KENANGA ANNUAL REPORT 2017

c. The AC had, at its meeting held on 25 October 2017, recommended the impairment approach and assumptions used for Kenanga Group, subject to the final assessment to be done for the financial results as at 31 December 2017, for the Board’s adoption. The AC’s recommendation was subsequently approved by the Board on 31 October 2017. d. With regard to the implementation of the Malaysian Financial Reporting Standard (“ MFRS ”) 9 – Financial Instrument, the AC was updated at its quarterly meetings on 25 January 2017, 20 April 2017, 20 July 2017 and 25 October 2017, on the status of the Company’s implementation of MFRS 9. e. At each of its quarterly meeting, the AC was also notified of the amount of non-audit fees incurred and paid by Kenanga Group to the External Auditors and their affiliates to ensure compliance with the Group’s Policy on Non-Audit Services by External Auditors. 3.2 External Audit a. The report by the External Auditors on the statutory audit of the financial statements of the Company for the financial year ended 31 December 2016 was reviewed and deliberated by the AC at its meeting held on 25 January 2017. During its deliberation, in addition to the relevant disclosures in the audited financial statements, the AC had also considered the recommendations made by the External Auditors towards enhancing internal controls and procedures. b. The AC had also at the same meeting reviewed the list of services provided by the External Auditors during the financial year comprising audit and regulatory- related services; issuance of a written communication to Management and the AC describing significant deficiencies and material weaknesses identified during the External Auditors’ audit, including recommendations for improvements in controls and procedures. In addition, the External Auditors’ services also included the annual review of the Statement on Risk Management and Internal Control, as well as other regulatory submission as required under the various regulatory requirements. c. The AC was subsequently at its meeting held on 27 February 2017 updated by the External Auditors of the latest status of the statutory audits conducted on Kenanga Group, wherein the AC had deliberated on audit matters which required the AC’s attention. d. Pursuant to section 67(1) of the Financial Services Act, 2013 (“ FSA ”), an auditor appointed by a licensed person shall meet the qualification criteria set out in BNM’s Policy Document on External Auditor and shall continue to meet the criteria throughout the audit engagement. In addition, BNM’s letter dated 3 May 2012 on “Supervisory Expectations on AC Pertaining to the Appointment/ Re-appointment of External Auditors” also sets out the areas of assessment to be performed. Being a licensed financial institution under the FSA, the Company is required to undertake an annual assessment on areas focusing on performance and independence of External Auditors. In relation to the audit of the Company’s financial statements for the financial year ended 31 December 2017, the External Auditors had given a written assurance to the AC that they were not aware of any relationships or matters that, in their professional judgement, might reasonably be thought to bear on their independence; and that they were independent in accordance with the Bylaws (on Professional Ethics, Conduct and Practice) of the MIA, throughout their audit engagement for 2017. This written assurance by the External Auditors was contained in the External Auditors’ report which was presented to the AC on 25 January 2018. Based on the assessment conducted, the AC had concluded that the External Auditors had fulfilled all the qualification criteria set out in BNM’s Policy Document on External Auditor in terms of its performance and independence and had therefore, recommended to the Board that the External Auditors be re-appointed as the Company’s External Auditors for the financial year ending 31 December 2018. e. At its meeting held on 25 October 2017, the AC had reviewed and recommended the audit fees of the External Auditors covering their recurring audit assignments and other regulatory-related services for the financial year ended 31 December 2017 to the Board for approval. At the same meeting, the AC had also reviewed and approved the 2017 Audit Plan of the External Auditors. f. On 25 January 2018, the GCFOO briefed the AC that the non-audit fees incurred and paid by Kenanga Group to the External Auditors for the financial year ended 31 December 2017 were RM362,224 or 73% of the audit fees for the financial year ended 31 December 2017. Kenanga Investment Bank Berhad 62 audit committee report