Page 46 - TreasuryChinaTrust2011

Corporate Governance Report
44
The Board and Audit Committee have access to the Guidebook for Audit Committees in Singapore issued by the Audit
Committee Guidance Committee in October 2008. Where appropriate, the Audit Committee will adopt relevant best practices
set out in the Guidebook, which will be used as a reference to assist the Committee in performing its functions.
A whistle blowing policy has been put in place to provide a channel through which employees of management may report,
in good faith and in confidence, any concerns in financial and other matters, and arrangements have been put in place for
independent investigation with appropriate follow-up action.
COCG Code Principle 12: Internal Controls
The Trustee-Manager has the dual responsibility of safeguarding the interests of the Unitholders, and managing the business
conducted by TCT. In order to do this the Board has established a system of internal controls to safeguard the Unitholder
investments and the assets of TCT. These controls include approval limits for capital expenditure, investments and divestments,
bank borrowing as well as internal control arrangements in relation to cheque signatories. In addition sub-limits are also
delegated to various management levels to facilitate operational efficiency.
The Board is assisted in assessing the internal controls by the Audit Committee whose responsibility, inter-alia, is to monitor
and evaluate the compliance of principal internal control systems and procedures and risk management systems established
by management of the Trustee-Manager and the Property Manager and the effectiveness of these internal controls and
risk management system. Internal and external auditors conduct audits that involve testing the effectiveness of the material
internal control systems in the TCT Group. Any material non-compliance or lapses in internal controls together with corrective
measures recommended by internal and external auditors are reported to the Audit Committee. The Audit Committee also
reviewed the effectiveness of the measures taken by management in response to the recommendations made by the internal
and external auditors.
The Board is of the view that TCT and the Trustee-Manager currently have an adequate internal control system in place during
the financial year under review to provide reasonable assurance that TCT’s assets are safeguarded, laws and regulations are
complied with and that the financial reporting is reliable.
Whilst no system can provide absolute assurance against material loss or financial mis-statement, TCT’s internal financial
controls are designed to provide reasonable assurance that assets are safeguarded, that proper accounting records are
maintained, and that financial information used within the business and for publication is reliable. In designing these controls,
the Board of the Trustee-Manager has regard to the risks to which the business is exposed, the likelihood of such risks
occurring and the costs of protecting against them.
COCG Code Principle 13: Internal Audit
TCT’s internal audit function has been outsourced to RSM Ethos Pte. Ltd (“RSM”). RSM reports to the Audit Committee on
internal audit matters and reports to the CEO administratively. RSM have taken over the role as internal auditor following the
acquisition of SBA Stone Forest Corporate Advisory (Shanghai) Co., Ltd, who were previously appointed to undertake the
internal audit function.
An internal audit program commenced during the financial year. The Audit Committee receives reports from RSM at the
completion of each stage of the internal audit program. The Audit Committee is also provided with a detailed scope of work
for the next stages of the internal audit program for their review and approval.
RSM conducts its internal audit according to the International Professional Practices Framework issued by the Institute of
Internal Auditors.
Specific duties included within the scope of work to be undertaken as part of the Internal Audit program include:
• an annual risk assessment of the controls and operating effectiveness; and
• presentation of the internal audit program annually to the Board of the Trustee-Manager and reporting to the Board
on the findings of the internal audit so that they may consider what action, if necessary, should be taken.
The Audit Committee will ensure the adequacy of the internal audit function at least annually.
The Board recognises that whilst they have resolved to outsource the internal audit function, they retain responsibility for
maintaining an effective internal audit activity.
SAR1112034_TCT_AR_().indb 44 3/24/2012 5:54: