2003 - KNM Steel Sdn Bhd

KNM GROUP BERHAD (521348-H)AUDIT COMMITTEE REPORT3. AuthorityThe Committee is authorised by the Board to investigate any activity within its terms of reference and shall have:1. full and unrestricted access to any information pertaining to the Company and its subsidiary companies;2. direct communication channels with both the external auditors and internal auditors;3. full access to any employee or member of the management; and4. the resources which are required to perform its duties.The Committee is also authorised by the Board to obtain outside legal or other independent professional adviceit considers necessary and reasonable for the performance of its duties.4. ResponsibilitiesThe Committee is authorised by the Board to:1. investigate any matter within the scope of its terms of reference;2. have full and unrestricted access to any information in the Company;3. obtain independent professional advice, or other advice, wherever deemed necessary; and4. make recommendations for improvements in operating performance and management control arisingfrom internal and external audit recommendations.5. FunctionsIn fulfilling its primary objectives, the Committee shall undertake the following functions:5.1 In relation to external audit functions:5.1.1 to discuss with the external auditors, where necessary, the nature and scope of audit and the auditplan, and to ensure co-ordination of audit where more than one audit firm is involved;5.1.2 to review with the external auditors:5.1.2.1 audit reports prepared by the external auditors, the management letter and management’sresponse.5.1.3 to discuss any issues arising from the interim and/or final audit and any matters which the externalauditors may highlight, in the absence of management, where necessary;5.1.4 the resignation or dismissal of the external auditors of the Company;5.1.5 whether there is reason (supported by grounds) to believe that the Company’s external auditor is notsuitable for re-appointment; and5.1.6 recommend the nomination of a person(s) as external auditors.5.2 In relation to internal audit functions:5.2.1 to review the adequacy of the scope, functions and resources of the internal audit department andthe necessary authority to carry out its functions;5.2.2 to review and consider the scope and results of the internal audit plans, programs and processes orinvestigations undertaken;5.2.3 to consider any significant audit findings reported by the internal audit department and management’sresponses thereto, and to ensure appropriate corrective or preventive actions are taken on suchfindings; and5.2.4 to report regularly to the Board its activities, significant results and findings.5.3 In relation to corporate governance requirements:5.3.1 review the quarterly results and year-end financial statements prior to the approval of the Board,focusing particularly on:5.3.1.1 changes to or implementation of major accounting policies and practices;5.3.1.2 significant adjustments and unusual events arising from the audit; and5.3.1.3 compliance with accounting standards and other legal requirements.2003 ANNUAL REPORT15