Ka Shui : Announcements and Notices - Terms of Reference of Audit Committee

Microsoft Word - Audit Committee - terms of reference (Eng)2016-1-1 (Final clean)

KA SHUI INTERNATIONAL HOLDINGS LIMITED

AUDIT COMMITTEE

Terms of Reference

(Revised with effective from 1 January 2016)

The board of directors (the "Board") of Ka Shui International Holdings Limited (the "Company") has resolved to establish a committee to be known as the Audit Committee (the "Committee") on 2 June 2007 with the terms of reference set out below.

1. Membership

   
   

2. Members of the Committee shall be appointed by the Board, on the recommendation of the Nomination Committee.

3. The Committee shall be appointed by the Board from amongst the non-executive directors of the Company and shall consist of a minimum of 3 members, at least one of whom is an independent non-executive director 1 of the Company with appropriate professional qualifications or accounting or related financial management expertise as required under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") (as amended from time to time), and with a majority being independent non-executive directors of the Company. The Chairman of the Board shall not be a member of the Committee2.

4. Only members of the Committee shall have the right to attend Committee meetings. However, other individuals of the Company such as the chairman of the Board, the Company's chief executive, the Company's financial controller, other directors of the Company, the heads of risk, compliance and internal audit representatives from the finance function and other professional advisers may be invited to attend all or part of any meeting as and when appropriate.

5. The external auditors will be invited to attend meetings of the Committee on a regular basis.

   
   

6. Appointments to the Committee shall be for a period of up to three years, which may be extended for two further three-year periods, provided the director remains independent.

7. The Board shall appoint the chairman of the Committee (the " Committee Chairman") who shall be an independent non-executive director. In the absence of the Committee Chairman and/or an appointed deputy, the remaining members present shall elect one of themselves to

   
   

   1 An independent non-executive director is defined in Code provisions A.3.1, Appendix 14, the Listing Rules

   2 Except on appointment, the Chairman of the company is not considered to meet the test of independence. Code provisions A.3.1, Appendix 14, the Listing Rules

   chair the meeting.

   
   

8. Secretary

9. The company secretary of the Company or his/her nominee shall act as the secretary of the Committee (the "Secretary").

   
   

10. Quorum

11. The quorum necessary for the transaction of business shall be 2 members. A duly convened meeting of the Committee at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions vested in or exercisable by the Committee.

    
    

12. Frequency of Meetings

13. The Committee shall meet at least twice a year at appropriate times in the reporting and audit cycle and otherwise as required3. Meetings may be conducted by way of telephone or other electronic means.

    
    

14. Notice of Meetings

    
    

15. Meetings of the Committee shall be summoned by the Secretary at the request of any of its members or at the request of external or internal auditors if they consider it necessary.

16. Unless otherwise agreed, notice of each meeting confirming the venue, time and date together with an agenda of items to be discussed, shall be forwarded to each member of the Committee, any other person required to attend and all other non-executive directors, no later than 5 working days before the date of the meeting. Supporting papers shall be sent to Committee members and to other attendees as appropriate, at the same time.

    
    

17. Minutes of Meetings

18. The Secretary shall minute the proceedings and resolutions of all meetings of the Committee, including recording the names of those present and in attendance.

19. The Secretary shall ascertain, at the beginning of each meeting, the existence of any conflicts of interest and minute them accordingly.

20. Full minutes of meetings should be kept by the Secretary. Draft and final versions of minutes of the meetings should be sent to all members of the Committee for their comment and to all members of the Board for records respectively, in both cases within a reasonable time after the meeting.

    
    

    3 The frequency and timing of meetings will differ according to the needs of the Company. Meetings should be organized so that attendance is maximized (for example by timetabling them to coincide with board meetings).

21. Annual General Meeting

22. The Committee Chairman shall attend the annual general meeting of the Company prepared to respond to any shareholders' questions on the Committee's activities.

    
    

23. Duties

    
    

24. The Committee should carry out the duties below:

    
    

    Relationship with the Company's auditors

    
    

25. to be primarily responsible for making recommendation to the Board on the appointment, reappointment and removal of the external auditor, and to approve the remuneration and terms of engagement of the external auditor, and any questions of resignation or dismissal of that auditor;

26. to review and monitor the external auditor's independence and objectively and the effectiveness of the audit process in accordance with applicable standard. The Committee should discuss with the auditor the nature and scope of the audit and reporting obligations before the audit commences;

27. to develop and implement policy on the engagement of an external auditor to supply non-audit services. For this purpose, external auditor shall include any entity that is under common control, ownership or management with the audit firm or any entity that a reasonable and informed third party having knowledge of all relevant information would reasonably conclude as part of the audit firm nationally or internationally. The Committee should report to the Board, identifying any matters in respect of which it considers that action or improvement is needed and making recommendations on any matters where action or improvement is needed;

28. The Committee should act as the key representative body for overseeing the Company's relations with the external auditor.

    
    

    Review of financial information of the Company

    
    

29. to monitor integrity of financial statements of the Company and the Company's annual report and accounts, half-year report and, if prepared for publication, quarterly reports, and to review significant financial reporting judgments contained in them. In this regard, in reviewing the Company's annual report and accounts, half-year report and, if prepared for publication, quarterly reports before submission to the Board, the Committee should focus particularly on:-

30. any changes in accounting policies and practices;

    
    

31. major judgmental areas;

    
    

32. significant adjustments resulting from audit;

    
    

33. the going concern assumptions and any qualifications;

34. compliance with accounting standards; and

    
    

35. compliance with the Listing Rules and other legal requirements in relation to financial reporting;

    
    

36. In regard to 8.1.5 above:

    
    

37. members of the Committee must liaise with the Board, senior management and the Committee must meet, at least once a year, with the Company's auditors; and

38. the Committee should consider any significant or unusual items that are, or may need to be, reflected in such reports and accounts and must give due consideration to any matters that have been raised by the Company's staff responsible for the accounting and financial reporting function, compliance officer or auditors;

    
    

    Oversight of the Company's financial reporting system, risk management and internal control systems

39. to review the Company's financial controls, and unless expressly addressed by a separate Board risk committee, or by the Board itself, to review the Company's risk management and internal control systems;

40. to discuss with the management the risk management and internal control systems to ensure that management has discharged its duty to have effective systems. This discussion should include the adequacy of resources, staff qualifications and experience, training programmes and budget of the Company's accounting and financial reporting function;

41. to consider major investigation findings on risk management and internal control matters as delegated by the Board or on its own initiative and management's response to these findings;

42. where an internal audit function exists, to ensure co-ordination between the internal and external auditors, and to ensure that the internal audit function is adequately resourced and has appropriate standing within the Company, and to review and monitor the effectiveness of the internal audit function;

43. to review the group's financial and accounting policies and practices;

44. to review the external auditor's management letter, any material queries raised by the auditor to management in respect of the accounting records, financial accounts or systems of control and management's response.

45. to ensure that the board will provide a timely response to the issues raised in the external auditor's management letter;

46. to report to the board on the matters set out in this section 8;

47. to consider other topics, as defined by the Board; and