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GOVERNANCE
Axiata Group Berhad | Annual Report 2016
105
BOARD AUDIT
COMMITTEE
Summary of the Board Audit Committee’s Key Activities in 2016
During the Financial Year ended 2016 (FY16), the Board Audit Committee
(BAC) discharged its functions and carried out its duties as set out in the
Terms of Reference (ToR). Key activities undertaken by the BAC include the
following:
Risks and Controls
•
The Group’s major business risks and remedial actions were reported
and deliberated at the BAC each quarter, a summary of which was
reported to the Board.
•
Four (4) Group Risk Management Committee meetings were held with
the Senior Leadership Team (SLT). The Group’s risks were assessed from
various control perspectives that included preventive and detective
controls.
•
Reviewed the proposed collaboration between Celcom Axiata Berhad,
Celcom Mobile Sdn Bhd and Celcom Networks Sdn Bhd with Telekom
Malaysia Berhad and Packet One Networks (Malaysia) Sdn Bhd.
•
The BAC provided an initial reviewof the implementation of BEPS (‘Base
Erosion Profit Shifting’) Action Point No. 13 by the Malaysian Inland
Revenue Board (‘IRB’) with the introduction of the Country-by-Country
Reporting (“CbCR”) including Master file and Local file which came
into effect on 1 January 2017. The first CbCR that Axiata is required
to submit to IRB is no later than 31 December 2018. The implication
is to ensure transparent reporting of related party transactions (i.e
management support services, financing activities, etc).
•
Reviewed the group gearing status, portfolio rebalancing and funding
proposals.
•
Reviewed Ncell’s tax issues, hedging progress and internal controls.
•
Reviewed and approved the new capex governance process to
improve efficiency and effectiveness of spending.
•
Reviewed the proposed amendment on dividend policy to be approved
at the Board.
•
Reviewed the fraud and investigation function and mechanism across
the Group. This is to strengthen and improve the overall whistle blower
and fraud and investigation framework.
•
Reviewed and approved the revised version of Internal Control
Assurance Letter (ICAL) to be completed by all Operating Companies’
(OpCos) Chief Executive Officers (CEO), Axiata’s SLT and selected
group finance personnel. The purpose of ICAL is to provide a self-
assessment of the internal controls based on the Committee of
Sponsoring Organizations of the Treadway Commission (COSO)
framework.
•
Commissioned and approved the establishment of the Group Cyber
Security Steering Committee (CSSC). As part of the CSSC, the Cyber
Security Operations Center (CSOC) has been established across the
majority of OpCos and implementation of initiatives such as the Cyber
Security Posture Assessment (CSPA). A current assessment and test on
cybersecurity readiness is ongoing in four (4) out of the six (6) OpCos,
with agreed actions to address all gaps.
•
Reviewed integrated financial reporting and monitored corrective
actions taken.
•
Axiata BAC Chairman Forum was conducted on 11 April 2016
prioritising risks and action plans. The top priorities were cybersecurity,
digitization of the core, mergers and acquisitions deal learnings and
capex efficiency and governance process.
•
A total of 105 internal audit reviews were completed across the Group.
Other recurring works include:
•
Reviewed and recommended the Statement on Corporate Governance,
Statement on Risk Management and Internal Control and BAC Report
to the Board for approval.
•
Reviewed the policy and limits of authority across the Group.
•
Reviewed the financial results quarterly, half yearly and annually prior to
the Board for approval.
•
Reviewed impact of the new Companies Act and new IFRS standards
on reporting.
•
Reviewed the accounting impact and accounting entries arising from
merger and acquisition deals and revised accounting policies when
required.
•
Reviewed the potential impairment exposure of major investments.
•
Reviewed on a quarterly basis the related party transactions entered
into by Axiata pursuant to the shareholders mandate on Recurrent
Related Party Transactions (RRPT) procured at the 24th AGM of the
Company held on 25 May 2016 and the reporting of these transactions
in the 2016 Annual Report.
•
During the financial year ended 31 December 2016, Axiata has granted
a total of 5,338,000 shares under the Performance-Based Employee
Share Options and Share Scheme (details provided under Notes 14
of the Audited Financial Statements) at the Share Reference Price of
RM3.79 for 15 February Regular Stock Purchase (RSP) grant. The BAC
has reviewed the allocation of the above shares granted to eligible
employees (as defined in the Bye-Laws of the Performance-Based
Employee Share Option and Share Scheme) and noted its compliance
with the conditions for the allocation of share options/shares as
approved.
•
Held two (2) private meetings with the external auditors on 16 February
2016 and 23 August 2016 without the presence of management and
Internal Audit. The topics that were discussed were the sufficiency
and adequacy of information provided to external auditors to perform
the audit, cooperation provided by the management and key matters
noted from audits.
•
Reviewed and approved appointment of external auditors, taking
into consideration their competencies, commitments, objectivity and
independence.
•
Reviewed and approved the annual internal audit plan and budget.
•
Assessed the quality of internal audit staff, experience, discipline and
length of service.
•
Reviewed 12 business control incidents and identified cases of control
weaknesses including fraud for sharing of lessons learnt within the
Group to avoid similar incidents.
•
Acknowledged, reviewed and investigated 20 defalcation cases across
the Group.