Osim FR 050407.indd

9) Reports actions and minutes of the AC to the board of directorswith such recommendations as the AC considers appropriate;and10) Reviews interested person transactions in accordance with therequirements of the Singapore Exchange Securities TradingLimited (SGX-ST)’s Listing Manual.The AC has the express power to conduct or authorise investigationsinto any matters within its terms of reference. Minutes of the ACmeetings are regularly submitted to the Board for its informationand review.The AC, having reviewed all non-audit services provided by theexternal auditors to the Group, is satisfied that the nature and extentof such services would not affect the independence of the externalauditors. The AC has also conducted a review of interested persontransactions.The AC also conducts a review to ensure that there are no improperactivities of the Company (if any).The AC convened four meetings during the year with full attendancefrom all members. The AC has also met with internal and externalauditors, without the presence of the Company’s management, atleast once a year.The Company’s external auditors, Ernst & Young (“EY”), carry out,in the course of their statutory audit, a review of the effectivenessof the Company’s material internal controls, including financial,operational and compliance controls, and risk management annuallyto the extent of their scope as laid out in their audit plan. Materialnon-compliance and internal control weaknesses noted during theiraudit, and the auditors’ recommendations, are reported to the AC.The Internal Audit follows up on EY’s recommendations as part ofits role in the review of the Company’s internal control systems.The AC has reviewed the Company’s risk assessment, and basedon the IA audit reports and management controls in place, it issatisfied that there are adequate internal controls in the Company.The AC expects the risk assessment process to be a continuingprocess.The AC has also instructed the Company to embark on the EnterpriseRisk Management (“ERM”) initiatives for better assessment andmanagement of the company risks. The Company has engagedKPMG as its consultant for the development of ERM framework.Principle 13: Internal AuditsThe Internal Audit (“IA”) function is currently performed by anAudit & Risk Management (“A&RM”) team. The A&RM team reportsdirectly to the chairman of the AC on audit matters, and to theChief Financial Officer on administrative matters. The AC reviewsA&RM team’s reports on a quarterly basis. The AC also reviewsand approves the annual audit plans and resources to ensure thatthe A&RM team has the necessary resources to adequately performits functions. The A&RM team has adopted the Standards forProfessional Practice of Internal Auditing set by The Institute ofInternal Auditors.To ensure the adequacy of the internal audit function, the ACreviews the A&RM team’s activities on a half yearly basis. In 2002,the team, together with PricewaterhouseCoopers and the supervisionof the AC, has completed the development of the MinimumAcceptable Controls and Control Self-Assessment programmes forthe Company. The assessment exercises are done on an ongoingbasis.Corporate Governance Report 56 Annual Report 2006