BIMB Integrated Annual Report 2017

The AEC key responsibilities on financial reporting for 2017 were as follows: (a) Reviewed the unaudited quarterly financial reports and the audited financial report for submission to Bank Negara Malaysia (“ BNM ”), Bursa Malaysia Securities Berhad (“ Bursa Securities ”) as well as Securities Commission with the Management before recommending to the Board of Directors for its approval prior to submission to the relevant regulatory authorities. When reviewing the report, the AEC would seek for the assurance that the condensed consolidated interim financial statements have been prepared in accordance with the Malaysian Financial Reporting Standards 134: Interim Financial Reporting, Paragraph 9.22 of the Listing Requirements and International Accounting Standards 34: Interim Financial Reporting issued by the International Accounting Standards Board; (b) Reviewed the audited statutory accounts of the Company and of the Group, raised issues and concerns, if any, arising from the statutory audit with the External Auditors, prior to recommending to the Board of Directors for its approval. The AEC’s review included a critical scrutiny of the statutory accounts based on an analytical approach. At the same time, the AEC seek assurance from the Management and the External Auditors that the financial statements disclosures are in compliance with relevant and applicable statutory requirements and the Malaysian Financial Reporting Standards. The AEC’s scrutiny of the statutory accounts also included a review of the reasonableness of accounting policies and estimates applied by the Group, and reporting on going concerns, as concurred by the External Auditors in its Report to the AEC. The AEC also reviewed pertinent audit matters highlighted by the External Auditors in their report to the AEC which warrant the AEC’s attention; (c) Reviewed and approved the Report of the AEC pursuant to Listing Requirements for inclusion in the Company’s Annual Report; (d) Reviewed the disclosures forming the contents of the Company’s Annual Report as required in Part A of Appendix 9C of the Listing Requirements; (e) Reviewed the updates on the internal accounting control in accounting and auditing process to achieve operational effectiveness and efficiency, reliable financial reporting and compliance with regulations and policies; (f) During the year under review, the GCFO and the External Auditors have highlighted on the new/revised requirements on financial reporting standards. This is to enable the Management and the Board to understand the requirements of the new/revised standards and to facilitate actions to address and meet the new requirements within the stipulated deadline; and (g) For the key audit matters, the External Auditors have focused particularly on credit and valuation. The AEC has also received reports and updates from the External Auditors. The AEC is therefore made aware of all materially relevant issues of concern during the year. In particular, the External Auditors have brought the AEC’s attention to the following matters: 1. Allowance for impaired financing and advances and others Throughout the year, Management had continuously monitored the financing and advances portfolios and assessed the adequacy of allowances for impairment. Specific names and industries were monitored based on economic and sectoral assessment. The AEC was also regularly updated on the status of these financing accounts and portfolios. The Credit Management Division of Bank Islam identified portfolios that were susceptible to emerging events in the external environment and focused its effort to manage the risk. The team continuously monitored the Group’s exposure to the various high risk sectors. Reviews done during the year on high risk sectors include exposure to Commercial Property as well as the Small and Medium Enterprise portfolio. The AEC also requested and received information on potential risks, their impact as well as the measures taken to manage the risks so that impairment allowance estimates incorporated timely recognition of potential risk. The Group also performed regular stress testing on the financing portfolios to assess the impact on the capital and profitability of Bank Islam under the various stress scenarios. For the financial year ended December 2017, the net allowances for impairment in respect of financing and advances and others was a write back of RM15.6 million compared to an amount charged of RM92.1 million in 2016. 117 Overview Value Creation Accountability Financial Statements Sustainability Performance Data Shareholders Information 21 st AGM Information Management Discussion & Analysis