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ANNUAL REPORT 2014
•
reviewing reports on material breaches of risk limits and the adequacy of the proposed
actions taken to rectify such breaches; and
•
reviewing, assessingand reporting to theBoards annually on the adequacy andeffectiveness
of the established risk management framework, especially to address H-REIT’s and HBT’s
financial, operational, compliance and information technology risks (which review may be
carried out internally or with the assistance of competent third parties).
For the financial year under review, the RMC conducted an assessment of its effectiveness based
on a self-assessment checklist (“RMC Self-Assessment Checklist”). The RMC Self-Assessment
Checklist covered inter alia, the responsibilities of the RMC under its terms of reference.
Based on the self-assessment, the RMC agreed that continuing development and improvement
of the RMC’s effectiveness is an ongoing process and that the RMC has fulfilled its responsibilities
and discharged its duties as set out in its terms of reference.
To enable the RMC to discharge its responsibilities satisfactorily, it is authorised by the Board to
(i) seek any information that it requires from any officer or employee of the H-REIT Manager or
HBT Trustee-Manager, all of whom the RMC are granted full access to and who are directed to
co-operate with; (ii) exercise full discretion in its invitation to any other Director, Management,
representatives from the Managers’ or H-REIT and HBT’s risk, compliance and/or internal audit
functions (as may be applicable), representatives from the external auditors, specific risk owners or
any officer or employee of the H-REIT Manager, the HBT Trustee-Manager and their subsidiaries or
any external professional advisers to attend its meetings; and (iii) engage any firm of accountants,
lawyers or other professionals as the RMC sees fit to provide independent counsel and advice or to
assist in any review of matters within the RMC’s terms of reference as the RMC deems appropriate,
at the Managers’ or H-REIT and HBT’s expense.
Internal Controls
Having regard to the risks to which the business is exposed, the likelihood of such risks
occurring and the costs of mitigating such risks, H-REIT and HBT’s internal controls structure
has been designed and put in place by Management to provide reasonable assurance against
material financial misstatements or loss, for the safeguarding of assets, for the maintenance of
proper accounting records, for the provision of financial and other information with integrity,
reliability and relevance, and in compliance with applicable laws and regulations. However, no
internal controls system can provide absolute assurance in view of inherent limitations of any
internal controls system against the occurrence of human and system errors, poor judgement
in decision-making, losses, fraud or other irregularities. H-REIT and HBT’s internal controls
structure includes:
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an external audit programme;
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an internal audit programme;
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a risk management framework established for the identification, assessment, measurement
and monitoring of its key risks;
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the establishment and review from time to time of policies and procedures which govern
and allow for the monitoring of financial, operational, compliance and information
technology controls; and
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a whistle blowing programme.
The Board has received assurance from the Management on both the H-REIT Group and HBT
Group’s financial records and the effectiveness and adequacy of the risk management and
internal controls structure. Each Board also receives a separate quarterly representation on the
financial information and controls, that nothing has come to Management’s attention which may
render the financial statements to be false or misleading in any material respect.
CORPORATE GOVERNANCE
Guideline 11.3
(a) In relation to the
major risks faced by the
Company, including
financial, operational,
compliance, information
technology and
sustainability, please state
the bases for the Board’s
view on the adequacy
and effectiveness of
the Company’s internal
controls and risk
management systems.
Please refer to paragraph
under the heading
“Internal Controls”.
Guideline 11.3
(b) In respect of the past
12 months, has the Board
received assurance from
the CEO and the CFO that:
(i) the financial records
have been properly
maintained and the
financial statements give
true and fair view of the
Company’s operations
and finances; and (ii)
the Company’s risk
management and internal
control systems are
effective? If not, how does
the Board assure itself of
points (i) and (ii) above?
Please refer to the
third paragraph under
the heading “Internal
Controls”.
