Master-Pack Group Berhad


Group Berhad (199401011341) (297020-W)

Audit Committee’s Terms of Reference

1. Membership

1.1 The Audit Committee shall be appointed by the Board from among its members and shall consist of :
– Not less than three (3) members;
· All members of the Audit Committee must be Non-Executive Directors, with a majority of them Independent Directors,
· Audit Committee members are expected to be financially literate and able to understand matters purview of the AC including the financial reporting process.
· At least one of the members of the AC must be a member of the Malaysian Institute of Accountants, or if he is not a member of the Malaysian Institute of Accountants, he must have at least three (3) years of working experience and either must have passed the examinations specified in Part I of the schedule of Accountants Act, 1967, or must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountant Act, 1967 or fulfills such other requirements as prescribed or approved by the Bursa Malaysia Securities Berhad (“Bursa Malaysia”).
· In the event a former key audit partner is invited as an Audit Committee member, a cooling-off period of at least three years shall be observed before appointment.

1.2 The members of the Audit Committee shall elect a Chairman from among their number who shall be an Independent Non-Executive Director. The Chairman of the Audit Committee shall not be the Chairman of the Board.
In the absence of the Chairman of the Audit Committee, the other members of the Audit Committee shall amongst themselves elect a Chairman who must be an independent director to chair the meeting.

1.3 Members of the Audit Committee, including the Chairman, will hold office as long as they serve as Directors of the Company.

1.4 The term of office and performance of the Audit Committee as a whole should be reviewed by the Board every year. The Nominating Committee shall assess whether the Audit Committee had carried out their duties in accordance with their Terms of Reference. However, members who are Independent Directors shall be assessed by the Board annually with the assistance of the Nominating Committee.

1.5 If the number of members of the Audit Committee is, for any reason, reduced to below three (3), the Board of Directors shall within three (3) months of the event, appoint such number of new members as may be required to make the minimum of three (3) members.

2. Objectives of the Audit Committee

2.1 Assist the Board in its duties of ensuring the implementation of a Risk Management & Sustainability Framework including the accompanying systems of internal control to manage identified principal risks and ensure that the systems are working effectively.

2.2 Assure the shareholders of the Company that the Company has complied with specified financial standards and disclosure policies developed and administered by Bursa Malaysia Securities.

2.3 Evaluate the quality of the audit conducted by the internal and external auditors

2.4 Assess the suitability, objectivity and independence of the external auditor.

2.5 Ensure consistency with Bursa Malaysia Securities’ commitment to encourage high standards of corporate disclosure.

2.6 Endeavour to adopt certain practices aimed at maintaining appropriate standards of corporate responsibility, integrity and accountability to the Company’s shareholders

3. Authority

3.1 The Audit Committee is authorised by the Board at the Company’s cost, to investigate any matters within its terms of reference and shall have the resources to perform its duties. The Audit Committee has full and unrestricted access into all books, information records and documents relevant to its activities as well as to the Internal and External Auditors and all employees of the Group.

3.2 The Audit Committee is authorised by the Board to obtain external legal, independent or other professional advice and be able to convene meetings with external parties whenever deemed necessary. The Audit Committee is empowered to engage and retain persons having special competence or skills and knowledge as necessary to assist the Committee in fulfilling its responsibilities.

3.3. The Audit Committee may invite the Executive Directors, Group Financial Controller or any employee within the Group who the Committee thinks fit to attend its meetings to assist in resolving and clarifying matters raised in audit reports.

3.4 The Internal Auditors engaged by the Company reports directly to the Audit Committee.

4. Duties and Responsibilities

The 4 fundamentals responsibilities of Audit Committee are categorized as follows :-

4.1 Board and the Management
The Audit Committee Chairman shall report to the Board on its deliberations and decision at the Audit Committee meeting on its activities:-

4.1.1 Reviews and evaluate the adequacy and effectiveness of the Group’s accounting policies, procedures and internal controls;

4.1.2 Reviews the quarterly and year-end financial statements focusing particularly on any changes in major accounting policies and practices, significant and unusual events; the going concern assumption; and the compliance with accounting standards and other legal requirements;

4.1.3 Establishes the Group Risk Management & Sustainability Framework to identify, assess the risk tolerance and monitor key business risks with the management team;

4.1.4 Reviews the Risk Management Framework, Risk Register together with its accompanying control measures and action plans to mitigate the risks;

4.1.5 Reviews the Risk Management and Internal Control Statement pursuant to paragraph 15.26(b) of the Listing Requirements before recommendation for the Board’s approval

4.1.6 Ensures appropriate internal controls systems encompassing financial, operational and compliance in nature are in place and working as intended to manage and mitigate risks;

4.1.7 Reviews any major proposed transaction or change in the nature of the business in line with the Risk Management & Sustainability Framework of the Group;

4.1.8 Performs such other duties as may be agreed to by the Committee and the Board.

4.1.9 Review the Corporate Governance Overview Statement and the Corporate Governance Report to ensure in compliance with the Malaysian Code on Corporate Governance (“the Code”) as well as the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

4.2 Internal Auditors
To oversee the internal audit function by:-

4.2.1 Reviews the adequacy of the functions, scopes, competency and resources of the internal audit functions and that it has the necessary authority to carry out its work; In performing the review :-
– Ascertains that the internal audit personnel are free from any relationships or conflict of interest which would impair their objectivity and in dependence;
– The number of resources in the internal audit department;
– Name and qualification of the person responsible for internal audit;
– Whether the internal audit function is carried out in accordance with a recognized framework

4.2.2 Reviews and discuss the Internal Auditors’ audit plans, the nature and scope of their audit and evaluation of the system of internal controls and audit reports;

4.2.3 Considers the adequacy of Management’s actions taken on internal audit reports.

4.2.4 Nominates, a person or person(s) as the Internal Auditors, the fee thereof, assess their performances and hence the re-appointment of existing Internal Auditors and considers, if any, their resignation or termination and upon endorsement by the Board of Directors;

4.2.5 Reviews the assistance and co-operation provided by the Company’s officers to the Internal Auditors.

4.2.6 The Internal Auditors shall meet with the Audit Committee without the presence of the Executive Directors and management once a year and may raise any matters in the meeting.

4.3 External Auditors
4.3.1 Reviews and discusses the External Auditors’ audit plans, the nature, scope and timeliness of their audit and evaluation of the system of internal controls and audit reports;

4.3.2 Reviews the terms of engagement and the remuneration to be paid i.e. audit fee or non-audit fee of the company and its subsidiaries ensuring that the non audit services do not impair the auditor’s independence and recommend the audit fees to the Board for approval;

4.3.3 Reviews the External Auditor’s Audit Review Memorandum and the management’s response to points raised in the audit report. Where necessary ensure that major audit issues that arose during the course of audit have subsequently been resolved.

4.3.4 Discusses the matters arising from the interim and final audit with the External Auditors. The External Auditors shall meet with the Audit Committee without the presence of the Executive Directors and management twice a year and may raise any matters in the meeting.

4.3.5 Reviews the assistance and co-operation provided by the Company’s officers to the External Auditors

4.3.6 Assesses the External Auditors performances and hence the re-appointment of existing External Auditors and considers, if any, their resignation or termination;

4.4 Related Party Transactions and Conflict of Interest
4.4.1 Reviews related party transactions and conflict of interest situation that may arise within the Company and the Group.

4.4.2 Reviews and approves the circular for the Proposed Renewal of Shareholders’ Mandate for Recurrent Related party Transactions of a Revenue and/ or Trading Nature

4.4.3 Ensures related party transactions are in accordance with Main Market Listing Requirements of Bursa Malaysia Securities Berhad or approved shareholders’ mandate, where applicable.

5. Meetings

5.1 Meetings shall be held at least four (4) times a year although additional meetings may be called at any time, at the discretion of the Chairman. Members of the Audit Committee shall be provided with the notice of meeting and a compilation of materials for discussion at least 5 days before the meeting to enable members to participate actively in the meeting.
On a continuous basis, the Chairman of the Audit Committee should meet up with the senior management, such as Chairman, the Chief Executive Officer, Group Financial Controller / Head of Finance Department, Internal and External Auditors in order to be kept informed of matters affecting the Company.

5.2 The quorum necessary for the transaction of business of the Audit Committee Meeting shall be two (2) independent members to constitute a valid meeting.

5.3 Questions arising at any meeting shall be decided by a majority of votes, each member having one (1) vote and in case of equality of votes, the Chairman shall have a second or casting vote. Save that where two (2) members form a quorum, the Chairman of a meeting at which only such a quorum is present, or that which only two (2) members are competent to vote on the question of issue, shall not have a casting vote.

5.4 The Internal and External Auditors have a right to appear and be heard at any meeting of the Audit Committee and shall appear before the Committee when required by the Company. The External Auditors shall attend the meeting at least twice a year or as the Committee deems fit. A meeting with the External Auditors shall be held at least twice a year without the presence of the Executive Directors and members of management.

5.5 Upon request of the Internal or External Auditors, the Chairman of the Audit Committee shall convene a meeting of the Audit Committee to consider any matters the auditors believe should be brought to the attention of the Board of Directors or shareholders.

5.6 The Company Secretary shall be the Secretary of the Committee who shall be responsible to document, keep complete records of meeting minutes and to produce the minutes for inspection upon request.

5.7 The Audit Committee may resolve and approve certain ad-hoc matters via circular resolutions provided that the circular resolutions are drawn up with detailed information and must be signed by all members of the Audit Committee.

6. Review of the Audit Committee Terms of Reference

This Audit Committee Terms of Reference established by the Board shall be periodically reviewed and updated by the Board taking into consideration the needs of the Group as well as any development in rules and regulations that may have an impact on the discharge of the Board’s duties and responsibilities.