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EC World Real Estate Investment Trust ANNUAL REPORT 2016
(h) reviews the policy and arrangements by which employees of the Manager and any other persons may, in
confidence, report suspected fraud or irregularity or suspected infringement of any laws or regulations or rules,
or raise concerns about possible improprieties in matters of financial reporting or other matters with a view to
ensuring that arrangements are in place for such concerns to be raised and independently investigated, and for
appropriate follow-up action to be taken.
(i)
reviews the procedures implemented to ensure the legal and regulatory compliance of ECW’s financing activities
in the applicable jurisdiction;
(j)
reviews the Master Lessees’ performance of their obligations under such agreements, including deliberating and
assessing whether the renewal of such agreements is in the interest of ECW and its unitholders prior to time for
renewal;
(k) reviews the Sponsor’s compliance with various undertakings given in respect of the relevant issues until such time
that the Deeds of Indemnity are terminated in accordance with their terms;
(l)
reviewsECW’s investment inPRCcorporatebonds (whicharemade for thepurposeof efficient capitalmanagement)
and monitoring Manager’s compliance with the agreed investment criteria of establishing a diversified portfolio of
corporate bonds issued by PRC corporations with investment ratings of AA- or higher (throughout the tenure of
such bond investment)
As announced via SGXNet on 30 September 2016, given the current volatile PRC corporate bond, the ARC had concurred
with Management’s recommendations to set aside the cash security deposits which it received under the Master Leases
in the form of cash, which may be utilised to part-finance potential acquisition(s) in which Management is exploring.
The ARC has reviewed the nature and extent of non-audit services provided by the external auditors during FY2016 and
the fees paid for such services. The aggregate amount of fees paid and payable to the external auditors for FY2016 was
approximately S$1,565,488 of which audit fees amounted to approximately S$350,000 and non-audit fees amounted to
approximately S$1,215,488. The ARC is satisfied that the independence of the external auditors has not been impaired
by the provision of those services notwithstanding the non-audit fees exceeded 50% of the total audit fees for FY2016.
The non-audit fees were one-off fees paid to the external auditors in relation to the restructuring of ECW Group and
advices rendered on the listing of the restructured group. The external auditors have also provided confirmation of their
independence to the ARC.
In FY2016, the ARC also met with the internal and external auditors, without Management’s presence, to discuss the
reasonableness of the financial reporting process, the system of internal controls, and the significant comments and
recommendations by the auditors. Where relevant, the ARC makes reference to the best practices and guidance in the
Guidebook for Audit Committees in Singapore and the practice directions issued from time to time in relation to the
Financial Reporting Surveillance Programme administered by the Accounting and Corporate Regulatory Authority of
Singapore.
The Manager confirms, on behalf of ECW, that ECW complies with Rule 712 and Rule 715 of the Listing Manual.
Internal Audit
Principle 13:
The company should establish an effective internal audit function that is adequately resourced and independent of
the activities it audits
The Board recognises the importance of maintaining a system of internal controls, procedures and processes for
safeguarding the Unitholders’ investments and ECW’s assets. The internal audit function of ECW is outsourced to
Deloitte & Touche LLP, who adopts the Standards for the Professional Practice of Internal Auditing set by the Institute
of Internal Auditors and reviews the Group’s compliance with the control procedures and policies established within
the internal control and risk management systems.
Corporate
Governance