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Terms of Reference
1.0 Definition
| 1.1 |
For the purposes of these terms of reference (the Terms):
“Audit Committee” means the audit committee established by the resolution of the Board in accordance with clause 2 of these Terms.
“Board” means the board of directors of the Company.
“Chief Financial Officer” means the senior officer of the Company responsible for financial management as appointed by the Board from time to time.
“Company Secretary” means the company secretary of the Company.
“Executive Directors” mean the executive directors of the Board.
“Independent Non-Executive Directors” mean the independent non-executive directors of the Board.
“Listing Rules” mean the Listing Rules of the Stock Exchange.
“Non-Executive Directors” mean the non-executive directors of the Board.
“Stock Exchange” means the Stock Exchange of Hong Kong Limited. |
2.0 Constitution
The Board hereby resolves to establish a committee of the Board to be known as the Audit Committee.
3.0 Membership
| 3.1 |
The Audit Committee shall be appointed by the Board from amongst the Non-Executive Directors and shall consist of not less than three members, a majority of whom should be Independent Non-Executive Directors and at least one of whom should be an Independent Non-Executive Director with appropriate professional qualifications or accounting or related financial management expertise as required by the Listing Rules. A quorum shall be two members. |
| 3.2 |
The chairman of the Audit Committee shall be appointed by the Board and should be an Independent Non-Executive Director. |
4.0 Attendance at meetings
| 4.1 |
The Chief Financial Officer and a representative of the external auditors shall normally attend meetings. However, at least once a year the Audit Committee shall meet with the external auditors without the Executive Directors present. |
| 4.2 |
The Company Secretary shall be the secretary of the Audit Committee. |
5.0 Frequency of meetings
Meetings shall be held not less than twice a year. The external auditors may request a meeting if they consider that one is necessary.
6.0 Authority
| 6.1 |
The Audit Committee is authorised by the Board to investigate any activity within its terms of reference. It is authorised to seek any information it requires from any employee and all employees are directed to co-operate with any request made by the Audit Committee. |
| 6.2 |
The Audit Committee is authorised by the Board to obtain outside legal or other independent professional advice and to secure the attendance of outsiders with relevant experience and expertise if it considers this necessary. |
7.0 Duties
| 7.1 |
The duties of the Audit Committee shall be:
1) to make recommendations to the shareholders of the Company for their approval in general meeting, in relation to the appointment, re-appointment or dismissal of the external auditor and the remuneration and terms of engagement of the external auditor;
2) to consider any questions of resignation or dismissal of the external auditor;
3) to review and monitor the external auditor’s independence and objectivity and the effectiveness of the audit process in accordance with applicable standards;
4) to develop and implement policy on engaging external auditors for the provision of non-audit-related services;
5) to discuss with the external auditor before the audit commences, the nature and scope of the audit, and ensure co-ordination where more than one audit firm is involved;
6) to discuss problems and reservations arising from the interim and final audits, and any matters the external auditor may wish to discuss (in the absence of management where necessary);
7) to review the external auditor’s management letter and management’s response;
8) to monitor the integrity of the financial statements of the Company, and any public announcements relating to the Company’s financial performance, including but not limited to reviewing any significant financial reporting judgments made therein.
9) to review the interim and annual financial statements before submission to the Board, focusing particularly on:
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1) any changes in accounting policies and practices;
2) major judgmental areas;
3) significant adjustments resulting from the audit;
4) the going concern assumption and any qualifications;
5) compliance with accounting standards; and
6) compliance with any requirements from the Stock Exchange and other legal requirements; |
10) to review the Company’s financial controls, internal control and risk management systems as well as the Company’s statement on internal control system (where included in the annual report) prior to endorsement by the Board;
11) to discuss with the Company’s senior management any matters in relation to the Company’s internal control system and to ensure that the Company’s senior management has discharged its duties in establishing and maintaining an effective internal control system;
12) (where an internal audit function exists) to review the internal audit programme, ensure co-ordination between the internal and external auditors, and ensure that the internal audit function is adequately resourced and has appropriate standing within the Company;
13) to review the policies and arrangements to be implemented by the Company to enable its employees to report in confidence, any issues relating to possible improprieties in the Company in relation to financial reporting or other matters;
14) to consider the major findings of internal investigations and management's response; and
15) to consider any other issues, as required by the Board. |
8.0 Reporting procedures
The Company Secretary shall circulate the minutes of meetings and reports of the Audit Committee to all members of the Board.
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