WONG ENGINEERING CORPORATION BERHAD

Registration No. 199601037606 (409959-W)

 (Incorporated in Malaysia)

TERMS OF REFERENCE OF THE AUDIT COMMITTEE

  1. Objective

The primary function of the Audit Committee (“AC”) is to assist the Board of Directors (“Board”) in fulfilling the following oversight objectives on the Group activities: –

 a) Assess the Group’s process relating to its risks and control environment;

 b) Oversee financial reporting; and

 c) Evaluate the internal and external audit process.

 

  1. Composition

The Board shall elect and appoint AC members from amongst their numbers, comprising not fewer than three (3) Directors. All members of the AC shall be Non-Executive Directors of the Company and financial literate. The Board shall at all times ensure that at least one (1) member of the AC fulfils the Bursa Securities requirements as prescribed in paragraph 15.09 (1C):

 a) Must be a member of the Malaysian Institute of Accountants (“MIA”); or

 b) If he or she is not a member of MIA, he or she must have at least three (3) years of working experience and :-

      i.He or she must have passed the examinations specified in Part I of the First Schedule of the Accountants Act 1967; or

     ii.He or she must be a member of one of the associations of accountants specified in Part II of the First Schedule of the Accountant Act 1967; or

  c) Fulfils such other requirements as prescribed or approved by Bursa Malaysia Securities Berhad (“Bursa Securities”).

 

If a member of the AC resigns, dies or for any reason ceases to be a member with the result that the number of members is reduced below three (3), the Board shall within three (3) months of the event appoint such number of new members as may require to fill the vacancy.

 

The Chairman of the AC shall be an Independent Director. No alternate Director of the Board shall be appointed as a member of the AC. A secretary shall be nominated by the AC.

 

  1. Duties and Responsibilities

In fulfilling its primary objectives, the Committee shall undertake the following duties and responsibilities: –

 a) to recommend the nomination and appointment or re-appointment of the external auditors, the audit fee and any questions of resignation or dismissal of external auditors, (if any) before making a recommendation to the Board;

 b) with the external auditors, to review the following and report the same to the Board: –

     i) the nature and scope of the audit plan;

    ii) their evaluation of the system of internal accounting controls and risk management within the Company and its subsidiaries (“Group”);

    iii) their letter to management and the management’s response and comments;

  c) to ensure sufficient assistance given by the employees of the Group to the external auditors;

  d) to review the suitability and performance as well as factors relating to the independence of the external auditors with due consideration to the quality,                robustness and timeliness of the audit and report furnished, audit governance, level of understanding demonstrated of the Group’s business and communication about new and applicable accounting practices and auditing standards and its impact on the Group’s financial statements as well as the quality of the people and service level.

  e) to review the non-audit services provided by the external auditors, if any.

  f) to review quarterly unaudited financial results of the Group before recommending to the Board for its consideration and approval and subsequent announcement to Bursa Securities.

  g) to review the Company’s compliance, in particular, the quarterly and year-end financial statements, with the Listing Requirements of Bursa Securities, applicable approved accounting standards of the Malaysian Accounting Standards Board and other relevant legal and statutory requirements.

  h) to review recurrent related party transactions of revenue and trading nature and other related party transactions entered into by the Group.

  i) to do the followings where an internal audit function exists;

     i) Review the budget, adequacy of the scope, function, competency and resources of the internal audit function and that it has the necessary authority to carry out its work;

     ii) Review of internal audit programme and results of the internal audit process and where necessary ensure that appropriate action is taken on the recommendations of the internal audit function;

    iii) Review any appraisal or assessment of the performance of members of the internal audit function;

    iv) Approve any appointment or termination of senior staff members of the internal audit function;

     v) Review the resignation of internal audit staff members and provide the staff member the opportunity to submit his reasons for resigning; and

    vi) To consider major findings of Internal investigations and management’s response.

  j) to review the relevant regulatory changes and ensure compliance by the Company and the Group.

 K) to review and consider any related party transaction and conflict of interest situation that may arise within the Group including any transaction, procedure or course of conduct that may raise questions of management integrity; and

  l) to carry out any function defined by the Board and AC or as according to the directive of the governmental and/or regulatory authorities.

 

  1. Authority

In carrying out its duties and responsibilities, the Committee shall have the following rights:

 a) to have explicit authority to investigate any matter within its terms of reference;

 b) to have adequate resources which are required to perform its duties;

 c) have full and unrestricted access to any information pertaining to the Group;

 d) have direct communication channels with external and internal auditors;

 e) be able to obtain independent professional advice and to invite external parties with relevant experience to attend the AC meetings for advice;

 f) discretion to invite other Directors and/or employees of the Company to attend any particular AC meeting to discuss specific issues; and

 g) to convene meetings with external and internal auditors, excluding the attendance of the other Directors and employees of the Company whenever deemed necessary.

 

  1. AC Meetings

The AC shall meet not less than four (4) times in every financial year and as many times as the Committee deemed necessary. The external auditors may request a meeting if considered necessary. The Company Secretary of the Company shall be the secretary of AC.

 

Where possible, notices, agenda of meetings and other meeting materials should be distributed at least seven (7) days before the AC meeting, in order to provide sufficient time for members’ review ahead. The Board meetings may be held by means of a conference telephone or similar electronic telecommunication device according to the Company’s Constitution.

 

The quorum for meetings of the AC shall be two (2) members. Each member is entitled to one (1) vote on all matters deliberated at the AC meeting. In the case of an equality of votes, the Chairman of the AC except when only two (2) directors are present or when only two (2) Directors are competent to vote on the question at the issue shall have a second or casting vote.

 

  1. Circular Resolution

 

A circular resolution in writing signed by the members of the Audit Committee who are sufficient to form a quorum, shall be valid and effectual as if it had been passed at a meeting of the AC duly convened. Any such resolution may consist of several documents in like form, each signed by one (1) or more members of the AC and shall include signed copies via legible confirmed transmission or other written electronic means.