KENANGA ANNUAL REPORT 2018

69 ANNUAL REPORT 2018 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 the External Auditors. In relation to the audit of the Company’s financial statements for the Financial Year Ended 31 December 2018, 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 2018. This written assurance by the External Auditors was contained in the External Auditors’ Report which was presented to the AC on 30 January 2019. Based on the assessment conducted, the AC had concluded that the External Auditors had fulfilled all the qualification 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 2019. e. At its meeting held on 26 October 2018, the AC reviewed and recommended to the Board for approval, the External Auditors’ 2018 Audit Plan outlining their scope of work and proposed fees covering their recurring audit assignments, as well as, other regulatory-related services. f. On 30 January 2019, the GCFOO briefed the AC that the pre-approved tax fees and non-audit fees incurred and paid by the Group to the External Auditors for the Financial Year Ended 31 December 2018 were within the threshold of the pre- approved maximum fee and in line with the Group’s Policy of Non-Audit Services by External Auditors. 3.3 Internal Audit a. The AC at its meeting on 25 January 2018 had reviewed and approved the 2018 Audit Plan tabled by Group Internal Audit (“ GIA ”) after considering the adequacy of scope and comprehensiveness of the coverage of activities within the Group, as well as, the adequacy of resources in the internal audit department. b. In 2018, the AC had reviewed and deliberated on a total of forty-seven (47) internal audit reports in relation to the audits carried out by GIA, together with the audit recommendations made by GIA and Management’s responses to those recommendations. Where appropriate, the AC directed Management to rectify and improve control and work flow procedures based on GIA’s recommendations and suggestions for improvement. The AC, at all its quarterly meetings, also reviewed the implementation status of the corrective actions arising from the audit recommendations to ensure that the key risks and control lapses were addressed in a timely manner. AUDIT COMMITTEE REPORT