CAHYA MATA SARAWAK ANNUAL REPORT 2016

A N N U A L R E P O R T 2 0 1 6 Section 06 Governance 65 Cahya Mata Sarawak Berhad FINANCIAL REPORTING AND AUDIT Financial Reporting The Board is responsible for ensuring that accounting records are properly kept and that the financial statements are prepared in accordance with applicable approved accounting standards in Malaysia and the provisions of the Companies Act, 1965. The Board approves the announcements on the quarterly results and issuance of the Annual Report on a timely basis to Bursa Securities which reflects the Board’s commitment to provide timely and up-to-date assessments on the Group’s performance and prospects. The quarterly financial reports are approved by the Board for release to Bursa Securities no later than two (2) months after the end of each financial quarter for public announcement together with the required disclosure under the MMLR. The Board is assisted by the Group AC in overseeing the Group’s financial reporting processes and the quality of the financial reporting. Two (2) of the members of the Group AC including the AC Chairman are qualified accountants and members of professional accounting organisations. The Group AC reviews the quarterly financial reports which are presented by the Group CFO in the presence of the Group Internal Auditor and Group MD prior to recommending them for approval by the Board and issuance to Bursa Securities. Group CFO’s quarterly financial reports include comparisons of key financial ratios compared against the previous corresponding period and approved budget. The Group AC met on a quarterly basis and carried out their duties in accordance with the TOR. The Board, via the NRC, reviews the term of office and performance of the Group AC and each of its members annually to determine whether the Group AC members have carried out their duties in accordance with their TOR. The Group AC also carries out a similar self-assessment once every three (3) years. The Directors have also provided assurance that the financial statements prepared for each financial year give a true and fair view of the state of affairs of the Company and the Group as at the end of the financial year and of the results and cash flow of the Group as required by the Act. The Statement of Responsibility by Directors in respect of the audited financial statements of the Company is outlined on page 79 of this Annual Report. External Auditors The Group AC invites the external auditors to attend its meetings as and when required. During the meetings, the external auditors highlight and discuss the nature, scope of audit, audit plan, internal control and/or issues with the Group AC. The Group AC met with the external auditors three (3) times during the year 2016 without the presence of Management. The external auditors’ presence is requested at the Company’s AGM to attend to any issues raised by the shareholders. The service provided by the external auditors includes statutory audits and non-audit services. The terms of engagement for the services rendered by the external auditors are reviewed by the Group AC and approved by the Board. The Group AC also reviews the proposed fees for audits and non-audit services and makes recommendations for Board approval. In 2013, the Board had approved the Group AC’s recommendation that any cumulative non-audit fee incurred in excess of 50% of the preceding year’s approved audit fee for the Group would require its approval. This ensures the Board and Group AC deliberate on the provision of non-audit work by the external auditors and/or firms affiliated to them to ensure it does not impede the external auditors’ audit work. The Group AC places great emphasis on the objectivity and independence of the external auditors and, as such, undertakes an annual assessment of the objectivity, independence and quality of service delivery of the external auditors. In March 2017, the Group AC assessed the independence of Messrs. Ernst & Young (“EY”) as external auditors of the Company for 2016. Overall, the Group AC was satisfied with EY’s suitability based on the quality of services and sufficiency of resources they provided to the Group. The Group AC was also satisfied with the review of provision of non-audit services for 2016 by EY to the Group did not impair their objectivity and independence as external auditors. Based on the outcome of the annual assessment of external auditors, the Board approved, in March 2017, the Group AC’s recommendation for shareholders’ approval to be sought at the forthcoming 42 nd AGM for EY’s re-appointment as external auditors for financial year ending 31 December 2017. The details of the fees paid/payable for statutory audit, audit-related and non-audit fees approved in 2016 to the external auditors are set out below: Company RM’000 Group RM’000 Fees paid/payable to Messrs Ernst & Young and its affiliates • Statutory Audit 150 824 • Non-audit services including tax services 391 764 Total 541 1,588 Statement on Corporate Governance