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REPORTS
During the financial year under review, the ARCs of the H-REIT Manager and HBT Trustee-
Manager have established an internal control system to ensure that all Related Party
Transactions and/or Interested Party Transactions are undertaken on normal commercial
terms and are not prejudicial to the interests of H-REIT and the holders of H-REIT units or
HBT and the holders of HBT units.
The H-REIT Manager ARC and the HBT Trustee-Manager ARC held five meetings each
during the year respectively and carried out their duties as set out within the terms of
reference. The Company Secretary maintains records of all ARC meetings including
records of discussions on key deliberations and decisions taken. The ARCs meet with the
external auditors separately without the presence of Management annually.
In performing its duties, the H-REIT Manager ARC and the HBT Trustee-Manager ARC
also took guidance from the Guidebook for Audit Committees in Singapore issued by
MAS, ACRA and SGX-ST in August 2014 as well as the Board Risk Committee Guide
issued by the SID in 2016. For the financial year under review, the ARCs conducted a
self-assessment of its effectiveness in the discharge of its duties and responsibilities.
The assessment was facilitated through the use of a self-assessment checklist ("
ARC
Self-Assessment Checklist
"). The ARC Self-Assessment Checklist covered
inter alia
, the
responsibilities of the ARCs under their terms of reference.
Based on the self-assessment, the H-REIT Manager ARC and the HBT Trustee-Manager
ARC agreed that they had fulfilled their responsibilities and discharged their duties as set
out in their terms of reference.
The H-REIT Manager ARC and HBT Trustee-Manager ARC recommended to the Board to
approve the full year financial statements.
Guideline 12.6
(b) If the external auditors have
supplied a substantial amount of
non-audit services to the Company,
please state the bases for the
Audit Committee’s view on the
independence of the external
auditors.
Please refer to the second
paragraph under the heading
“External Auditors”.
External Auditors
The ARCs had evaluated the performance of the external auditors for FY 2016. The ARCs
also reviewed the responses furnished by KPMG LLP, based on the sample questionnaire
set out in the “Guidance to Audit Committees on Evaluation of Quality of Work Performed
by External Auditors” issued by ACRA and Singapore Exchange Limited on 15 July 2010.
Taking cognisance that the external auditors should be free from any business or other
relationships with the H-REIT Group, HBT Group and the Stapled Group that could
materially interfere with their ability to act with integrity and objectivity, the ARCs had,
in 2016, undertaken a review of the independence of KPMG LLP ("
KPMG
") and gave
careful consideration to the H-REIT Group’s and the Stapled Group’s relationships with
them during 2016. In determining the independence of KPMG, the ARCs reviewed all
aspects of their relationships with them including the processes, policies and safeguards
adopted by the H-REIT Group, the HBT Group and the Stapled Group and KPMG relating
to audit independence. The ARCs also considered the nature of the provision of the
non-audit services in 2016 and the corresponding fees and are of the opinion that such
non-audit fees did not impair or threaten the audit independence. Based on the review,
the ARCs are of the opinion that KPMG is, and is perceived to be, independent for the
purpose of the H-REIT Group’s, HBT Group’s and the Stapled Group’s statutory audit.
Guideline 12.6
(a) Please provide a breakdown of
the fees paid in total to the external
auditors for audit and non-audit
services for the financial year.
For details of the fees paid and/or payable by the H-REIT Group, HBT Group and the
Stapled Group in respect of audit and non-audit services for FY 2016, please refer to Note
21 of the Notes to the Financial Statements.
Please refer to the third paragraph
under the heading “External
Auditors”.
In reviewing the nomination of KPMG for re-appointment for the financial year ending
31 December 2017, the ARCs had taken into consideration the Audit Quality Indicators
Framework introduced by ACRA.
CORPORATE GOVERNANCE
89
Annual Report 2016