My first Publication ocbc_ar17_fullreport_english | Page 77

• the experience and expertise
of senior members of the
engagement team;
• the audit plan agreed with the
external auditor, the areas of audit
focus and the external auditor’s
approach to materiality;
• the quality of reports and findings
presented by the external auditor;
• the external auditor’s presentation
of its Audit Quality Framework and
its confirmation of independence
pursuant to its policies and processes
for maintaining independence
and objectivity;
• the external auditor’s report to the
Audit Committee on main findings
on audit quality reviews of the
Bank’s audit;
• the key highlights or findings on
the external auditor’s quality
control systems by audit oversight
bodies and, where relevant, the
appropriate steps taken by the
external auditor; and
• feedback through an annual
evaluation exercise from senior
management across geographical
regions to gather internal perceptions
as to the knowledge, competence,
independence, efficiency
and effectiveness - as well as
communications by and with -
the external auditor.
As part of its assurance process on the
objectivity and independence of the
external auditor, the Audit Committee
has in place a policy that lists the non-
audit services which may not be provided
by external auditors and sets out the
circumstances in which the external
auditor may be permitted to undertake
non-audit services. Permitted non-audit
services exceeding S$250,000 require
the approval of the Audit Committee
before the auditor can be engaged. In
addition, the Audit Committee reviews
reports on non-audit services undertaken
by the external auditor to satisfy itself
as to the nature of non-audit services
being provided and the fees incurred.
The nature of the non-audit services
provided during the financial year ended
31 December 2017 is shown in the Notes
to the Financial Statements.
To reinforce the Audit Committee’s
effectiveness and enhance the quality of
the audit, the Audit Committee meets
regularly with the external auditor.
The external auditor discusses its audit
plan with the Audit Committee and
presents its engagement teams and
its audit fee proposals. It reports to the
Audit Committee on audit focus areas,
the support rendered by management,
key audit findings, quantitative and
qualitative aspects of financial statement
disclosures, any unadjusted audit
differences (or review differences in
the case of a half-yearly or a quarterly
review) and any other matters relevant
to its engagement. Discussions may be
held privately without the presence of
management. The external auditor also
discusses with the Audit Committee key
changes to regulatory requirements and
reporting as well as developments in
accounting standards.
In the review of the 2017 financial
statements, the Audit Committee
discussed with management the
accounting principles applied and
significant judgements affecting the
financial statements. Matters raised by
Group Audit and the external auditor in
respect of risk management, accounting
and internal controls over financial
reporting were also reviewed. The
following key audit matters highlighted
in the Independent Auditors’ Report on
pages 154 to 156 of the Annual Report
were discussed with management and
the external auditor:
Impairment of loans and bills receivable
The Audit Committee reviewed
management’s computation and
justification of portfolio allowances in
accordance with approved methodology
and guiding principles. The Committee
also considered management’s
assessment of specific allowances.
The adequacy of specific allowances
set aside for key loan accounts was also
discussed with the external auditor.
Additionally, the Audit Committee also
considered the input from Group Audit’s
independent assessment of the Group’s
credit portfolio quality and credit risk
management process.
Valuation of financial instruments
held at fair value
The Audit Committee reviewed
management’s valuation of financial
instruments framework and their
control, monitoring and issue escalation
processes. In addition, the Committee
reviewed both Group Audit’s and the
external auditor‘s assessment of the
controls over valuation which included
independent verification of price and
validation of valuation models.
Valuation of insurance contract liabilities
The Audit Committee reviewed the
approach and methodology applied
to the valuation of insurance contract
liabilities of Great Eastern Holdings Ltd in
their review of Great Eastern’s financial
results together with the Group’s
financial performance. In considering
the valuation of insurance contract
liabilities, the Committee considered
the external auditor’s independent
assessment of the valuation methodology
and assumptions adopted by Great
Eastern and its subsidiaries.
Impairment of goodwill
The Audit Committee reviewed
management’s goodwill impairment
testing methodology and results,
including the appropriateness of the
cash flow forecasts and discount rates
used. The Committee also considered
the external auditor’s assessment of the
methodology and testing results.
The Audit Committee believes that the
financial statements are fairly presented
in conformity with the relevant Singapore
Financial Reporting Standards in all
material aspects, based on its review and
discussions with management and the
external auditors.
Where appropriate, the Audit Committee
has adopted relevant best practices
set out in the Guidebook for Audit
Committees in Singapore.
PRINCIPLE 13: INTERNAL AUDIT
The Audit Committee approves the
terms of reference of internal audit
(Group Audit) and reviews the adequacy
and effectiveness of the internal audit
function, at least annually. In line with
BUILDING ON OUR CORPORATE STRATEGY FOR SUSTAINABLE GROWTH
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