SCGM Bhd

Lot 3304 Batu 24 1/2 Jalan Kulai - Air Hitam

81000 Kulai, Johor Malaysia

Tel: +607-6522288       Fax: +607-6522299

Email: ir@scgmbhd.com

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Monday, 23 October 2017

5 years Revenue (RM Millions)

Net Dividends Per Share (sen)

Profit after Tax (RM Millions)

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Audit Committee Report

AUDIT COMMITTEE REPORT

 

 

 

OVERVIEW

 

 

 

The Audit Committee of SCGM Bhd is committed to its role of supporting oversight functions of the Board on the Group’s financial reporting, risk management and internal control systems and ensuring high corporate governance practices.

 

 

 

  1. COMPOSITION AND ATTENDANCE OF MEETINGS

 

 

 

The details of the Audit Committee members and meetings held in FY2016 are as follows:

 

 

 

Name of Committee Members

Status

Numbers of committee meetings

 

 

Attended

Held

Wong Tun Boon

Chairman Independent Non-Executive Director

6

6

Tang Nai Soon

Independent Non-Executive Director

6

6

Amrik Singh Harcharan Singh

Independent Non-Executive Director

6

6

 

 

 

    1. Quorum And Frequency For Meetings

 

 

 

  1. Meetings shall be held at least four (4) times a year with a minimum quorum of two (2) members of whom majority shall be independent Directors.

  2. Additional meetings may be called at any time at the discretion of the Committee.

 

 

 

    1. Attendance Of Meetings

 

 

 

  1. Group Financial Controller and Finance Manager shall normally be invited to attend meetings. The Managing Director, Executive Chairman and Executive Directors, the Internal Auditor/External Auditor may be invited to attend the meeting; and

  2. The external auditors shall attend the meeting to deliberate the audited financial statements and such other meetings determined by the Committee.

 

 

 

    1. Reporting Procedures

 

 

 

  1. The Chairman of the Audit Committee reports to the Board on matters deliberated during the Audit Committee meetings. Minutes of each meeting are circulated to each member of the Board;

  2. The books containing the minutes of the proceedings of meetings of the committee are kept in the registered office of the Company and are available for inspection.

 

 

 

  1. MEMBERSHIP

 

 

 

  1. The Committee shall be appointed by the Board from amongst its members and shall comprise not less than three (3) members.

  2. All the audit committee members must be non-executive directors, with a majority of them being independent directors.

  3. The Chairman of the Committee shall be an independent Director appointed by the Board.

  4. No alternate Director shall be appointed as a member of the Committee.

  5. At least one member of the Committee:-

 

  1. shall be a member of the Malaysian Institute of Accountants (“MIA”); or

 

ii) if he is not a member of the MIA, he shall have at least three (3) years’ working experience and:-

 

  1. he must have passed the examinations specified in Part 1 of the 1st Schedule of the Accountants Act 1967; or

  2. he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Acts 1967; or

 

iii) fulfils such other requirement as prescribed or approved by the Exchange.

 

  1. The term of office and performance of the Committee and each of its members must be reviewed by the Board annually; and

  2. If a member of the Committee resigns or for any other reason ceases to be a member with the result that the number of members is reduced to below three (3), the Board shall within three (3) months of that event, appoint such number of new members as may be required to make up a minimum number of three (3) members.

 

 

 

3. SUMMARY OF TERMS OF REFERENCE

 

 

 

3.1 Authority

 

 

 

The Audit Committee is authorised by the Board, in accordance with the procedures to be determined by the Board (if any) to carry out the following:

 

 

 

  1. Investigate any matter within its terms of reference;

  2. Have full and unrestricted access to information and documents, to the external auditors and to all employees of the Company and the Group;

  3. Have direct communication channels with the external and internal auditors;

  4. Convene meetings with external auditors, internal auditors or both, excluding the attendance of the other directors and employees, whenever deemed necessary;

  5. Obtain independent professional or other advice at the Company’s expense and to invite outsiders with relevant experience and expertise to attend meetings if it considers this necessary; and

  6. Where the Committee is of the view that a matter reported by it to the Board has not been satisfactorily resolved resulting in a breach of the Listing Requirements of the Bursa Malaysia Securities Berhad, the Committee shall promptly report such matter to the Exchange.

 

 

 

3.2 Duties and Responsibilities

 

 

 

The duties and responsibilities of the Audit Committee are as follows:-

 

 

 

Internal controls/ risk management/governance

 

  1. To review inspection and examination reports issued by any regulatory authority and to ensure prompt and appropriate actions are taken in respect of any findings.

 

 

 

Internal Audit

 

  1. To review the adequacy of the competency of the internal auditor,

  2. To review the adequacy and relevance of the scope, functions and resources of the internal audit function and that it has the necessary authority to carry out its work.

  3. To review the internal audit plan and processes, where necessary, ensure that appropriate actions are taken on the recommendations of the internal audit function.

  4. To ensure the internal audit function is well placed to undertake review or investigation on behalf of the Audit Committee; and

  5. To consider all proposals by management regarding the appointment, transfer or dismissal of the internal auditors and recommend to the Board for approval;

 

 

 

External Audit

 

  1. To review the external audit plan, the nature and scope of their audit plan, their evaluation of the system of internal controls and their management letter and discuss any matter that the external auditors may wish to raise in the absence of management, where necessary;

  2. To recommend to the Board on the appointment and the annual reappointment of the external auditors and their audit fee, after taking into consideration the independence and objectivity of the external auditors and the cost effectiveness of their audit;

  3. To approve the provision of non-audit services by the external auditors to the Company, evaluating whether such non-audit services would impair their independence;

  4. To discuss problems and reservations arising from audit, and review with the external auditors if there is any issue of concern that they may encounter during the course of audit; and

  5. To meet with the external auditors without the presence of Management or Executive Directors to discuss any key concerns and obtain feedback.

 

 

 

Others

 

  1. To review the quarterly results and annual financial statements of the Company and the Group and recommend to the Board for approval, focusing on the following:

 

  • changes in or implementation of major accounting policy changes;

  • significant matters highlighted including financial reporting issues, significant judgments made by management, significant and unusual events or transactions, and how these matters are addressed; and

  • compliance with accounting standards and other legal requirements;

 

  1. To review any related party transaction that they are conducted in the best interest of the Company or the Group and conflict of interest that may arise within the Company or the Group;

  2. To convene meetings with internal auditors, external auditors or both whenever deemed necessary; and

  3. To perform any other functions as authorised by the Board.

 

 

 

  1. SUMMARY OF WORK OF THE AUDIT COMMITTEE DURING THE FINANCIAL YEAR

 

 

 

The Audit Committee has carried out the following activities in accordance with the Terms of Reference during the financial year ended 30 April 2016:

 

 

 

  1. Reviewed the Group’s unaudited quarterly financial results before recommending the same for the Board’s approval and subsequent release to Bursa Securities;

  2. Reviewed the related party transactions that entered by the Group to ensure that they are properly conducted as well as the adequate and proper disclosure of these procedures and items of the related party transactions;

  3. In considering the external audit plan for annual audit with the external auditors, the Audit Committee received written confirmation through their Audit Approach Memorandum that they are independent and the external auditors had conducted themselves in accordance with the terms of all relevant professional and regulatory;

  4. Reviewed the external audit plan, nature and scope of work, evaluation of the system of internal controls and audited financial statements with External Auditors for the financial year ended 30 April 2016 before recommending to the Board for approval;

  5. Discussed and obtained feedback from external auditors without presence of management and Executive Directors.

  6. Assessed the suitability and competency of the outsourced internal audit professional firm and made recommendations to the Board of Directors on their appointment;

  7. Reviewed and discussed with the Internal Auditors on the internal audit plan, its scope of work and procedures;

  8. Reviewed and discussed with the Internal Auditors, the results of their internal audit and internal control recommendations in respect of improvements in the internal control procedures noted in the course of their audit; and

  9. Ensured that the transactions entered into by the Company and the Group are in compliance with requirements of Bursa Securities, Securities Commission and other regulatory bodies.

  10. To review and ensure the Group adopts and adhere to the Malaysian Financial Reporting Standards.

 

 

 

 

 

  1. INTERNAL AUDIT FUNCTION

 

 

 

The internal audit function is independent of the activities or operations it audits. The principal role of the internal audit is to undertake regular and systematic reviews of the systems of internal control in order to provide reasonable assurance that such systems continue to operate satisfactorily and effectively. It is ultimately the responsibility of the internal audit function to provide the Audit Committee with independent and objective reports on the state of internal controls of the various operating units within the Group and the extent of compliance of the units with the Group’s established policies and procedures as well as relevant statutory requirements.

 

 

 

During the financial year under review, The Group outsourced its internal audit to an independent professional firm, Messrs TT Governance Sdn. Bhd., to undertake the internal audit functions that would enable the Audit Committee to discharge its duties.

 

 

 

A summary of work of the internal audit function carried out includes:

 

  • Developed internal audit plan based on management’s assessment of business processes and risks, and proposed the plan to Audit Committee for approval;

  • Conducted scheduled internal audit engagement, focusing primarily on the effectiveness of internal control and recommended improvements where necessary. The main activity for 2016 was focus on financial close and reporting and treasury; and

  • Presentation of the internal audit findings and recommendations to the Audit Committee for their advice to the Board.

 

 

 

The Statement on Risk Management and Internal Control which provides an overview of the state of internal controls within the Group is set out on page 138 of this Annual Report.

 

 

 

The total cost incurred for the internal audit service for the financial year was RM35,000.00 (2015 : RM16,000)

 

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