Terms of Reference of the Audit Committee

   
Primary Purposes
   
The Committee shall:-
 
1. Provide assistance to the Board of Directors (“Board”) in fulfilling its fiduciary responsibilities relating to the corporate accounting and practices for YTL Power International Berhad and its subsidiaries (“Group”).
2. Assist to improve the Company and the Group’s business efficiency, the quality of the accounting function, the system of internal controls and the audit function to strengthen the confidence of the public in the Company’s and the Group’s reported results.
3. Maintain through regularly scheduled meetings, a direct line of communication between the Board and the external auditors as well as internal auditors.
4. Establish policies and procedures to assess the suitability, objectivity and independence of the external auditors.
5. Ensure that the internal audit function is effective and able to function independently.
6. Strengthen the role of the Independent Directors by giving them a greater depth of knowledge as to the operations of the Company and of the Group through their participation in the Committee.
7. Act upon the Board’s request to investigate and report on any issues or concerns in regard to the management of the Company and the Group.
8. Review the effectiveness of the policies and procedures for whistle-blowing and anti-corruption.
9. Instil discipline and control to reduce incidence of fraud.
   
Composition
   
1. The Committee shall be appointed by the Board from amongst their number and shall comprise no fewer than three (3) members, all of whom must be non-executive directors, with a majority of them being Independent Directors.
2. All members of the Audit Committee should be financially literate. At least one member of the Audit Committee:-
  (a) must be a member of the Malaysian Institute of Accountants; or
  (b) if he is not a member of the Malaysian Institute of Accountants, he must have at least 3 years’ working experience and –
    (i) he must have passed the examinations specified in Part I of the First Schedule of the Accountants Act 1967; or
    (ii) he must be a member of one of the associations of accountants specified in Part II of the First Schedule of the Accountants Act 1967; or
  (c) fulfils such other requirements as prescribed or approved by Bursa Malaysia Securities Berhad (“Bursa Securities”).
3. The Board must ensure that no alternate Director is appointed as a member of the Audit Committee.
4. The members of the Committee shall elect a Chairman from amongst their number who shall be an Independent Director. The Chairman of the Committee shall not be the Chairman of the Board.
5. In the event of any vacancy in the Committee resulting in the non-compliance of sub-paragraph 15.09(1) of the Bursa Securities Main Market Listing Requirements (“Main LR”), the Company must fill the vacancy within three (3) months.
   
Authority
 
The Committee shall in accordance with the procedure determined by the Board and at the cost of the Company:-
   
1. have authority to investigate any matter within its terms of reference;
2. have the resources which are required to perform its duties;
3. have full and unrestricted access to any information pertaining to the Company and the Group;
4. have authority to review and approve the appointment, renewal of appointment, replacement or removal of the Head of Internal Audit who reports directly to the Committee;
5. have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity;
6. be able to obtain independent professional or other advice and to secure the attendance of outsiders with relevant experience and expertise if it considers this necessary;
7. be able to convene meetings with the internal auditors without the presence of other directors and employees of the Company, whenever deemed necessary; and
8. to meet with the external auditors at least twice a year without the presence of the other directors and employees of the Company.
   
Functions And Duties
   
The Committee shall, amongst others, discharge the following functions:-
   
1. Financial Reporting
  (a) Review the quarterly financial results and annual financial statements prior to its recommendation to the Board for approval, focusing particularly on:-
• changes in or implementation of major accounting policies and practices;
• significant matters highlighted including financial reporting issues, significant judgments made by management, significant and unusual events or transactions, and how these matters are addressed;
• the accuracy and adequacy of the disclosure of information essential to a fair and full presentation of the financial affairs of the Company and the Group;
• compliance with applicable approved accounting standards, other regulatory and legal requirements; and
• the going concern assumption.
   
2. External Audit
  (a) Review the audit plan, scope of audit and audit report with the external auditors;
  (b) Review with the external auditors their evaluation of the system of internal controls, during the course of their audit, including any significant suggestions for improvements and management’s response;
  (c) Review the assistance given by the employees of the Company to the external auditors;
  (d) Recommend the nomination of a person or persons as external auditors and the audit fee;
  (e) Review any letter of resignation from the external auditors of the Company;
  (f) Review whether there is reason (supported by grounds) to believe that the Company’s external auditors are not suitable for re-appointment;
  (g) Review any significant audit findings, reservations, difficulties encountered or material weaknesses reported by the external auditors.
   
3. Internal Audit
  (a) Review the adequacy of the scope, competency and resources of the internal audit function and that it has the necessary authority and resources to carry out its work;
  (b) Review the internal audit plan, processes, the results of the internal audit assessments, investigation undertaken and whether or not appropriate action is taken on the recommendations;
  (c) Review any significant audit findings, reservations, difficulties encountered or material weaknesses reported by the internal auditors.
   
4. Related Party Transactions
  (a) Review any related party transaction and conflict of interest situation that arose, persist or may arise within the Company or Group including any transaction, procedure or course of conduct that raises questions of management integrity, and the measures taken to resolve, eliminate or mitigate such conflicts.
   
5. Employees Share Option Scheme (“ESOS”)
  (a) Verify allocation of share options to the eligible employees pursuant to the criteria set out in the By-Laws of the ESOS in accordance to the Main LR.
   
6. Other Matters
  (a) Carry out any other function that may be mutually agreed upon by the Committee and the Board which would be beneficial to the Company/Group and ensure the effective discharge of the Committee’s duties and responsibilities;
  (b) Promptly report to Bursa Securities on any matter reported by it to the Board which has not been satisfactorily resolved resulting in a breach of the Main LR.
   
Meetings
   
1. To form a quorum in respect of a meeting of the Committee, the majority of members present must be Independent Directors.
2. The Committee shall meet at least five (5) times a year, although additional meetings may be called at any time at the discretion of the Chairman of the Committee. An agenda shall be sent to all members of the Committee and any other persons who may be required/invited to attend. All meetings to review the quarterly financial results and annual financial statements, shall be held prior to such quarterly financial results and annual financial statements being presented to the Board for approval.
3. Notwithstanding item 2 above, upon the request of any member of the Committee, the external auditors or the internal auditors, the Chairman of the Committee shall convene a meeting of the Committee to consider any matter which should be brought to the attention of the Directors or shareholders.
4. The external auditors have the right to appear and be heard at any meeting of the Committee and shall appear before the Committee when required to do so by the Committee.
5. The Committee may invite any Board member or any member of the management within the Company/Group whom the Committee thinks fit to attend its meetings to assist in resolving and clarifying matters raised in audit reports.
6. The internal auditors shall be in attendance at meetings of the Committee to present and discuss the audit reports of findings and the recommendations relating thereto and to follow up on decisions made at these meetings.
7. The Committee may establish any regulations from time to time to govern its administration.
   
Minutes
   
1. The Secretary shall cause minutes to be duly entered in the books provided for the purpose of all resolutions and proceedings of all meetings of the Committee. Such minutes shall be signed by the Chairman of the meeting at which the proceedings were held or by the Chairman of the next succeeding meeting and if so signed, shall be conclusive evidence without any further proof of the facts thereon stated.
2. Minutes of each meeting shall also be distributed to the members of the Committee prior to each meeting.
3. Detailed minutes of the Committee’s meetings will be made available to all Board members. A summary of significant matters and resolutions will be reported to the Board by the Committee.
4. The books containing the minutes of proceedings of any meeting of the Committee shall be kept by the Company at the registered office of the Company and shall be opened to the inspection of any member of the Committee or the Board.
   
Secretary
   
The Secretary to the Committee shall be the Company Secretary.