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CORPORATE GOVERNANCE
Principle 12: Audit Committee
Composition of the AC
On 29 December 2015, the AC was dissolved and the function and responsibilities of the AC are
now undertaken by the ARC. The ARC of both the H-REIT Manager and the HBT Trustee-Manager
comprises three NEDs, all of whom (including the chairman of the ARC) are independent.
The chairman of the ARC and all members of the ARC have audit, accounting or finance
background and experience. The H-REIT Manager Board and the HBT Trustee-Manager are of
the view that the ARC has sufficient financial management expertise and experience amongst its
members to discharge the functions of the ARC within its written terms of reference approved
and adopted by the respective Boards.
Powers and Duties of the ARC
The ARC is authorised by the H-REIT Manager Board and the HBT Trustee-Manager Board to
review and investigate any matters it deems appropriate within its written terms of reference and
has direct and unrestricted access to the external auditors and the internal auditors. The ARC may
invite any Director, Management, officer or employee of the H-REIT Manager and/or the HBT
Trustee-Manager to attend its meetings. It is also authorised to engage any firm of accountants,
lawyers or other professionals as it sees fit 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 expense of the H-REIT Manager and the HBT Trustee-Manager.
The principal responsibility of the ARC is to assist the H-REIT Manager Board and the HBT
Trustee-Manager Board in maintaining a high standard of corporate governance, particularly by
providing an independent review of the effectiveness of H-REIT’s and HBT’s financial reporting
process (including reviewing the accounting policies and practices of the H-REIT Group, the HBT
Group and the Stapled Group on a consolidated basis) and risk management and key internal
controls, including financial, operational, compliance and information technology controls. Other
duties within its written terms of reference include:
• to review significant financial reporting issues and judgements so as to ensure the integrity
of the financial statements of H-REIT Group, HBT Group and CDLHT to be reported to the
Stapled Security Holders, and any other formal announcements relating to the financial
performance of the H-REIT Group, HBT Group and the Stapled Group.
• to review and report to the Board annually on the adequacy and effectiveness of the
H-REIT’s and HBT’s internal controls, including financial, operational, compliance and
information technology controls (which review may be carried out internally or with the
assistance of competent third parties);
•
to monitor in particular the identification, evaluation, management and monitoring of the
risks related to financial reporting;
•
to review reports from the Management, external auditors and internal auditors on the
systems for internal controls, including financial, operational, compliance and information
technology controls and review reports issued by any external professional adviser who
may be engaged to carry out an independent review of H-REIT’s and HBT’s internal controls
framework;
•
to review activities of the internal auditors on factors such as independence, adequate
resources and appropriate standing to perform an effective role;
•
to review a summary of the internal audit reports and review Management’s responses to
the internal audit findings and recommendations;
