The Audit and Risk Management Committee (“the Committee”) of OCB Berhad (“OCB” or “the Company”) is responsible for making recommendations to the Board of Directors (“Board”) regarding the appointment and removal of the external auditor. In making those recommendations, the Committee is assigned to conduct annual reviews of the performance, suitability and independence of the external auditors.
PROVISION UNDER SECTION 271 OF COMPANIES ACT 2016 (“CA 2016”)
In accordance with Section 271 of the CA 2016, an auditor of a public company shall be appointed for each financial year and should only be appointed by the Board or members of the Company.
The Board shall appoint an auditor:
at any time before the first annual general meeting of the company and the auditor will hold office until the conclusion of the first annual general meeting for the appointment; or
to fill casual vacancy in the office of the auditor and the auditor will hold office until the conclusion of the next annual general meeting for the appointment.
The members shall appoint an auditor by ordinary resolution:
at the annual general meeting;
if the company should have appointed an auditor at an annual general meeting but failed to do so; or
if the Board fails to appoint an auditor as mentioned above.
SELECTION AND APPOINTMENT
The Committee will follow the following procedures for selection and appointment of new external auditors should the Committee determine a need for a change of external auditors:
the Committee to identify the audit firms which meet the criteria for appointment and to request for their proposals of engagement for consideration;
the Committee to confirm whether the audit firm and engagement partner are registered with Audit Oversight Board (“AOB”) and to check whether there are any reprimand or sanction imposed by the AOB;
the Committee will assess the proposals and fee, and shortlist the suitable audit firms;
the Committee will meet and/or interview the shortlisted audit firms;
the Committee will recommend the suitable audit firm to the Board for appointment as external auditors; and
the Board will if deemed appropriate, endorse the recommendation and seek shareholders’ approval for the appointment of the new external auditors and/or resignation/removal of the existing external auditors at the general meeting.
The Committee may delegate or seek the assistance of the Group Chief Financial Officer or Executive Director(s) to perform items (a) to (d) above.
OBJECTIVITY AND INDEPENDENCE OF EXTERNAL AUDITOR
The external auditors are precluded from providing any services that may impair their independence or conflict with their role as external auditors.
The Committee shall obtain a written assurance from the external auditors confirming that they are, and have been, independent throughout the conduct of the audit engagement in accordance with the terms of all relevant professional and regulatory requirements.
The external auditors can be engaged to perform non-audit services that are not, and are not perceived to be, in conflict with the role of the external auditors. This excludes audit related work in compliance with statutory requirements.
The prohibition of non-audit services is based on three (3) basic principles as follows:
external auditors cannot function in the role of Management;
external auditors cannot audit their own work; and
external auditors cannot serve in an advocacy role of the Company and its subsidiaries (“the Group”).
The external auditors shall observe and comply with the By-Laws of the Malaysian Institute of Accountants in relation to the provision of non-audit services, which include the following:
accounting and book keeping services;
internal audit services;
IT systems services;
litigation support services;
recruitment services; and
corporate finance services.
All engagements of the external auditors to provide non-audit services are subject to the approval/endorsement of the Committee.
The Management shall obtain confirmation from the external auditors that the independence of the external auditor will not be impaired by the provision of non-audit services.
ROTATION OF ENGAGEMENT PARTNER
The audit partner responsible for the external audit of the Group is subject to rotation at least every five (5) financial years in accordance with the MIA By-Laws which requires that the engagement partner involved in the external audit should not remain in a key audit role beyond five (5) years and cannot be re-engaged to play a significant role in the audit of the Company for at least another two (2) successive years.
The external auditors must provide an annual declaration addressed to the Committee confirming:
the nature of any non-audit services provided to the Company; and
that the auditor has maintained its independence in accordance with relevant legislation and professional accounting standards.
The Committee shall carry out annual assessment on the performance, suitability and independence of the external auditor based on the following six (6) key areas:
competence and quality of audit service;
sufficiency of resources;
ability to meet deadlines and responding to issues in a timely manner;
communication and interaction with the Management;
independence, objectivity and professionalism; and
whether there are any reprimand or sanction imposed by the AOB.
The Committee may also request the Group Chief Financial Officer or Executive Director(s) and/or Internal Auditors to perform the annual assessment of the external auditors.
APPOINTMENT OF FORMER KEY AUDIT PARTNER AS MEMBER OF AUDIT AND RISK MANAGEMENT COMMITTEE
It is the Group’s policy that requires a former key audit partner to observe a cooling-off period of at least two (2) years before being appointed as a member of the Committee.
REVIEW OF THE POLICY
The Committee shall, from time to time and at any time that it deems necessary, review this Policy to ensure that it continues to remain relevant and appropriate.