be a member of the Malaysian Institute of Accountants; or
(b) if he is not a member of the Malaysian Institute of Accountants, he must have at least three (3) years’ working experience; and
(i) he must have passed the examinations specified in Part I of the First Schedule of the Accountants Act 1967; or
(ii) he must be a member of one of the association of accountants specified in Part II of the First Schedule of the Accountants Act 1967; or
(c) fulfils such other requirements as prescribed or approved by Bursa Malaysia Securities Berhad (“Bursa Securities“);
4. the Chairman of the Committee shall be appointed by the Board, whom shall be an Independent Non-Executive Director and shall not be the Chairman of the Board;
5. no alternate director shall be appointed as a member of the Committee; and
6. where a former audit partner of an audit firm acting as the external auditors of the Company or any of its subsidiary company is appointed to the Board of the Company, he/she is required to observe a cooling-off period of at least three (3) years before being eligible to be appointed as a member of the Committee.
In the event of any vacancy in the Committee, the Board shall fill the vacancy within three (3) months from such vacancy.
The terms of office and performance of the Committee and each of its members must be reviewed by the Nomination and Remuneration Committee and the Board annually to determine whether the Committee and its members have carried out their duties in accordance with the terms of reference herein.
Frequency
Meetings of the Committee shall be held not less than four (4) times a year, with additional meetings being convened as and when necessary, at the discretion of the Chairman of the Committee. Upon the request of the external or internal auditors, the Chairman of the Committee may convene a meeting of the Committee to consider any matter the external or internal auditors believes should be brought to the attention of the Directors or the shareholders of the Company.
In the interval between the Committee meetings, for any matter requiring urgent decision, the Committee’s approval may be sought via a circular written resolution to be signed by a majority of the Committee members and such resolution shall be accompanied with sufficient information for an informed decision by the Committee members.
Quorum
Any two (2) members of the Committee shall form a quorum for a meeting of the Committee, provided that the majority of members present must be independent non-executive directors.
In the absence of the Chairman of the Committee, the members present shall elect any of the members present as chairman of the Committee meeting.
Any member of the Committee may participate in any meeting of the Committee via telephone conferencing, video conferencing or by means of any communication equipment/media which allows all persons participating in the meeting to hear one another. A person so participating shall be deemed to be present in person at the meeting and shall be entitled to vote or be counted in a quorum accordingly.
Secretary
The Company Secretary shall be the Secretary of the Committee or in his/her absence, another person appointed by the Chairman of the Committee. The Secretary of the Committee shall be responsible for issuing the notice of a Committee meeting containing the agenda of the meeting as approved by the Chairman of the Committee before circulating it together with explanatory statements and other supporting documents to the Committee members prior to each meeting. The Secretary is also responsible for keeping the minutes of meetings of the Committee, circulating them to the Committee members and the Board members. The Secretary shall keep the minutes of meetings properly filed and shall produce the minutes of meetings for inspection when necessary.
Reporting Procedure
The minutes of each Committee meeting and any circular written resolutions approved by the Committee shall be circulated by the Secretary of the Committee to all members of the Board.
Attendance
Other Directors and employees may be invited by the Committee to attend any particular meeting of the Committee.
At least twice a year, the Committee shall meet with the external auditors without any executive directors present.
(1) The Committee is authorised by the Board to investigate into any activities within its terms of reference. It is authorised to seek any information it requires from any employee and all employees shall be directed to cooperate on any request made by the Committee.
(2) The Committee is authorised by the Board to obtain legal advice or other independent professional advice if it deems or considers necessary.
(3) The Committee is empowered to convene meetings with the external auditors and the internal auditors, in the absence of other directors and employees of the Group, whenever deemed necessary.
(4) The Committee has direct communication channels with the external auditors and internal auditors.
The functions, duties and responsibilities of the Committee shall include the following:-
(1) to review the quarterly results and year-end financial statements of the Group and the Company before recommending them to the Board for approval, focusing particularly on:-
(a) any changes in or implementation of major accounting policies and practices;
(b) significant and unusual events or transactions, significant matters highlighted arising from the audit;
(c) the going concern assumption; and
(d) compliance with accounting standards and other legal and regulatory requirements.
(2) to review the following in respect of the external audit function:-
(a) to recommend the appointment and re-appointment the external auditors and to review the audit and non-audit fees payable to the external auditors;
(b) to consider the resignation or termination of the external auditors and deliberate on the issues relating to such resignation or termination;
(c) to review and discuss the audit plan with the external auditors, before the audit commences, the nature and scope of audit;
(d) to review with the external auditors, their evaluation of the Group’s system of internal controls;
(e) to review with the external auditors, their audit report to the Board and management’s response thereto;
(f) to review the assistance given by the Management and employees of the Group to the external auditors;
(g) to carry out an annual assessment on the performance, suitability and independence of the external auditors based on, among others, the following considerations:-
(aa) the competence, audit quality and resource capacity of the external auditors in relation to the audit;
(bb) the nature and extent of non-audit services rendered and the appropriateness of the level of fees charged; and
(cc) obtaining 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.
(h) to review the external auditors’ management letter and the management’s response with regards to the problems and reservations arising from any interim and final audit, and any matter the external auditors may wish to discuss (in the absence of management where necessary).
(3) To review and assess the following in respect of the internal audit function:-
(a) the adequacy of the scope, functions, competency and resources of the internal audit functions, and that it has the necessary authority to carry out its audit plan;
(b) the internal audit program, processes, results of the internal audit program and processes;
(c) any appraisal or assessment of the performance of members of the internal audit team;
(d) To discuss the problems and reservations arising from the internal audit, and any matter the internal auditors may wish to discuss (in the absence of management where necessary); and
(e) The major findings of internal audit assessments, investigations undertaken and the management’s response, and where necessary ensure that appropriate actions are taken on the recommendations of the internal audit function.
(4) To review and monitor any related party transactions and conflict of interest situations that may arise within the Company or Group including any transaction, procedure or course of conduct that raises questions of management integrity;
(5) To review and verify at the end of each financial year, the options allocated and granted under the Company’s Employees Share Option Scheme, if any, are in compliance with the approved allocation criteria;
(6) To review the Statement on Risk Management and Internal Control, Statement on Corporate Governance and Corporate Governance Report prior to inclusion in the Company’s Annual Reports;
(7) To undertake such other functions or assignments as may be delegated and authorised by the Board.
Collectively, the Committee should possess a wide range of necessary skills to discharge its duties. All members should be financially literate, competent and are able to understand matters under the purview of the Committee including the financial reporting process.
All members of the Committee should undertake continuous professional development to keep themselves abreast of relevant developments in accounting and auditing standards, practices and rules.
The Terms of Reference of the Audit Committee shall be reviewed by the Committee periodically or where necessary to take into consideration the prevailing laws and regulations from time to time. Any amendments to Terms of Reference of the Audit Committee shall be subject to the approval by the Board.