Audit Committee Report

COMPOSITION

Tang Kin Kheong
(redesignated as Chairman on 30 November 2023)
(Chairman/Independent Non-Executive Director)

Choo Yoo Kwan @ Choo Yee Kwan
(Member/Independent Non-Executive Director)

Raja Noorma Binti Raja Othman
(appointed on 30 November 2023)
(Member/Independent Non-Executive Director)

Faiz Bin Ishak
(resigned on 30 November 2023)
(Chairman/Independent Non-Executive Director)

Dato’ Ahmad Fuaad Bin Mohd Dahalan
(resigned on 30 November 2023)
(Member/Independent Non-Executive Director)

Sharifatu Laila Binti Syed Ali
(appointed on 26 September 2024)
(Member/Independent Non-Executive Director)

 

TERMS OF REFERENCE

Primary Purposes

The Committee shall:-

1. Provide assistance to the Board of Directors (“Board”) in fulfilling its fiduciary responsibilities relating to the corporate accounting and practices for YTL Corporation Berhad and its subsidiaries (“Group”).
2. Assist to improve the Company and the Group’s business efficiency, the quality of the accounting function, the system of internal controls and the audit function to strengthen the confidence of the public in the Company’s and the Group’s reported results.
3. Maintain through regularly scheduled meetings, a direct line of communication between the Board and the external auditors as well as internal auditors.
4. Establish policies and procedures to assess the suitability, objectivity and independence of the external auditors.
5. Ensure that the internal audit function is effective and able to function independently.
6. Strengthen the role of the Independent Directors by giving them a greater depth of knowledge as to the operations of the Company and of the Group through their participation in the Committee.
7. Act upon the Board’s request to investigate and report on any issues or concerns in regard to the management of the Company and the Group.
8. Review the effectiveness of the policies and procedures for whistle-blowing and anti-corruption.
9. Instill discipline and control to reduce incidence of fraud.

 

Composition

1. The Committee shall be appointed by the Board from amongst their number and shall comprise no fewer than three (3) members, all of whom must be non-executive directors, with a majority of them being Independent Directors.
2. All members of the Audit Committee should be financially literate. At least one member of the Audit Committee:-
(a) must be a member of the Malaysian Institute of Accountants; or
(b) if he is not a member of the Malaysian Institute of Accountants, he must have at least 3 years’ working experience and:-
  (i) he must have passed the examinations specified in Part I of the First Schedule of the Accountants Act 1967; or
  (ii) he must be a member of one of the associations of accountants specified in Part II of the First Schedule of the Accountants Act 1967; or
(c) fulfils such other requirements as prescribed or approved by Bursa Malaysia Securities Berhad (“Bursa Securities”).
3. The Board must ensure that no alternate Director is appointed as a member of the Audit Committee.
4. The members of the Committee shall elect a Chairman from amongst their number who shall be an Independent Director. The Chairman of the Committee shall not be the Chairman of the Board.
5. In the event of any vacancy in the Committee resulting in the non-compliance of sub-paragraph 15.09(1) of the Bursa Securities Main Market Listing Requirements (“Main LR”), the Company must fill the vacancy within three (3) months.

 

Authority

The Committee shall in accordance with the procedure determined by the Board and at the cost of the Company:-

1. have authority to investigate any matter within its terms of reference;
2. have the resources which are required to perform its duties;
3. have full and unrestricted access to any information pertaining to the Company and the Group;
4. have authority to review and approve the appointment, renewal of appointment, replacement or removal of the Head of Internal Audit who reports directly to the Committee;
5. have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity;
6. be able to obtain independent professional or other advice and to secure the attendance of outsiders with relevant experience and expertise if it considers this necessary;
7. be able to convene meetings with the internal auditors without the presence of other directors and employees of the Company, whenever deemed necessary; and
8. to meet with the external auditors at least twice a year without the presence of the other directors and employees of the Company.

 

Functions And Duties

The Committee shall, amongst others, discharge the following functions:-

1. Financial Reporting
  (a) Review the quarterly financial results and annual financial statements prior to its recommendation to the Board for approval, focusing particularly on:-
  • changes in or implementation of major accounting policies and practices;
  • significant matters highlighted including financial reporting issues, significant judgements made by management, significant and unusual events or transactions, and how these matters are addressed;
  • the accuracy and adequacy of the disclosure of information essential to a fair and full presentation of the financial affairs of the Company and the Group;
  • compliance with applicable approved accounting standards, other regulatory and legal requirements; and
  • the going concern assumption.
 
2. External Audit
  (a) Review the audit plan, scope of audit and audit report with the external auditors;
  (b) Review with the external auditors their evaluation of the system of internal controls, during the course of their audit, including any significant suggestions for improvements and management’s response;
  (c) Review the assistance given by the employees of the Company to the external auditors;
  (d) Recommend the nomination of a person or persons as external auditors and the audit fee;
  (e) Review any letter of resignation from the external auditors of the Company;
  (f) Review whether there is reason (supported by grounds) to believe that the Company’s external auditors are not suitable for re-appointment;
  (g) Review any significant audit findings, reservations, difficulties encountered or material weaknesses reported by the external auditors.
 
3. Internal Audit
  (a) Review the adequacy of the scope, competency and resources of the internal audit function and that it has the necessary authority and resources to carry out its work;
  (b) Review the internal audit plan, processes, the results of the internal audit assessments, investigation undertaken and whether or not appropriate action is taken on the recommendations;
  (c) Review any significant audit findings, reservations, difficulties encountered or material weaknesses reported by the internal auditors.
 
4. Related Party Transactions
  (a) Review any related party transaction and conflict of interest situation that arose, persist or may arise within the Company or Group including any transaction, procedure or course of conduct that raises questions of management integrity, and the measures taken to resolve, eliminate or mitigate such conflicts.
 
5. Employees Share Option Scheme (“ESOS”)
  (a) Verify allocation of share options to the eligible employees pursuant to the criteria set out in the By-Laws of the ESOS in accordance to the Main LR.
 
6. Other Matters
  (a) Carry out any other function that may be mutually agreed upon by the Committee and the Board which would be beneficial to the Company/Group and ensure the effective discharge of the Committee’s duties and responsibilities;
  (b) Promptly report to Bursa Securities on any matter reported by it to the Board of the Company which has not been satisfactorily resolved resulting in a breach of the Main LR.

 

Meetings

1. To form a quorum in respect of a meeting of the Committee, the majority of members present must be Independent Directors.
2. The Committee shall meet at least five (5) times a year, although additional meetings may be called at any time at the discretion of the Chairman of the Committee. An agenda shall be sent to all members of the Committee and any other persons who may be required/invited to attend. All meetings to review the quarterly financial results and annual financial statements, shall be held prior to such quarterly financial results and annual financial statements being presented to the Board for approval.
3. Notwithstanding item 2 above, upon the request of any member of the Committee, the external auditors or the internal auditors, the Chairman of the Committee shall convene a meeting of the Committee to consider any matter which should be brought to the attention of the Directors or shareholders.
4. The external auditors have the right to appear and be heard at any meeting of the Committee and shall appear before the Committee when required to do so by the Committee.
5. The Committee may invite any Board member or any member of the management within the Company/Group whom the Committee thinks fit to attend its meetings to assist in resolving and clarifying matters raised in audit reports.
6. The internal auditors shall be in attendance at meetings of the Committee to present and discuss the audit reports of findings and the recommendations relating thereto and to follow up on decisions made at these meetings.
7. The Committee may establish any regulations from time to time to govern its administration.

 

Minutes

1. The Secretary shall cause minutes to be duly entered in the books provided for the purpose of all resolutions and proceedings of all meetings of the Committee. Such minutes shall be signed by the Chairman of the meeting at which the proceedings were held or by the Chairman of the next succeeding meeting and if so signed, shall be conclusive evidence without any further proof of the facts thereon stated.
2. Minutes of each meeting shall also be distributed to the members of the Committee prior to each meeting.
3. Detailed minutes of the Committee’s meetings will be made available to all Board members. A summary of significant matters and resolutions will be reported to the Board by the Committee.
4. The books containing the minutes of proceedings of any meeting of the Committee shall be kept by the Company at the registered office of the Company and shall be opened to the inspection of any member of the Committee or the Board.

 

Secretary

The Secretary to the Committee shall be the Company Secretary.

 

NUMBER OF MEETINGS HELD AND DETAILS OF ATTENDANCE

During the financial year, a total of 6 Audit Committee Meetings were held and the details of attendance are as follows:-

  Attendance
Tang Kin Kheong 4/4
Choo Yoo Kwan @ Choo Yee Kwan 5/5
Raja Noorma Binti Raja Othman 3/3
Faiz Bin Ishak 3/3
Dato’ Ahmad Fuaad Bin Mohd Dahalan 3/3

 

SUMMARY OF WORK CARRIED OUT FOR FINANCIAL YEAR

The Audit Committee carried out the following work for the financial year ended 30 June 2024 in the discharge of its functions and duties:-

1. Financial Reporting
  (a) Reviewed the unaudited quarterly financial reports and audited financial statements (“Financial Reports”) prior to its recommendation to the Board of Directors for approval.
  (b) In respect of the Financial Reports, the following matters were reviewed and discussed with management, and additionally, in respect of the audited annual financial statements, with the external auditors as well:
  • Appropriate accounting policies had been adopted and applied consistently, and other statutory and regulatory requirements had been complied with;
  • The Company has adequate resources to continue in operation for the foreseeable future and that there are no material uncertainties that could lead to significant doubt as to the Group’s ability to continue as a going concern;
  • Significant judgements made by management in respect of matters such as impairment assessment of goodwill, carrying value of investment, and post-employment benefit obligations and the underlying assumptions and/or estimates used were reasonable and appropriate in accordance with the requirements of the Malaysian Financial Reporting Standards (“MFRS”);
  • The Financial Reports were fairly presented in conformity with the relevant accounting standards in all material aspects.
   
2. External Audit
  (a) Noted that the external auditors, HLB Ler Lum Chew PLT (“HLB”), had assigned a new Audit Engagement Partner for the statutory audit of the Group for FY2024 due to rotation, as previously planned.
  (b) Reviewed with the external auditors, HLB:
  • the audit plan for the financial year ended 30 June 2024 outlining, amongst others, their scope of work, and areas of audit emphasis and multi-location audit, and development in laws and regulations affecting financial reporting and the roles and responsibilities of directors/audit committee members and auditors;
  • their status report, and final report on the audit of the financial statements for financial year ended 30 June 2024 setting out their comments and conclusions on the significant audit and accounting matters highlighted, including management’s judgements, estimates and/or assessments made, and adequacy of disclosures in the financial statements.
  (c) Reviewed the audit fees proposed by HLB together with management and recommended the fees agreed by HLB to the Board of Directors for approval.
  (d) Had discussions with HLB without the presence of management twice on 19 August 2024 and 25 September 2024, to discuss matters concerning the audit and financial statements. The Audit Committee also enquired about the assistance and co-operation given by management to HLB.
  (e) Reviewed on a regular basis, the nature and extent of the non-audit services provided by HLB and its affiliates to the Company and its subsidiaries (excluding those of YTL Power International Berhad and its subsidiaries, Malayan Cement Berhad and its subsidiaries, and YTL Hospitality REIT and its subsidiaries. These are collectively referred to as “the listed sub-groups”) and was satisfied with the suitability, performance, independence and objectivity of HLB.
  (f) Obtained written assurance from HLB that they have complied with the independence requirements and that their objectivity has not been compromised in accordance with regulatory and professional requirements.
  (g) Assessed the performance of HLB for the financial year ended 30 June 2024 and recommended to the Board of Directors for re-appointment at the forthcoming annual general meeting.
  (h) Received the Condensed Transparency Report prepared by HLB, which contains the audit partner workload, auditor independence, professional capacity and competency, and investment in audit quality.
   
3. Internal Audit
  (a) Reviewed with the internal auditors the internal audit reports (including follow-up review reports), the audit findings and recommendations, management’s responses and/or actions taken thereto, and ensured that material findings were satisfactorily addressed by management.
  (b) Reviewed the internal audit risk analysis reports for FY2024 which are used by the internal auditors to focus on the business processes and relevant areas of audit.
  (c) Reviewed the Anti-Bribery and Corruption Risk Assessment reports for FY2024 to effectively manage the risks identified within the Group.
  (d) Reviewed and adopted the internal audit plan for financial year ending 30 June 2025 to ensure sufficient scope and coverage of activities of the Company and the Group.
  (e) Reviewed the internal audit resources to ascertain if the internal audit department is appropriately tasked and resourced.
  (f) Initiated the engagement of the Institute of Internal Auditors Malaysia to perform a GAP Assessment with the aim of achieving compliance with Global Internal Audit Standards.
  (g) Reviewed the Internal Audit Charter to enhance and upgrade the internal audit activities to be consistent with the mandatory elements of the Institute of Internal Auditors International Professional Practices Framework, including its Standards Core Principles for the Professional Practice of Internal Auditing, Definition of Internal Auditing and Code of Ethics, prior to its recommendation to the Board of Directors for approval.
   
4. Related Party Transactions
  (a) Reviewed, on a quarterly basis, the recurrent related party transactions of a revenue and trading nature (“RRPTs”) entered into with related parties to ensure that the Group’s internal policies and procedures governing RRPTs are adhered to, and disclosure requirements under the Listing Requirements are observed.
  (b) Reviewed the ongoing RRPTs for financial year ending 30 June 2025 and assessed whether shareholder mandate should be sought at the Annual General Meeting, prior to its recommendation to the Board of Directors for approval.
   
5. Annual Report
  Reviewed this Audit Committee Report, and Statement on Risk Management and Internal Control before recommending these to the Board of Directors for approval for inclusion in 2024 Annual Report.
   
6. Amendments to Terms of Reference (“TOR”)
  Reviewed the proposed amendments to its TOR to reflect revised Paragraph 15.12(1)(h) of the Listing Requirements pertaining to the expanded scope of work or function of the audit committee in the review of conflict of interest situations, prior to its recommendation to the Board of Directors for approval.
   
7. Conflict of Interest (“COI”)
  (a) Reviewed and adopted a COI Policy, together with the ‘COI Declaration Form’ for the purpose of identifying, evaluating, disclosure/reporting, monitoring, maintenance and management of COI situations.
  (b) Reviewed the disclosure of actual or potential COI, including interest in any competing business, submitted by the Directors and key senior management of the Company and its subsidiaries (excluding the listed sub-groups) via the ‘COI Declaration Form’ to the Secretary, who then escalated the same to the AC for assessment, conflict management and/or mitigation. There are two potential COI identified arising from the declarants’ interest, one in a competing business and the other in a vendor relationship. The Audit Committee will monitor this potential COI and take the necessary action should the actual conflict of interest materialises in the future. This was subsequently reported to the Board.

 

INTERNAL AUDIT FUNCTION

The Group’s internal audit function is substantially carried out by its Internal Audit Department (“YTLIA”).

YTLIA undertakes the internal audit function for the Group which comprises:

  • YTL Power International Berhad and its subsidiaries (“YTL Power Group”),
  • Malayan Cement Berhad and its subsidiaries (“Malayan Cement Group”),
  • YTL Hospitality REIT and its subsidiaries, (“YTL REIT Group”); and
  • YTL Corporation Berhad and those of its subsidiaries outside of the listed sub-groups (as defined below)

save for certain subsidiaries of the YTL Power Group, namely YTL PowerSeraya Pte Ltd group of companies where the internal audit function is outsourced and Wessex Water Limited group of companies where the internal audit function is undertaken by its in-house internal audit team.

YTL Power International Berhad, Malayan Cement Berhad and YTL Hospitality REIT (collectively, “the listed subsidiaries”) are listed on Bursa Securities, and accordingly, have their respective board audit committees as part of their corporate governance frameworks.

Accordingly, when reporting on its internal audit responsibilities on the listed sub-groups, YTLIA reports directly to the audit committees of the respective listed subsidiaries.

In view of the above, the Audit Committee’s oversight of the internal audit function covers the Company and its subsidiaries that are not within the listed sub-groups. Therefore, the matters disclosed above in paragraph 3 Internal Audit under SUMMARY OF WORK CARRIED OUT FOR THE FINANCIAL YEAR and in the paragraphs appearing hereinafter refers only to the internal audit function within the Company and its subsidiaries that are not within the listed sub-groups.

The internal audit function is performed in-house by the internal audit function of the YTL Corporation Berhad. YTLIA reports directly to the Audit Committee on the adequacy and effectiveness of the risk management and internal control systems.

Every YTLIA team member has confirmed that they are free from conflict of interest or any relationship that could impair their objectivity and independence as internal auditors.

The Audit Committee reviews annually the adequacy of the scope, function, competency and resources of YTLIA to ensure that it is able to fully discharge its responsibilities. Details of the resources and the qualifications of the head of YTLIA are set out in the Corporate Governance Overview Statement and Corporate Governance Report.

During the year, the YTLIA evaluated the adequacy and effectiveness of key controls in responding to risks within the organisation’s governance, operations and information systems regarding:-

  • reliability and integrity of financial and operational information;
  • effectiveness and efficiency of operations;
  • safeguarding of assets; and
  • compliance with relevant laws, regulations and contractual obligations.

The work of the internal audit function during the year under review include the following:-

1. Developed the annual internal audit plan and proposed the plan to the Audit Committee.
2. Conducted scheduled and special internal audit engagements, focusing primarily on the adequacy and effectiveness of internal controls and recommending improvements where necessary.
3. Conducted follow-up reviews to assess if appropriate action has been taken to address issues highlighted in previous audit reports.
4. Presented significant audit findings and areas for improvements to the Audit Committee for consideration on the recommended corrective measures together with the management’s response.
5. Conducted RRPTs reviews to assess accuracy and completeness of reporting for presentation to the Audit Committee, and ensure compliance with the Listing Requirements.
6. Conducted discussions with management in identifying significant concerns and risk areas perceived by management for inclusion in the internal audit plan.
7. Conducted discussions with management to identify, analyse, assess and prioritise the internal and external corruption risks, for the purpose of establishing appropriate processes, systems and controls to mitigate the specific corruption risks exposure.

Costs amounting to RM1,386,689 were incurred in relation to the internal audit function for FY2024.