Audit Committee Terms of Reference

Composition

The Audit Committee of Varia Berhad shall be constituted by the Board from among its members, comprising no fewer than three individuals. It is imperative that the majority of the Audit Committee's members are Independent Directors, with all members serving in a Non-Executive capacity. At least one member of the Committee must possess qualifications in accounting, or meet other criteria as stipulated or sanctioned by Bursa Malaysia Securities Berhad. The Board is responsible for the appointment of the Audit Committee's Chairman, who must be an Independent Director.

Should a vacancy arise within the Audit Committee that leads to non-adherence to these stipulations, it is incumbent upon the Board to rectify this by filling the vacancy within a three-month period.

The tenure of Audit Committee members, including that of the Chairman, is inherently linked to their status as Directors of Varia Berhad. Consequently, should any member cease to hold the position of Director within the Company, their membership in the Audit Committee will simultaneously terminate.

Meetings

The Audit Committee shall meet at least four times a year and such additional meetings as the Chairman shall decide in order to fulfill its duties. The quorum for a meeting shall be two members and the majority of members present must be Independent Directors.

Other Board members and the Head of Finance and Accounts may attend meetings upon the invitation of the Audit Committee. At least twice a year, the Audit Committee shall meet with the external auditors, the Head of Internal Audit or both without the presence of Executive Directors and other employees of the Company.

The Company Secretary shall be the Secretary of the Audit Committee.

Minutes of meetings shall be distributed to the Board. The Chairman shall report on each meeting to the Board.

Authority

The Audit Committee is authorised by the Board to investigate any activity within its terms of reference. It is authorised to seek any information it requires from any employee and all employees are directed to co-operate with any request made by the Audit Committee. In addition, it shall have unrestricted access to both the internal and external auditors and to the Senior Management of the Group. The Audit Committee is also authorised by the Board to obtain legal or other professional advice where they consider it necessary to carry out their duties.

Duties and Responsibilities

The Audit Committee is authorised by the Board to investigate any activity within its terms of reference. It is authorised to seek any information it requires from any employee and all employees are directed to co-operate with any request made by the Audit Committee. In addition, it shall have unrestricted access to both the internal and external auditors and to the Senior Management of the Group. The Audit Committee is also authorised by the Board to obtain legal or other professional advice where they consider it necessary to carry out their duties.

1. 1. To review the quarterly results and year end financial statements, prior to the approval by the Board, focusing particularly on
   1.1   Changes in or implementation of major accounting policy changes;
   1.2   Significant matters highlighted including financial reporting issues, significant judgments made by management, significant and unusual events or transactions, and how these matters are addressed;
   1.3   The going concern assumption;
   1.4   Significant adjustments arising from the audit; and
   1.5   Compliance with Financial Reporting Standards and other legal requirements.
2. 2. To review with the external auditors, the following:
   2.1   the audit plan;
   2.2   the audit report;
   2.3   their evaluation of the system of internal controls;
   2.4   problems and reservations arising from their interim and final audits, and any matter the external auditors may wish to discuss (in the absence of Management where necessary);
   2.5   the assistance given by the Company’s officers to the external auditors; and
   2.6   the external auditors’ management letter and management’s response.
3. 3. To do the following in respect of internal audit functions:
   3.1   review the adequacy of the scope, functions, competency and resources of the Internal Audit Department and that it has the necessary authority to carry out its work;
   3.2   review the internal audit programme, processes, the results of the internal audit programme, processes or investigation undertaken and whether or not appropriate actions are taken on the recommendations of the Internal Audit Department;
   3.3   consider the findings of internal investigations and management’s response;
   3.4   review any appraisal or assessment of the performance of members of the Internal Audit Department;
   3.5   approve any appointment or termination of senior staff member(s) of the Internal Audit Department; and
   3.6   take cognizance of resignations of internal audit staff member(s) and provide the resigning staff member an opportunity to submit his reasons for resigning.
4. 4. To consider any related party transaction and conflict of interest situation that may arise within the Company or the Group including any transaction, procedure or course of conduct that raises questions of management integrity.
5. 5. To review
   5.1   any letter of resignation from the external auditors of the Company;
   5.2   whether there is a reason (supported by grounds) to believe that the Company’s external auditors are not suitable for re-appointment;
   5.3   any recommendation on the nomination of a person or persons as external auditors.
6. 6. To carry out other functions as may be agreed by the Audit Committee and the Board.