FGV Annual Report 2018

REINFORCED OUR STANDARDS OF GOVERNANCE 01 02 05 03 07 06 04 08 09 77 ANNUAL INTEGRATED REPORT 2018 GOVERNANCE AT FGV: ACCOUNTABILITY AUDIT COMMITTEE REPORT For further details of the Audit Committee’s Terms of Reference are published on our website, www.fgvholdings.com Through the 12 meetings and various private sessions held with the external auditors, internal auditors and Management, the Audit Committee undertook the following principal activities in discharging its responsibilities: Assessment of the Risks and Control Environment a. Evaluated the reports on the assessment of the risk and control environment based on the external auditors’ quarterly financial information review at each quarter and statutory financial audit at year end. b. Reviewed four reports from the Chief Internal Auditor summarising the main observations from the internal audit reports issued, which included information relevant for the assessment of the risks and control environment. c. Considered the overall rating of the internal audit reports issued in 2018 as reflection of the overall effectiveness of the system of internal control vis-à-vis the risks, control environment and compliance requirements of the Group. d. Received assurances from the GP/CEO and the GCFO that the risk management and internal control system of the Group for FY2018 operated adequately and effectively, in all material respects. At each of its meetings, the Audit Committee has given guidance which was relevant for the improvement of the risks and control environment of the Group, in particular in the areas of commodities trading, receivables management, procurement management and plantation operations, which were the main challenges to the Group during the financial year. Overseeing Financial Reporting a. Reviewed reports of the external auditors from their quarterly Financial Statements review and annual statutory financial audit at each meeting. Amongst the main focus of the reports were the assessments of impairment and provision exposures of various assets, land lease arrangements, goodwill on investments and onerous contracts based on applicable financial reporting standard. b. Met with the external auditors in two private sessions during the financial year without the presence of Management on 20 February 2018 and 20 August 2018. In these sessions, the following matters were discussed, amongst others: • Practices in refined sugar sales. • Crude Palm Oil (CPO) trading of the Group. • Investment and receivables impairment assessment. • Enhancement of acquisition undertakings. • Monitoring of covenants imposed on the Group. • Accounting closing process to meet shorter deadlines. c. Evaluated the Quarterly Report on Consolidated Results for each quarter and appraised the analysis of the results in detail. Where required, the Audit Committee had provided direction and sought more details on the analysis of Consolidated Results to make its recommendation to the Board on the Quarterly Report. The Audit Committee also requested further details on several important matters for its deeper understanding and provided the necessary direction on the matters. SUMMARY OF WORK OF THE AUDIT COMMITTEE The purpose of the Audit Committee is to assist the Board in fulfilling the following key responsibilities: • Assessing the risks and control environment. • Overseeing financial reporting. • Evaluating the internal and external audit processes and outcomes. • Reviewing conflict of interest situations and related party transactions. • Providing oversight on the Annual Integrated Report. • Undertaking any such other functions as may be determined by the Board from time to time. The existence of the Audit Committee does not diminish the Board’s ultimate statutory and fiduciary responsibility for decision making relating to the functions and duties of the Audit Committee. The Audit Committee may empower one or more of its members to meet or communicate with the external auditors and/or internal auditors independently.