CAHYA MATA SARAWAK ANNUAL REPORT 2016

www.cmsb .com.my Section 06 Governance Cahya Mata Sarawak Berhad 70 e) Reviewed the audit plan with the external auditor and their evaluation of the system of internal control; f) Reviewed and deliberated on the external auditor’s report with regard to the relevant disclosures in the annual financial statement; g) Reviewed and deliberated on the external auditor’s findings arising from audits including the comments and responses in management letters; h) Reviewed the assistance given by the Company’s and Group’s officers to the external auditor; i) Noted new and revised Auditing Standards on external auditor reporting; and j) Held three (3) private meetings with the external auditors without the presence of Management to reinforce the independence of the external audit function. Risk Management a) Reviewed and recommended the Statement on Risk Management and Internal Control for Board approval for inclusion in the Company’s Annual Report; (Refer to Statement of Risk Management and Internal Control on pages 72 to 77); and b) One of the Committee members is also a member of the Group Risk Committee (“GRC”). He along with the Group Internal Auditor have attended all four (4) meetings of the GRC in 2016 and reviewed quarterly status reports on Enterprise Risk Management focusing on key risks reporting. Post mortem of risk events were also deliberated in the same meetings. Related Party Transactions a) Reviewed the Statement of Related Party Transactions and Procedures taking note of any possible conflict of interest transactions, ensuring all related party transactions are taken on arm’s length basis and on normal commercial terms and consistent with the Company’s procedures; and b) Reviewed the estimated recurrent related party transaction mandate for the year and recommended to theBoard toseek renewal of shareholders’mandate and new shareholders’ mandate at the forthcoming Annual General Meeting of the Company. Others a) Reviewed its Terms of Reference to ensure all the mandatory requirements under the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad, as well as other corporate governance best practices are met; b) Ensured succession planning for the Committee in consultation with the Board and its Nomination & Remuneration Committee; c) Reviewed major litigation, claims and/or issues that may have substantial financial impact; d) Reviewed disclosure statements on the Statement of Corporate Governance and Group Audit Committee Report for the financial year ended 31 December 2016 for inclusion in the Annual Report 2016 and recommended their adoption by the Board; and e) Reviewed the recommendation to the Board on proposed first and final dividend for the year ended 31 December 2016. Training The training attended by the members of the Committee during the financial year is reported under the Statement of Corporate Governance on pages 63 to 64. Summary of Work of Internal Audit Function It is the policy of the BOD to maintain and support an internal audit function for the provision of independent and objective assurance and consulting activities that is guided by a philosophy of adding value to improve the operations of the CMS group of companies. The internal audit reports functionally to the Committee to ensure independence and objectivity, and administratively to the Group Managing Director. The Internal Audit Department’s primary responsibility is to conduct regular and systematic audits of the significant operations of the Group based on assessed risks so as to provide reasonable and independent assurance to the Committee of the adequacy and effectiveness of the systems of internal control within the Group. The internal audit function undertakes its duties in accordance with the IIA’s International Standards for the Professional Practice of Internal Auditing (“IPPF”). Group Audit Committee Report