My first Publication ocbc_ar17_fullreport_english | Page 76

CORPORATE GOVERNANCE
systems, were adequate and effective as
at 31 December 2017, to address the risks
which the Group considers relevant and
material to its operations.
The system of internal controls provides
reasonable but not absolute assurance
that the Bank will not be adversely
affected by any event that could be
reasonably foreseen as it strives to
achieve its business objectives. However,
the Board also notes that no system of
internal controls can provide absolute
assurance in this regard, or absolute
assurance against the occurrence of
material errors, poor judgement in
decision-making, human error, losses,
fraud or other irregularities.
PRINCIPLE 12: AUDIT COMMITTEE
The composition and summary terms
of reference of the Audit Committee
are provided under the caption
“Audit Committee” on page 64 and
the Committee’s summary activities
are also provided in the Directors’
Statement on page 153.
In addition to the review of the Group
Financial Statements, the Audit
Committee reviews and evaluates,
with the external auditors and
internal auditors, the adequacy and
effectiveness of the system of internal
controls including financial, operational,
compliance and information technology
controls, and risk management policies
and systems. It reviews the scope
and results of the audits, the cost-
effectiveness of the audits and the
independence and objectivity of the
external auditors and internal auditors.
When the external auditors provide
non-audit services to the Bank, the
Committee keeps the nature, extent
and costs of such services under review.
This is to balance the objectivity of the
external auditors against their ability to
provide value-for-money services. The
Audit Committee members keep abreast
of changes to accounting standards and
issues which have a direct impact on
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OCBC ANNUAL REPORT 2017
financial statements through briefings
provided by internal or external subject
matter experts. The Audit Committee also
reviews significant financial reporting
issues and judgements to ensure the
integrity of the financial statements.
The Committee reviews announcements
relating to financial performance.
The Audit Committee is also responsible
for the review of the Bank’s whistle-
blowing policy as well as any concerns,
including anonymous complaints, which
staff may in confidence raise about
possible improprieties in matters of
financial reporting or other matters. The
Committee will ensure such concerns are
independently investigated and followed
up on. If it is found that there has been
fraud, appropriate remedial action will be
taken and the Audit Committee updated
regularly on its status. The whistle-
blower’s interests will be safeguarded at
all times, including a right to appeal to
the Audit Committee if reprisals are taken
against him.
The Audit Committee meets at least once
a year with the external auditors and
internal auditors in separate sessions and
without the presence of management,
to consider any matters which may be
raised privately. In addition, the Chairman
of the Audit Committee meets the head
of internal audit on a regular basis to
discuss the work undertaken, key findings
and any other significant matters arising
from the Group’s operations. Formal
reports are sent to the Audit Committee
on a regular basis. The Board is updated
regarding these reports.
The Audit Committee has received
the requisite disclosures from the
external auditors evidencing their
independence. It is satisfied that the
financial, professional and business
relationships between the Group and
the external auditors will not prejudice
the independence and objectivity of the
external auditors. The aggregate amount
of fees paid to the external auditors for
financial year 2017, and the breakdown
of total fees paid for audit and non-audit
services, are shown in the Notes to the
Financial Statements.
The Audit Committee assesses the
quality of the external auditor before
its first appointment and at least
annually thereafter. The selection
of the current external auditor was
made after a tender process based
on the established framework for the
selection/appointment of OCBC’s
external auditor. This framework lists
the considerations and criteria for the
external auditor and provides a robust
tender process. Considerations include
having global reach as well as technical
and industry expertise, skills, resources
and reputation, and quality of
service delivery.
Exercising oversight over the
external audit function, the Audit
Committee is responsible for making
recommendations to the Board in
relation to the appointment, re-
appointment and removal of the
external auditor. The Audit Committee
also considers the annual fee proposals
presented by the external auditor and
reviews the scope of the audit plan, the
level of materiality, areas of focus and
significant risks to be addressed.
In its recommendation on the re-
appointment of the external auditor, the
Audit Committee considers the length
of the external auditor’s tenure and the
risk that may pose to objectivity and
independence. The Audit Committee
also takes into consideration the external
auditor’s compliance with SGX-ST Listing
Rules which require the lead engagement
partner to be rotated every five years.
The Audit Committee is responsible for
monitoring the performance, objectivity
and independence of the external auditor.
In its evaluation process, the Audit
Committee takes into consideration
the following: