Audit Committee

TERMS OF REFERENCE OF AUDIT COMMITTEE

The Audit Committee is governed by the following terms of reference:

1. Objectives

   The principal objective of the Audit Committee is to assist the Board of Directors in discharging its statutory duties and responsibilities relating to accounting and reporting practices of the Group. In addition, the Committee shall:

   • Evaluate the quality of the audit conducted by the internal and external auditors;

   • Provide assurance that the financial information presented by management is relevant, reliable and timely;

   • Oversee compliance with laws and regulations and observance of a proper code of conduct; and

   • Determine the adequacy of the Group’s control environment.

2. Composition

The Audit Committee shall be appointed by the Board of Directors from amongst their members and comprising not less than three (3) members, all of whom shall be Non-Executive Directors, with a majority being Independent Directors. An Independent Director shall be the one who fulfils the requirements as provided in the Listing Requirements of Bursa Malaysia Securities Berhad.

At least one (1) member of the Audit Committee must be a member of the Malaysian Institute of Accountants, or if he is not a member of the Malaysian Institute of Accountants, must have at least three (3) years working experience and either have passed the examinations specified in Part I of the First Schedule of the Accountants Act, 1967, or a member of one of the associations of accountants specified in Part II of the First Schedule of the Accountants Act, 1967 or fulfils such other requirements as prescribed or approved by Bursa Malaysia Securities Berhad.

The members of the Audit Committee shall elect a Chairman from amongst their number who shall be an Independent Non-Executive Director. No alternate Director shall be appointed as a member of the Committee.

If a member of the Audit Committee, for whatever reason, ceases to be a member with the result that the number of members is reduced below three (3), the Board of Directors shall, within three (3) months of the event, appoints such number of new members as may be required to make up the minimum number of three (3) members.

3. Authority

The Committee is authorized by the Board to investigate any activity within its terms of reference and shall have unlimited access to both the internal and external auditors, as well as the employees of the Group. All employees are directed to co-operate with any request made by the Committee.

The Committee shall also able to convene meetings with the external auditors, the internal auditors or both, excluding the attendance of other directors and employees of the Company, whenever deemed necessary.

The Committee shall have unlimited access to all information and documents relevant to its activities, to the internal and external auditors, and to senior management of the Group.

The Committee shall have the authority to obtain independent legal or other professional advice as it considers necessary.

It shall also have the power to establish Sub-Audit Committee(s) to carry out certain investigation on behalf of the Committee in such manner, as the Committee shall deem fit and necessary.

4. Meetings

The Committee is at liberty to determine the frequency of its meetings which in any event shall not be less than four (4) times a year.

The quorum shall consist of two (2) members of whom the majority of members present must be independent directors.

5. Attendance at Meetings

The Senior Finance Manager, the Head of Internal Audit and a representative of the external auditors should normally attend meeting. Other Board members may attend meeting upon the invitation of the Committee. However, the Committee should meet with the external auditors without Executive Board members present at least twice a year. The Committee may invite any person to be in attendance to assist in its deliberations.

The Company Secretary shall be the Secretary of the Committee and shall be responsible for drawing up the agenda with concurrence of the chairperson and circulating it, supported by explanatory documentation to committee members prior to each meeting.

6. Duties
   
   The duties of the Audit Committee include the following:

   • to consider and recommend the appointment and re-appointment of the external auditors, the audit fee and any questions of resignation or dismissal, if any;

   • to discuss with the external auditors on their audit plan including the assistance given by the employees of the Company to the external auditors;

   • to review the quarterly and year-end financial statements of the Company, focusing particularly on:

     • any changes in accounting policies and practices;

     • significant adjustments arising from the audit;

     • the going concern assumption;

     • compliance with accounting standards and other legal requirements; and

     • significant and unusual events;

   • to discuss problems and reservations arising from the interim and final audits, and any matter the auditors may wish to discuss (in the absence of management where necessary);

   • to review the external auditors’ management letter and management’s response;

   • to do the following where an internal audit function exists;

     • review the adequacy of the scope, functions, competency and resources of the internal audit function and that it has the necessary authority to carry out its work;

     • review the internal audit programme, processes, results of the internal audit programme, processes or investigation undertaken and whether or not, appropriate action is taken on the recommendations of the internal audit function;

     • review any appraisal or assessment of the performance of members of the internal audit function;

     • approve any appointment or termination of senior staff members of the internal audit function;

     • review the resignation of internal audit staff members and provide the staff member the opportunity to submit his reasons for resigning;

   • to consider any related party transactions that may arise within the Company or Group including any transaction, procedure or course of conduct that raises questions of management integrity;

   • to review the allocation of options during the year under the “Uchi Technologies Berhad Employee Share Option Scheme” (ESOS) to ensure that this was in compliance with the allocation criteria determined by the ESOS committee and in accordance with the Bye-Laws of the ESOS;

   • to consider the major findings of internal investigations and management’s response;

   • to consider other topics as defined by the Board.

7. Reporting

The Committee is authorized to regulate its own procedures and in particular the calling of meetings, the notice to be given of such meetings, the voting and proceeding thereat, the keeping of minutes and the custody, production and inspection of such meetings.

The minutes of meetings shall be circulated by the Secretary of the Committee to the Committee members and all the other Board members.