FGV Annual Report 2020

208 FGV HOLDINGS BERHAD Annual Integrated Report 2020 In 2020, the Audit Committee undertook the following principal activities in discharging its responsibilities: Summary of Work Area of Focus Matters Considered Assessment of the Risks and Control Environment a. Evaluated the reports on the assessment of the risks and control environment based on the external auditors’ quarterly financial information review in each quarter and statutory financial audit at year-end. b. Reviewed four (4) quarterly 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 2020 as a 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 GCEO and the GCFO that the risk management and internal control system of the Group for FY2020 operated adequately and effectively, in all material respects. e. Reviewed the implementation progress of a Control Self-Assessment Model Development. At each of its meetings, the Audit Committee gave 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, inventory management, construction project management, procurement management, refinery maintenance and plantation operations, which were the main challenges to the Group during the financial year. Evaluation of the External Audit Process and Outcome Overseeing Financial Reporting a. Reviewed the external auditors’ report on the outcome of the external audit process for FY2019, which included internal control recommendations and Management’s response to the recommendations. b. Assessed the comprehensiveness of the audit plan of the external auditors for FY2020 and ensured coordination with the various other audit firms apart from PricewaterhouseCoopers PLT (PwC) who are involved in the external audit of several subsidiaries. c. Assessed the external auditors for their reappointment for FY2020 based on the established External Auditor Policy and recommended their reappointment to the Board. The Audit Committee also considered the feedback from Management on their evaluation of the external auditors based on the services provided on the external audits for FY2019. d. Assessed the external auditors audit fees for FY2020 and made its proposal to the Board for approval. e. Received written assurance from external auditors in their audit plan for FY2020 confirming they are, and will maintain, independent throughout the conduct of the audit engagement in accordance with the Terms of Reference of all relevant professional and regulatory requirements. a. Reviewed reports of the external auditors from their quarterly Financial Statements review and annual statutory financial audit at each meeting. Among the main focus areas 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 standards. b. Met with the external auditors in two (2) private sessions during the financial year without the presence of Management on 24 March 2020 and 13 August 2020. In these sessions, the following matters were discussed, among others: • the impact of COVID-19 pandemic to the Group’s business operations. • the impact rising value of US dollar on the sugar business. • performance of the finance function within the Group. • performance and going concern of specific subsidiaries. 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 provided direction and sought more details on the analysis of the 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. d. Assessed the cash flow assumptions for the purpose of calculation of the Land Lease Liability to FELDA and its impact to the Financial Statements. e. Reviewed and endorsed policy revisions relating to accounting, finance, governance and internal control for the Board’s approval. The Chairman of the Audit Committee held five (5) private meetings with the external auditors to be briefed in detail on the financial results of the Company and the Group. How We Are Governed: Accountability