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42The re-appointment of auditors issubject to approval at each AGM.In making its recommendations toshareholders on the appointmentand re-appointment of auditors,the Board relies on the review andrecommendations of the AC.Directors and key senior executives ofthe Group are prohibited from dealingin ST Engineering shares two weeksbefore the announcement ofST Engineering’s first quarter,second quarter, third quarter andfull year results up to the date ofthe announcement of the results.Additionally, all directors ofthe Group and employees are remindednot to trade in situations where theinsider trading laws and rules wouldprohibit trading.The directors’ interests in shares ofST Engineering and its relatedcompanies during the year are foundon pages 90 to 98 of this Report.Audit Committee (Principle 11)The AC is supported in its workby the audit committees of thefour main business sectors. Therespective chairmen of the auditcommittees of the four businesssectors are invited to attend theAC meetings of ST Engineering soas to have a clear understandingof policies made at the holdingcompany level and to share anyfeedback or raise any issue that thesectors’ audit committees may have.The AC has full authority tocommission and review findings ofinternal investigations into matterswhere it is alerted of any suspectedfraud or irregularity or failure ofinternal controls or infringementof any law likely to have a materialimpact on the Group’s operatingresults. It can investigate anymatter within its terms of referenceand with the full cooperation ofmanagement.The Company has put in placea Whistle-Blowing framework,endorsed by the AC, where staffmay, in confidence and withoutfear of retaliation, raise concernsof incidents of possible wrongdoingor breach of applicable laws,regulations or policies to therespective chairmen of the auditcommittees in the Group. AsST Engineering has become a globalcompany with a presence in manycountries, it is aware of the needto apply international corporategovernance standards wherever itoperates. It takes a serious viewof all reports of violations receivedby initiating thorough investigationsinto each matter.The AC comprises Mr Koh BengSeng as Chairman, Dr PhilipPillai and Mr VenkatachalamKrishnakumar. All the members ofthe AC are independent directors.The AC held six meetings duringthe year, including a February2007 session with the externaland internal auditors, withoutmanagement.During the year, the AC reviewedand recommended to the Boardthe release of the 2006 full year,1Q2007, 2Q2007 and 3Q2007financial statements, and consideredand approved the 2007 Audit Planand the 2007 Internal Audit (IA)Plan. It also reviewed the adequacyof internal control procedures,Interested Person transactionsand the issues raised in IA reportswith IA being given the authorityto rate risk issues according todifferent risk levels, and to followup with remedial actions by themanagement.The AC reviewed the level of nonaudit services performed by itsexternal auditors to satisfy itselfthat non audit services performedby the auditors did not compromisetheir independence under regulatoryrequirements.The AC also reviewed theperformance of the externalauditors. It recommended to theBoard the re-appointment ofErnst & Young as auditors forFY2007, after having beensatisfied with its standard of audit,independence and objectivity.The AC reviewed the Group’sprocurement framework and themeasures that had been put inplace by the respective sectors’managements both locally andoverseas to provide for checksand balances.