Audit Committee

HeveaBoard Berhad (275512-A)
AUDIT COMMITTEE - TERMS OF REFERENCE

The Audit Committee is established as a committee of the Board.

1. Objective

The primary objectives of the Audit Committee are to:-

a) Reinforce the independence of the Company’s External and Internal Auditors by ensuring their functions are properly conducted and recommendations are implemented effectively;

b) Review and assess the soundness and compliance of the internal control processes and risk management practices within the Group; and

c) Ensure the Group are in compliance with the Main Market Listing Requirements (“Listing Requirements”), accounting standards and other statutory requirements.

2. Composition

The Audit Committee shall be appointed from amongst the Board and shall comprise no fewer than three (3) members. All the Audit Committee Members must be Non-Executive Directors. The majority of them must be Independent Directors and at least one (1) member must be a member of the Malaysian Institute of Accountants or possess such other qualifications and/or experience as approved by Bursa Malaysia Securities Berhad (“Bursa Securities”).

3. Meetings

The Audit Committee shall meet at least four (4) times in each financial year. The quorum for a meeting of the Audit Committee shall be two (2) members, provided that the majority of members present at the meeting shall be independent.

The Audit Committee may call for a meeting as and when required with reasonable notice as the Audit Committee Members deem fit.

All decisions at such meeting shall be decided on a show of hands on a majority of votes.

The Internal Auditors and the External Auditors may appear at any meeting at the invitation of the Audit Committee and shall appear before the Audit Committee when required to do so by the Audit Committee. The Internal Auditors and the External Auditors may also request a meeting if they consider it necessary.

4. Authority

The Audit Committee, whenever necessary and reasonable for the performance of its duties, shall in accordance with the procedure determined by the Board and at the Company’s expenses:-

(a) have the authority to investigate any matter within its terms of reference;
(b) have the resources which are required to perform its duties;
(c) have full and unrestricted access to any information pertaining to the Group;
(d) have direct communication channels with the External Auditors and person(s) carrying out the internal audit function or activity;
(e) have the right to obtain independent professional or other advice at the Company’s expense;
(f) have the right to convene meetings with the Internal Auditors and External Auditors, excluding the attendance of the other Directors or employees of the Group, whenever deemed necessary;
(g) promptly report to Bursa Securities, or such other name(s) as may be adopted by Bursa Securities, matters which have not been satisfactorily resolved by the Board resulting in a breach of the Listing Requirements;
(h) have the right to pass resolutions by a simple majority vote from the Audit Committee and that the Chairman shall have the casting vote should a tie arise;
(i) meet as and when required on a reasonable notice; and
(j) the Chairman shall call for a meeting upon the request of the Internal and the External Auditors.

5. Duties and Responsibilities

(a) To review with the External Auditors on:-
o the audit plan, its scope and nature;
o the audit report;
o the results of their evaluation of the accounting policies and system of internal accounting controls within the Group; and
o the assistance given by the officers of the Company to the External Auditors, including any difficulties or disputes with Management encountered during the audit.

(b) To review the adequacy of the scope, functions, competency, resources and set the standards of the internal audit function.

(c) To provide assurance to the Board on the effectiveness of the system of internal control and risk management practices of the Group.

(d) To review the internal audit programme and results of the internal audit, processes or investigation undertaken and whether or not appropriate action is taken on the recommendations of the internal audit function.

(e) To review with Management:-
o audit reports and management letters issued by the External Auditors and the implementation of audit recommendations;
o interim financial information; and
o the assistance given by the officers of the Company to the External Auditors.

(f) To monitor related party transactions entered into by the Company or the Group and to determine if such transactions are undertaken on an arm’s length basis based on normal commercial terms and on terms not more favourable to the related parties than those generally available to the public, and to ensure that the Directors report such transactions annually to shareholders via the Annual Report, and to review conflicts of interest that may arise within the Company or the Group including any transaction, procedure or course of conduct that raises questions of management integrity.

(g) To review the quarterly reports on consolidated results and annual financial statements prior to submission to the Board, focusing particularly on:-
o changes in or implementation of major accounting policy and practices;
o significant and / or unusual matters arising from the audit;
o the going concern assumption;
o compliance with accounting standards and other legal requirements; and
o major areas.

(h) To consider the appointment and / or re-appointment of the Internal and the External Auditors, the audit fee and any questions of resignation or dismissal including recommending the nomination of person or persons as auditors.