TERMS OF REFERENCE OF AUDIT COMMITTEE

  1. DUTIES AND RESPONSIBILITIES

    8.1

    To review the following and report the same to the Board

    a)

    With the External Auditors:

    • the audit plan, audit report and the extent of assistance rendered by employees of the Auditee, Property Manager or its service providers;
    • their evaluation of the system of internal controls;
    • the audit fee and on matter concerning their suitability for nomination, appointment and re-appointment and the underlying reasons for resignation or dismissal as Auditors;
    • the management letter and management’s response;
    • the issues and reservations arising from audits;
    • the assessment of the suitability, objectivity and independence of External Auditors annually; and
    • the provision of the non-audit services by the External Auditors. This is to ensure that there are proper checks and balances in place so that provision of such non-audit services does not interfere with the exercise of independent judgement of the External Auditors. The total amount of the non-audit fees paid or payable shall not be more than 50% of the total amount of audit fees paid or payable to the External Auditors.
    b)

    With the Internal Auditors:

    • the Internal Audit Charter which defines the independent purpose, authority, scope and responsibility of the internal audit function in the Company;
    • the adequacy and relevance of the scope, functions, competency and resources of the internal audit function and the necessary authority to carry out its work;
    • the audit plan of work programme and results of internal audit processes including recommendations and actions taken;
    • the extent of cooperation and assistance rendered by employees of Auditee, the Property Manager or its service providers;
    • the appraisal of the performance of the internal audit function including that of the senior staff and any matter concerning their appointment and termination;
    • the independence of the internal audit function;
    • the internal audit reports pertaining to the effectiveness of internal control, risk management and governance processes including compliance with the operational manuals, Listed REIT Guidelines and MMLR and ensuring that the audit recommendations are promptly implemented by the management.
    c)

    The quarterly results and year end financial statements prior to the approval by the Board, focusing particularly on:

    • changes and implementation of major accounting policies and practices;
    • significant and unusual issues;
    • going concern assumption; and
    • compliance with accounting standards, regulatory and other legal requirements.
    d) The major findings of internal investigations and management’s response.
    e) The propriety of any related party transaction and conflict of interest situation that may arise including any transaction, procedure or course of conduct that raises questions of management integrity as set out in the Listed REIT Guidelines, the Deed and the MMLR.
    8.2

    To prepare the Committee Report for inclusion in Sunway REIT’s Annual Report covering:

    a) the composition of the Committee, including the name, designation and directorship of the members;
    b) the number of meetings held during the financial year and details of attendance of each member of the Committee;
    c) a summary of the activities of the Committee in the discharge of its functions and duties for that financial year and how it has met its responsibilities; and
    d) a summary of the activities of the internal audit function.
    8.3

    To review the following for publication in the Sunway REIT’s Annual Report:

    a)

    the corporate governance disclosure statement of the Board (including corporate governance report) on:

    • the applications of the principles set out in the Malaysian Code on Corporate Governance (“MCCG”); and
    • the extent of compliance with the best practices and recommendations set out in the MCCG, specifying reasons for any area of non-compliance and the alternative measures adopted in such areas;
    b)

    the statement on the Board’s responsibility for the preparation of the annual audited financial statements;

    c)

    the disclosure statement on the state of the internal controls system of the Company; and

    d) other disclosures forming the contents of annual report spelt out in the Listed REIT Guidelines and MMLR.
    8.4

    To carry out any other functions that may be mutually agreed upon by the Committee and the Board which would be beneficial to the Company and Sunway REIT and to ensure the effective discharge of the Committee’s duties and responsibilities.

    8.5 To review the procedures for detecting fraud and whistle-blowing, and ensuring that arrangements are in place whereby employees may, in confidence, raise concerns or any possible improprieties in the matters of financial reporting, financial control or any other matters.
    8.6 To oversee the Company and Sunway REIT’s internal compliance and control systems established by management, including reviewing the effectiveness of these systems.