BIMB Integrated Annual Report 2019

THE BAEC AUTHORITY The Board has established a transparent and appropriate relationship with its external auditors, internal auditors, Management and key operating subsidiaries with the BAEC. The BAEC had clear authority to investigate any matter within its Terms of Reference. It has full access to and co-operation from Management and full discretion to invite any BHB’s Nominee Director or Directors of the respective key operating subsidiaries to attend its meeting. The external auditors of the key operating subsidiaries will also be invited to the BAEC when necessary. The BAEC shall have the necessary resources from the Group and has access to the information needed to discharge its function effectively. The BAEC is also able to obtain at the Company expenses, any professional advice including the advice of independent professional and to secure the attendance of the external adviser at its meeting if it considers necessary to fulfill its obligations. THE BAEC ACTIVITIES IN 2019 The summary of the activities performed by the BAEC for the financial year ended 31 December 2019 are as follows: Internal Audit • Reviewed and approved the 2019 Internal Audit Plan for BHB and its wholly owned subsidiaries, namely Syarikat Al-Ijarah Sdn. Bhd. and BIMB Securities (H) Sdn. Bhd. on 26March 2019. Ensure the internal audit plan comprehensive of scope coverage, procedures and frequency as well as adequacy and competency of internal audit resources. Reviewed the Internal Audit methodology in assessing the risk levels of various auditable areas based on the impact and likelihood of the inherent risk, the control in place and the existence of effective risk transfer in minimising potential losses from negligence or fraud. The approved plan was established based on the staff strength of five (5) auditors with an estimated requirement of 107 man-days and a projected audit fee of RM22,100.00. • Deliberated on the Internal Audit Report for BHB and its wholly owned subsidiaries issued by the Internal Auditor, which amongst others focused on the effectiveness and adequacy of governance, risk management and internal control, audit rating and recommendation. The Internal Audit report also include the Information Technology Audit which assess the adequacy of the IT information system and the necessary back-up systems to cover for contingencies or disaster. • Ensured that appropriate corrective actions were taken by Management in a timely manner to address control weaknesses, policies and other areas identified by the Internal Auditors and other control functions. • Reviewed the independence of the Internal Auditors. It was brought to the BAEC attention that there had been no conflicts of interest arising from the Internal Audit engagements in financial year 2019 and had conducted its internal audit as stated in the Audit Charter. External Audit • Evaluated the selection of new external auditor for the financial year ended 31 December 2019. The selection of the external audit firms is conducted by the BAEC and subsequently the final three (3) external audit firm conducted a presentation to the BAEC. The evaluation of the external audit firms was assessed based on: (1) Audit Scope; (2) Firm’s qualification and team experience; (3) Audit approach; (4) Auditors Independent; and (5) Expectation to value-add. Based on the evaluation, the BAEC deliberated and recommended for the Board the appointment of Messrs. PricewaterhouseCoopers PLT as the new external auditor replacing the Messrs KPMG Desa Megat PLT, who has served the Company since November 2002. The change is in line with good corporate governance of revisiting the appointment of the Company’s External Auditors from time to time. • Deliberated and approved on behalf of the Board, the external auditor’s 2019 audit plan encompassing the audit approach, roles and responsibility, the nature and scope for the year’s audit, audit fees, reporting schedule, potential key audit risk matters, Information Technology (“ IT ”) approach, transition plan, reliance with Internal Auditor and value- added services. The external auditor informed that focus for the Group will be on areas related to IT security and control over key financial information systems that are used to record and process critical financial data. The objective of the IT audit review is to assist the external auditor to form an opinion on the financial statements. 142 Integrated Annual Report 2019 Group Overview Sustaining The Group Management Discussion & Analysis Group Governance Corporate Governance Overview Statement (Pursuant to Paragraph 15.25 (1) of the MMLR of Bursa Securities)