Page 58 - TreasuryChinaTrust

Treasury China Trust Annual Report 2010 39

CORPORATE GOVERNANCE REPORT

The Board of the Trustee-Manager is of the view that the Audit Committee has sufficient management expertise and experience amongst its members to discharge the functions of the Audit Committee. The Audit Committee may invite any Director or management staff to attend its meetings and is also authorised to seek external professional advice to enable it to discharge its functions.

The principal role of the Audit Committee is to monitor and evaluate the effectiveness of the Trustee-Manager’s internal controls. The Audit Committee also reviews the quality and reliability of information prepared for inclusion in the financial reports, and is responsible for the nomination of external auditors and reviewing the adequacy of external audits in respect of cost, scope and performance. The Audit Committee’s responsibilities also include, but are not limited to, the following:

i) monitoring the procedures established to regulate Interested Person Transactions, including ensuring compliance with the provisions of the Listing Manual relating to Interested Person Transactions;

ii) reviewing external audit reports to ensure that where deficiencies in internal controls have been identified, appropriate and prompt remedial action is taken by the management;

iii) reviewing the financial statements and the internal audit reports to ascertain that the guidelines and procedures established to monitor Interested Person Transactions and conflicts of interest have been complied with; iv) resolving any conflicts of interest which may arise;

v) ensuring that the internal audit function is adequately resourced and has appropriate standing with TCT;

vi) monitoring the procedures in place to ensure compliance with applicable legislation, the Listing Manual and the BTA; vii) nominating external auditors;

viii) reviewing the nature and extent of non-audit services performed by external auditors;

ix) examining with management the effectiveness of financial, operating and compliance controls and reviewing and approving recruitment of senior personnel in the financial, operating and compliance sectors;

x) examining matters brought to the attention of the Audit Committee by the management of the SPVs and highlighting any relevant matter for the Board’s consideration before it; xi) issues confirmation under Rule 705(5) of the Listing Manual;

xii) reviewing, on an annual basis, the independence and objectivity of the external and internal auditors;

xiii) meeting with external and internal auditors, without the presence of the Executive Officers, at least on an annual basis; xiv) commissioning an annual internal controls audit, to be discontinued only after the Audit Committee is satisfied that the TCT Group’s internal controls are robust and effective enough to mitigate any internal control weaknesses, and thereafter to carry out such internal controls audit as and when the Audit Committee deems fit in order to satisfy itself that the TCT Group’s internal controls remain robust and effective;

xv) reviewing the Chief Financial Officer’s time spent in the People’s Republic of China in overseeing such aspects of the finance and reporting functions of TCT which are to be carried out in the People’s Republic of China, to ensure that the Chief Financial Officer is spending sufficient time in the People’s Republic of China to be familiar with the operations of TCT, to effectively control such finance and reporting functions and to properly prepare TCT’s accounts;

xvi) investigating any matters within the Audit Committee’s terms of reference, whenever it deems necessary; and xvii) reporting to the Board on material matters, findings and recommendations.

The Audit Committee met with the external auditors separately without the presence of management once during the financial year. In conjunction with the policy for the provision of non-audit services adopted by the Audit Committee in October 2010, the Audit Committee has reviewed, and is satisfied that the non-audit services provided to the TCT Group by the external auditors for the period ended 31 December 2010, does not affect the independence and objectivity of the external auditors.

The Audit Committee was formed on 17 May 2010. During the period to 31 December 2010, the Audit Committee met three times and had a further telephone audit committee meeting. The activities at the meetings included the following:

• review of the quarterly and year-end results and announcement required by the SGX-ST; • review of the annual budget and other forecast financial information to assist in future planning; • discussions with the external auditor on the annual audit plan and year-end timetable;

• approving the appointment of an external third party to undertake the internal audit function and reviewing the internal audit program for 2011;

• review and adoption of the Audit Committee’s Terms of Reference;

• review and adoption of a Policy for provision of non-audit services by the external auditor;

• review and adoption of a Whistle Blowing Policy with direct reporting to the secretary of the Audit Committee and the Chairman of the Audit Committee;

• review of all interested person transactions and a quarterly review of the register of interested person transactions to ensure compliance with the Listing Manual and the BTA; • approving the appointment of the CFO;

• review of the policy and procedures manual of the property manager; and • establishment of Rule 705(5) reporting from management to the Audit Committee.