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annual report 2012
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Principle 11: Audit Committee
Composition of the AC
The AC is appointed by the H-REIT Manager Board from among the Directors of the H-REIT Manager and is
composed of three NEDs, a majority of whom (including the chairman of the AC) are required to be Directors
independent from management and business relationships with the H-REIT Manager.
The chairman of the AC and all the remaining members of the AC have audit, accounting or fnance background
and experience. The H-REIT Manager Board is of the view that the AC has sufcient fnancial management
expertise and experience amongst its members to discharge the functions of the AC within its written terms
of reference approved and adopted by the H-REIT Manager Board.
Powers and Duties of the AC
The AC is authorised by the H-REIT Manager Board to investigate any matters it deems appropriate within its
written terms of reference and has full access to and co-operation of Management. It may invite any Director,
Management, ofcer or employee of the H-REIT Manager to attend its meetings. It is also authorised to engage
any frm of accountants, lawyers or other professionals as it sees ft to provide independent counsel and advice
to assist in the review or investigation on such matters within its terms of reference as it deems appropriate at
the H-REIT Manager’s expense.
The principal responsibility of the AC is to assist the H-REIT Manager Board in maintaining a high standard
of corporate governance, particularly by providing an independent review of the efectiveness of H-REIT’s
fnancial reporting process (including reviewing the accounting policies and practices of the H-REIT Group and
the Stapled Group on a consolidated basis) and material internal controls, including fnancial, operational and
compliance controls. Other duties within the AC’s written terms of reference include:
• to reviewwith Management and, where appropriate, with the external auditors the quarterly and full year
fnancial statements to be issued by the H-REIT Group and the Stapled Group before their submission
to the H-REIT Manager Board to ensure that they are drawn up to give a true and fair view of the state
of afairs of the H-REIT Group and the Stapled Group;
• to review activities of the internal auditors on factors such as independence, adequate resources and
appropriate standing to perform an efective role;
• to review a summary of the internal audit reports and review Management’s responsiveness to the
internal audit fndings and recommendations;
• to review annually with the RMC, Management, and any competent third parties engaged on the results
of their review and evaluation of the H-REIT Manager’s material internal controls, including fnancial,
operational and compliance controls and risk management policies and systems and report to the
H-REIT Manager Board annually the adequacy and efectiveness of such internal controls;
• to review the correctness, completeness and consistency of information prepared for inclusion in
fnancial reports;
• to make recommendations to the H-REIT Manager Board on the nomination for the appointment,
re-appointment and removal of external auditors, and to approve the remuneration and terms of
engagement of the external auditors;
• to review, on an annual basis, the scope and results of the external audit;
• to assess, on an annual basis, the independence and objectivity of the external auditors, and also to
review on a periodic basis, the nature and extent of any non-audit services provided by the external
auditors to H-REIT;
• to review the H-REIT Manager’s whistle-blowing policy and arrangements put in place for raising
concerns about possible improprieties in matters of fnancial reporting or any other matters; and
• to monitor the procedures established to regulate Related Party Transactions and/or Interested Party
Transactions, including reviewing any Related Party Transactions and/or Interested Party Transactions
entered into from time to time and ensuring compliance with the relevant provisions of the Listing
Manual and the Property Funds Appendix.
Corporate Governance